Residential Real Estate Brokerages: M&A Outlook

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Scott Wright Brokerage

Over the past 45 years, the real estate industry has experienced two distinct waves of mergers and acquisitions. The first wave, which began in 1977 and lasted until approximately 1989, was driven by major players such as Merrill Lynch, Sears (Coldwell Banker), and several Savings and Loan banks. These entities ushered in a transformative era, during which many brokerage firms realized their businesses held significantly higher equity value than they had previously believed.

The second wave spanned from 1997 to 2022 and was dominated by firms like Realogy/Anywhere Real Estate, HomeServices of America, Compass, The Hanna Companies, Peerage, and United, among others. This period saw the acquisition of hundreds of brokerage firms, with valuations surpassing those achieved during the first wave.

What’s to expect in 2025?

Now, in 2025, the landscape appears to be shifting. It is unlikely that major players such as Anywhere or Berkshire Hathaway will re-enter the acquisition market in any significant capacity. While Compass, The Hanna Companies and United Real Estate remain active, many other large acquirers have either exited the market or substantially reduced their activity. This has created opportunities for regional, privately-owned companies and local firms to step in and drive acquisitions.

The era of a few large national firms acquiring regional and local independents may be coming to an end. If a third wave of mergers and acquisitions emerges, it will likely be led by regional and local firms. What sets this potential wave apart is that it will be fueled by individuals and organizations investing their own capital, rather than relying on public funding.

While acquisition prices and terms may not be as lucrative as those offered during prior waves, the volume of deals is expected to recover as the housing market stabilizes and brokerage performance improves. Thousands of small- to medium-sized firms may find that merging with another company represents the most logical path forward. As a result, the third wave will likely be characterized by regional and local firms taking the lead in acquisition activity.

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