Market Insights

News and insights on the Residential Real Estate market, valuations and mergers & acquisitions

March 20, 2024

Well, well, well…just a little bit has happened in our industry this month.  We’ve talked about industry headwinds, and for many it now feels like the winds are howling something fierce.  If you heed the media noise, the NAR settlement has seemingly cast a pall over brokers.  In speaking with several of our friends and clients, however, they see this as opportunity.  From an M&A perspective, we fully expect significant consolidation in the years to come, and the great leaders will lean in with even more vigor to capture market share. 

From a valuation perspective the uncertainty with the more immediate-term court approval and practice changes, and longer-term potential effects on how brokerage revenues may be affected, values will likely suffer somewhat.  Deal terms will also continue to heavily favor purchasers for these reasons.  Purchasers will, however, still pay a premium if there are strong synergies.

I wouldn’t expect a ton of M&A activity in the second quarter given the state of flux we’re in, but I suspect in the second half of the year things could pick up.

Subscribe to email updates


box

More market news

  • Scott Wright on M&A and brokerage valuation trends

    Scott Wright joins Tracey Velt on the RealTrending podcast covering the upcoming Dealmakers Conference and discuss the importance of benchmarking data on brokerage operations, including trends they see in brokerage expenses, gross margin, and how firms are valued. They also explore innovative services brokers can adopt to enhance value, productivity, and recent market dynamics and…

  • Defendants have solid case for appeal in Sitzer

    A few days ago, the three main defendants—National Association of Realtors, Keller Williams and HomeServices—in the Sitzer/Burnett case filed two motions with the court. The first was a motion for judgement as a matter of law and the second was a motion for a new trial. These actions by the three firms are all a matter of public record. I have…

  • Here’s how brokerage valuation works

    Valuation in the residential brokerage industry has some characteristics that are unique when compared to other industries and businesses. First, the business of residential brokerage is highly dependent on the recruiting, retention and production of independent contractor sales agents. Brokerage firms are not producing goods on a factory line — there are no warehouses holding physical inventory, no…

  • RTC Valuations business planning

    Here’s how real estate brokers can aggressively attack operating costs

    Broker/owners have been on quite a ride over the last few years. With the residential real estate pendulum swinging from blissful exuberance in the second half of 2020 to extreme consternation for many today, brokers have had to pivot like never before. The ongoing housing market decline, which saw existing-home sales fall 36% in 2022 alone (on a seasonally adjusted annual…

  • Here’s what people are getting wrong about real estate commissions

    I recently read editorials and articles by such esteemed publications as The Economist, Entrepreneur Magazine, and The Wall Street Journal concerning the antitrust real estate commission lawsuits.  Here are some of the highlights: In Entrepreneur, the writer states, “…the court ruling (Sitzer) could lead to a decrease in the average home price in the U.S. by 1% to 2%…

  • RTC Valuations Brokerage Planning

    Thinking of selling your real estate brokerage? Here’s how to prepare

    Over the course of our 40+ years at RTC Consulting, we’ve brokered and/or advised on over 900 transactions in the residential real estate industry.  We usually represent the sell side of the deal and work with firms that range in size from small, one-office, 10-agent shops to the largest in the nation.  We’ve learned a few things along the way,…

  • How deal terms can affect a real estate brokerage’s value

    When we go through the brokerage valuation process, the product is Fair Market Value (FMV). Interestingly, though, FMV isn’t always the final purchase price in a lot of the deals out there. In mergers and acquisitions (M&A), nearly everything is negotiable, especially the purchase price. When we see transactions that are executed at a price that is…

  • State of the residential real estate industry with Mike Delprete

    Scott Wright sat down with Mike Delprete this week to have a candid discussion about the current state of the residential real estate industry.

  • RTC Valuations Brokerage Consolidations

    Real estate brokerage consolidation opportunities abound

    Most brokers are feeling the crunch. Existing home sales are down, mortgage interest rates are up, and the economic uncertainty is palpable. Rather than belabor the kick in the teeth this industry is feeling, I’d like to bring attention to the other side of the coin that has some real estate brokers licking their chops. During this time, we (RTC Consulting) have come to…

  • Best practices for identifying brokerage acquisition prospects

    There are three traditional ways that brokerage firms seek growth. The first two are organic andshould be a primary focus for all firms. At RTC Consulting we work with many firms that are quite adept at acquisitions. It’s somethingthat’s been in their playbook for a long time, and it’s been a very effective tool for growth overthe years. For…