Where small brokerages have an edge over the giants
LeadingRE’s Jessica Edgerton explained how regional and family firms can excel by reacting to market changes quickly and building culture and trust.
Key points:
- Local and family brokerages are often led with a “founder's mentality,” without being encumbered by corporate bureaucracy and shareholders, Edgerton said.
- She also argued that regional brands with a strong focus on culture have better retention rates and higher employee satisfaction.
- Smaller, local companies are also doing more to give back to their communities, fostering trust along the way.
Consolidation has been picking up steam in the real estate industry, allowing the biggest brokerages to capture an increasing share of sales while thousands of smaller firms hustle to compete for the rest of the market.
Can mom-and-pop brokerages still succeed in this environment?
Yes, says Jessica Edgerton, chief legal officer and EVP at Leading Real Estate Companies of the World (LeadingRE).
Independent brokerages with strong regional brand recognition have opportunities to stand out in a crowded field, particularly as corporate giants gobble up brokerages and change their culture, Edgerton argued at the T3 Leadership Summit on May 21. (Note: Real Estate News is an editorially independent division of T3 Sixty.)
Smaller firms can react more quickly
There has been a lot of M&A activity lately, and some brands are leaving the LeadingRE network to join up with larger firms, Edgerton conceded — but she believes there is still room for everyone in the residential real estate world, and there are reasons "why consumers lean so hard" into regional and family brands.
For one, smaller, regional and independent brokerages aren't encumbered with the management bloat so often found in publicly traded companies. Company leaders with a "founder's mentality" — like many who operate family brands — "are able to pivot quickly with the market, or ahead of the market," Edgerton said, because they are focused on their agents and clients, not shareholders and quarterly reports.
Local brands foster agent loyalty and satisfaction
Edgerton highlighted how quickly major corporations can rise and fall, noting that today's Fortune 500 looks very different than it did just a couple of decades ago. "The average lifespan of these companies is shrinking," she said, while regional and family brands can hang on much longer thanks to an emphasis on culture and consumer satisfaction.
In part, that's because companies with a "culture-first approach to growth" have strong retention, Edgerton said.
She highlighted research from the Harvard Business Review that found a strong corporate culture translates into four times higher revenue growth and results in a 14% turnover rate versus a 48% rate for companies that lack a well-defined corporate culture. Employees also report higher satisfaction with leaders of culture-focused companies, particularly among family and regional brands.
Smaller businesses give more — and gain trust in return
Edgerton pointed to longtime brokerage icons like Ebby Halliday and Michael Saunders as examples of firms focused on culture and community. And, she noted, it's the smaller companies that are most involved in local community activities and giving: "76% of the funds for local charities come from family and local brands," Edgerton said, meaning that in many cases, those brands and businesses "are literally keeping those local charities alive."
Three attributes — culture, retention and trust — represent "the power of family brands," she said. "The bottom line," Edgerton explained, is that "71% of consumers stop buying or buy less when trust is lost," while "91% of consumers would buy or buy more" with a company that they trust.
"Real estate is about communities and the people that we serve, and they will remain all of our North Stars," Edgerton concluded.