A couple of weeks ago I went into the Multiple Listing Service (MLS) and downloaded year-to-date statistics for every real estate brokerage office in the Phoenix metro area. This report shows sales volume and number of transaction sides (and takes a LONG time to generate and blows up on occasion).
The first thing that struck me about this report was that there are 5,177 brokerage offices listed. I knew there was a lot of competition out there, but I had no idea there were this many brokerages in the area.
The second item of interest was personal. I wanted to see where our brokerage office ranked in terms of total sales volume and number of transaction sides (“sides” would be “sales” for those not familiar with the vernacular).
Turns out, Thompson’s Realty was ranked #253 in total number of transaction sides and #257 in sales volume.
“Well that’s not so swift,” I thought to myself.
Then again, there are over five thousand brokerages in the area. Doing the math shows that for both metrics, we are in the top five percent of all offices in the Phoenix real estate market.
That isn’t too bad. Particularly considering we’ve only been in business for 2.5 years and we only have 22 sales agents. What I would really like to do is “normalize” this big giant pile of data and look at sales volume and transaction sides on a per agent basis ”“ just to see how we compare with the “big boys”. Unfortunately, the data set extracted from the MLS does not include the number of agents in each office. I can get this data from the Arizona Department of Real Estate on-line directory, but that would entail pulling up each office individually, and hand-counting the number of agents. An arduous task given the sheer number of offices and agents out there.
Right about now, the astute and long-time reader may be recalling a post I wrote awhile back titled, “We are #1!! Now please make it stop. PLEASE?” where I ranted against agents and brokerages making baseless claims about being #1. And now here I am proudly proclaiming, “We are in the top 5%!”
What’s up with that?
A. I’m not claiming to be #1.
B. I’m not talking about a metric as completely meaningless as Twitter followers or Facebook friends/likes.
C. I have the data, and I am being crystal clear about the exact metrics we are examining ”“ total sales volume and number of transaction sides year to date ”“ both are specific and measurable. (Of note, I’d link to a downloadable copy of the spreadsheet, but I don’t think I’m allowed to share the MLS’s data in that fashion. Any real estate agent with MLS access can generate this report. Just do it late at night or it will run interminably slow). I will produce the data for any client or potential client that would like to verify our position.
Why do I care?
As a small boutique brokerage, we often have to “prove our worth” when we compete directly with some of the better known entities in the brokerage world. It is not unreasonable for a potential buyer or seller to ask, “Why should I chose you to help me instead of <<insert large national brand name here>>?”
Well, the bottom line is we CAN compete with the big boys. I happen to think we can not only compete, but perform better in many respects than some national franchise offices (or other independent brokerages). Selfishly, I like being able to put in our listing presentation that we are in the top five percent of Phoenix real estate brokerages in sales volume and transaction sides. That means 95% of the brokerages out there sell less real estate than we do. No, I can’t say, “No one sells more real estate than Thompson’s Realty”, but I can say we sell more, in Phoenix, than 95% of the offices out there (incidentally, there are MANY “name brand” offices with fewer sales and lower volume than us).
Why should you care?
You probably could care less. Unless you are considering using us to help you buy or sell a home. There are 3,839 real estate offices (offices, not agents) out there that have 10 or less sales this year. That’s a whopping 74% of real estate offices selling one home per month or less. Now to be fair, many real estate brokerages are sole proprietorship’s, and maybe it’s not fair to compare them to multi-agent offices (hence the burning desire to look at data by agent count). And FOR THE RECORD, before anyone out there gets bent out of shape and says, “Jay Thompson said my business sucks and people shouldn’t use me because I sell less than one house a month” that is not what I am saying. There are some amazing agents and offices out there that do spectacular work at very low volumes. But volume may be a consideration for some home buyers and sellers. Clearly (at least I hope it is clear) an offices production numbers are just one of many factors any potential home buyer or seller should consider when choosing an agent / brokerage to represent them.
What will it take to move higher in the rankings?
At the most simplistic level, for our brokerage to move up in the rankings we will need to do more sides and more volume. From a brokerage perspective, there are two ways to do that ”“ hire more agents, or increase the production levels of the current agents. Or both. And both is our plan. Will we ever be #1? Nope. The #1 office in transaction sides currently has 987 agents. The #1 office in sales volume has 223 agents. Thompson’s Realty will never have that many agents. Well, unless someone wants to buy us and grow the agent count that high. But if that were to happen, I’ll be in the Bahamas fishing and drinking cocktails on the beach, so I won’t care. Right now though, I have zero desire to manage an office with 223 ”“ 987 agents.
So no #1 for us.
How about top 3%?
That’s doable. We’d need to increase our number of transactions by about 75% and our sales volume by 81%. Aggressive, but doable by hiring 10 ”“ 15 more great agents and helping existing agents increase their productivity.
Just give us another two years.
Maybe one. . .