demographic delight

Here's a quick post re a small item in the state associations magazine for August. California brokerages by size analysis is surprising, at least to me. 58.7 percent of brokerages are individuals--ie firm has one agent--the Broker. That's unexpected, although I are one, at least in one business. 16.5 percent are 2 agent firms with 7.2 percent having 3 agents and 3.9 percent 4 agents. Add those up and you get 86.2 percent of brokerages have 4 or fewer agents, leaving 13.8 percent with five or more.

In a former life I ran two offices owned by a small corporation and affiliated with a national franchise. Did it for 18 years. It just seems that a bigger percentage of the offices had 5 or more agents back in the "old days". Wonder how many of the one agent offices are actually full time in real estate? May be populated with some semi retired agents who keep broker license active, but don't do much business except for old clients.

What the study doesn't address, and I know the numbers are available, is what percentage of the state directors and more importantly the state association leadership are from firms with 5 or more agents. Wanna bet the percentage is just a little bit higher than 13.8 percent?

There are some among state association leadership who are from small firms, but not very many. The state association leadership is dominated by members from large brokerages from large associations. Not surprisingly, the profitability of those larger brokerages is very high on the priority list for education, government affairs and the development of the ever expanding array of state association business ventures, run by various subsidiaries (allegedly controlled by state directors--but not really in practical terms).

So what's that mean for the offices with less than 5 agents? Not much--you get the same stuff everyone else gets who is member of the state association. Much of the education and materials are fine for any sized office, but not all. It's a matter of being aware and asking yourself--does this idea, educational offering or product fit a large office's needs particularly well? There's a reason!

For example, transaction management applications are seldom used by very small offices. They are popular in larger offices with transaction coordinators who actually use the application. The state association has invested heavily in its product--that still has little market penetration. Nonetheless, the larger brokerages believe they'll enjoy a reduction in risk/liability with files approaching perfection and electronically archived. Economically, the transaction management product doesn't make the best of sense, but it's popular with the power part of the demographic, so it stays, regardless of use.

In an odd twist the higher profile of the state association may be a partial reason for more smaller brokerages. 25 years ago the state association was not a big part of the real estate scene. If you wanted to really learn the ropes, you went to work for a large office who had experienced managers/brokers who could guide your learning process through their experience and knowledge. Larger offices were training grounds. Now, the state association has no much information readily available the role of the larger offices has shifted.

Does the state association offer all the information needed to become a quality real estate agent? Not entirely. 
The complex skills needed involve nuances well beyond the vision of the state association and even the franchises because Buyers and Sellers have interests that may not be well described by profitability metrics.