End of Many Small Real Esate Brokerage Shops?

Media lately has had a lot of boisterous hoopla about the "rising tide" of residential sales.

Yes, sales have increased some but, will this increase continue as we head into fall and Winter, not generally peak seasons for home sales?

Shrinking house sales has already taken a financial toll on many, if not most, home brokers. Agents ranks are dwindling and operating expenses are increasing.

The blunt truth is that there is simply not enough business to go around. Something has to give.

From what I see the small shops with 1 or 2 agents will have a major up-hill struggle just to survive. Even the larger shops will hit financial bumps in the road.

Let's take a peek at one geographic area in Massachusetts and in particular Greater Lowell, consisting of the 9 communities of: Carisle, Chelmsford, Dracut, Dunstable Lowell, Tewksbury, Tyngsboro and Westford for the past 30 +/- days. These communities have seen the sales of about 267 to 287 sales+/- of 1 Families, Multi Families and Residential condos.

Not a bad number in this economy.

This would average 29+/- sales per community but real estate doesn't work that way.

The towns of Carlisle and Dunstable would be hard pressed to see 3 sales in any 30 day period where as the larger city might see 60 sales.

In these 9 communities, according to MLS there are a total of 269 brokerage firms with 793 real estate active agents.

This number of agents does not include those who do not belong to the Realtors.

Sales are not equally distributed as the top 10 largest firms, in this area, had an estimated cumulative sales of 157 units or 58%+/- and conversely 115 smaller rims reported 1 sale unit each.

Prices ranged from a low of $49,000 to one high sale of $2.2Million.

From the addresses posted on MLS it appears than many small shops have retreated somewhat to working from residential addresses and obviously from their home or condo. These firms till have on going operating expenses of Realtor dues, MLS membership fee's, Error's and Omissions Insurance, Internet fee's, etc.

This is not a new phenomena as in every downturn in the biz many firms just pack it in and go off the air. But this time I suspect, that in time, some of the larger firms are going to be caught in the squeeze.


Bill McInerney