Realtors Have More Confidence in Their Brokerages Than in Local Markets

COVID-19, and its economic impacts, has forced REALTORS® to reevaluate everything from their pipeline forecasting, to in-brokerage collaboration, to how to show listings while keeping their clients and themselves safe.

The unforeseen instability and dynamic environment can leave many agents uncertain about how much confidence they or their peers should have in their brokerage. Brokers and agents alike may also feel unsure about what support and adjustments to expect from their organization. 

To provide some perspective on the experiences of REALTORS® in today’s coronavirus housing market, we’ve surveyed 210 agents to gauge how their brokerages are adapting to the dynamic market, and how confident they are in their brokerages and the local residential real estate markets they operate in.

We surveyed these agents by phone from April 23 – May 8, shortly after the peak in COVID-related deaths in their area (as of this publication). We found that, while local markets can be unstable and unpredictable, REALTORS® are more confident in their brokerage’s abilities to adapt to, survive, and thrive amid the pandemic. 

Instability in the Residential Real Estate Market

Amid concerns around whether the housing market will crash in 2020, REALTORS® are reporting lower confidence in their local real estate markets. However, the degree of lost confidence can vary by region and makeup of a given market. 

Our survey of DFW-area REALTORS® found that, on a scale of 1-10, the vast majority of respondents rated their confidence in their market a 7 or above. Nearly 1 in 3 rated their confidence at 10 of 10: 

Realtors Confidence in Local Residential Markets | AgentAdvice.com

Anecdotal evidence from our sample validated this trend in confidence. One respondent mentioned his brokerage was “surprisingly busy,” and said that at a “sales meeting last week he learned in the month of March they were only down 5% compared to last year.” Other respondents similarly suggested that, in cases where business has declined, the shrinkage has been far less than expected. 

While a 5% decline in business year over year may appear to be concerning news, the tone of respondents suggests it was actually a positive outcome compared to expectations. Brokerages may have planned for sharper and more painful real estate disruptions than they’ve felt at this point.

This discrepancy suggests that, while predictions are difficult at best,  REALTORS® are still not predicting that the coronavirus will cause the housing market to crash the way it did in the Great Recession

Location Matters

While there is not pre-COVID data for the DFW area to compare to, the fact that nearly all respondents identified on the upper end of confidence is a stronger vote of confidence than other markets in the U.S. For instance, a recent survey of New York REALTORS® found that: 

“Overall Real Estate Broker Confidence Index for the first quarter of 2020 was 3.72 out of 10, a 46% decrease since brokers were last surveyed about the fourth quarter of 2019, and the lowest broker confidence on record.” 

The forecast of future confidence in the residential market specifically was even more bleak. Residential broker confidence looking six months from now was at 3.42 out of 10.

Several factors may be influencing differences in broker and REALTOR® confidence region to region. For instance, the unemployment rate in New York is slightly higher than in Texas. Since many look to the unemployment rate as a signal of the broader economy’s health, and the state of the real estate market, New York REALTORS® may be basing a lower confidence score on lower overall economic conditions. 

There are luxury real estate market trends that suggest New York may suffer more than the DFW market. The luxury real estate market has already ground to a near-halt in NYC. Pains in the luxury market have also been felt in the DFW market, with one respondent admitting that “ the luxury market is a bit down” in the Dallas area. 

REALTORS®’ feedback suggests that mid-market and lower-end real estate is a more stable market segment. One respondent was grateful that she “mostly works with the “Average Joe” middle class, not luxury,” which is a “great SOI” to have in this market.

With median home prices nearly ⅓ lower in Dallas compared to NYC, the difference suggests markets that are more saturated with high-value or luxury real estate are likely to slow down more quickly than lower-value market segments. 

Confidence in Future Markets

Evaluations of future confidence in real estate markets may be more valuable than evaluations of the current markets. Given the time frame in which both the New York and the DFW surveys were conducted, the change in in-progress deals and mid-cycle buying and selling processes may have lagged behind our understanding of the magnitude of the coronavirus and its economic impacts.

Deal cycles that were in motion before the pandemic was truly felt nationwide may still come through in the short term. For instance, buyers that were mid-move and had financial wheels in motion before the coronavirus “hit” may feel more pressure to finish the process than prospective buyers or sellers are currently feeling. 

Negative impacts on brokerages’ pipeline for buyers and sellers will be the first bottom-line predictors of a declining coronavirus housing market. Some DFW brokerages are preempting this concern by exploring “different ways to get different leads, [such as] working by referral.”

There is a range of lead-generation tools available to help real estate brokerages and agents build their pipeline. Others are taking a more straightforward approach: simply “buying leads.” 

More proactive lead generation strategies will become increasingly important if there are fewer buyers and sellers in the real estate market.

While home prices are not predicted to free fall, Zillow recently predicted home sales to fall 60% overall due to both a lower supply of sellers and a smaller demand pool of buyers. While buyers and sellers may not feel these effects as much, brokerages and REALTORS® will find themselves competing for a much smaller pool of leads on both sides of the real estate market. 

Unfortunately, recent market analyses suggest little reprieve for REALTORS® while the pandemic is still in effect. Realtor.com recently predicted a “W”-shaped real estate recovery, or a “see-saw” recovery, with additional declines as the coronavirus forces further shutdown periods and economic instability. These predictions may further inhibit confidence in any positive market signals we initially see since the coronavirus could undo that progress at any time.

Recent Google Trends data (below) suggests that, while the most recent trend in search activity is declining, the coronavirus has sparked some enduring concerns around whether the housing market will crash in 2020. 

Google Keyword Trend data for query "will the housing market crash in 2020" | AgentAdvice.com

Finding Solace in your Broker

While residential real estate markets can be a cause for concern, REALTORS® we surveyed had, on average noticeably higher confidence in the health of their brokerages than in the markets they serve: 

Agents' Confidence in Health of Local Real Estate Market vs Brokerage | AgentAdvice.com

Over half of REALTORS® we surveyed had the highest confidence in the health of their brokerage. Only 1 REALTOR® rated their brokerage confidence at less than a 5. It’s worth noting that the respondents may have felt a bias towards giving their own brokerage a higher confidence rating. 

Even factoring for professional bias, the overwhelming positivity relative to their confidence in their own markets suggests that many REALTORS® expect their brokerages to remain resilient in the face of COVID-related housing market changes.

The discrepancy in REALTORS®’ confidence between local residential markets and their brokerages suggests that agents have a higher level of confidence in their brokerages to endure short to mid-term instability and disruption. 

Many respondents went out of their way to reaffirm their confidence in their brokerage. These REALTORS® cited factors like longevity (“The brokerage is always prepared & has experience of over 60 years”), steady business, or operational changes to adapt to the new coronavirus-influenced housing market. The changes brokerages have taken to support their agents improved REALTORS®’ confidence in their brokerages.

How Brokerages are Adjusting to the Coronavirus Housing Market

Higher levels of confidence in brokerages may be largely attributable to changes brokerages have made to better support their REALTORS®.

We asked our respondents about the best adjustments their brokerages have made to help them adapt to the impact of the coronavirus. The majority of REALTORS® we surveyed called out the significant efforts their brokerages have made to support remote or virtual work as the best adjustments their brokerages have made.

Best Covid-Related Adjustments Made by Brokerages to Help Agents | AgentAdvice.com

Remote Work Adaptations — More Tools, Fewer Fees

REALTORS® identified a range of digital or virtualization adjustments made by brokerages that best support them. Within “digital adaptations,” the most frequently-mentioned changes include adopting online or remote tools. Zoom was the most commonly mentioned tool by name, which has been crucial to many REALTORS® to best coordinate and collaborate with their counterparts and clients in the brokerages. 

Close behind Zoom are mentions of collaboration tools and virtual tour tools. Both collaboration software and platforms for virtual tours have been available for a while, but they have transitioned from “beneficial” to “essential” products for many brokerages within a matter of weeks. 

One aspect of going fully digital and remote is a reduced need for brokerages’ office spaces. Some REALTORS® praised their brokerages for reducing office fees during this period or eliminating them entirely. While only a minority of respondents experienced this reduced burden, those who did were certain to identify it as a major adjustment brokerages have made to support them. 

More Training and Resources

The second most impactful change brokerages have made is providing online training and resources to support agents through the economic and logistical challenges presented by the coronavirus. Respondents praised training strategies and materials focused on updating outreach tactics with new messaging, new sales strategies, and using new online tools.

These trainings are some of the most accessible economic support options for brokerages. As one REALTOR® described: 

“[Brokerages are providing] a lot more training via Zoom, offering the training for free. They go over protocols for how to run your business during these times.”

Many REALTORS® also recognized how brokerages have supported their efforts to adapt to logistical challenges posed by coronavirus in the residential housing market, as well as local regulatory requirements.

One respondent described how brokerages have “Created coronavirus guidelines for clients safety”, including “Training for open houses, safety precaution, video tours,” as another respondent explained. 

The Impact of Not Adjusting

Some REALTORS® also said their brokerage hasn’t implemented any changes. While some REALTORS® in this grouping still expressed full confidence in their brokerage, the trend is noticeably lower than the average REALTOR®’s confidence rating:

Realtors Confidence in Brokerages with no Covid-Related Changes vs Overall | AgentAdvice.com

Brokerages that have, in REALTORS®’ opinions, not taken proactive steps to address coronavirus changes inspire less confidence than their more active counterparts. On the other hand, those brokerages who have taken measures are yielding dividends in their REALTORS®’ faith and loyalty in the future direction of the brokerage as a whole. 

This data shows that brokerage’s decisions during the pandemic, or crises in general, has a tangible effect on REALTORS®’ confidence in their organization, and can make navigating crises easier for their REALTORS®’ as well.

What’s Plan B?

Another signal of many REALTORS®’ faith in their brokerages is the rarity of backup plans should their brokerage need to close. When asked whether they have made a recovery plan for themselves and their clients if the brokerage closes down, only 16% said that they have. 

It’s debatable whether this reflects total confidence in their brokerage or a lack of perceived alternatives to their current workplace for some respondents. Either way, most REALTORS® appear to remain committed to their brokerages in the midst of instability. A large number of respondents even called this question moot, since their brokerages were “absolutely NOT going to be closing.” 

Most of the 16% who have recovery plans were taking one of a couple of core approaches. In an ambitious move, many REALTORS® identified opening their own brokerage as their recovery plan. These respondents either already have their brokers license or are in the process of procuring it. 

Other REALTORS® who aren’t interested in running their own brokerage and are confident in their sales numbers and reputation plan on moving to another brokerage should their current one close. 

For REALTORS® looking to develop an understanding of other brokerages they can join, reading other REALTORS®’ reviews of brokerage options can help identify red flags in potential brokerages and surface standout organizations who will best support their efforts, whether it be during a pandemic or when we manage to find the “new normal.”