In the ever-changing real estate landscape, Multiple Listing Services (MLS) are facing a major challenge today: agent attrition. With interest rates high and house prices soaring, the for-sale market has stalled, leaving many agents now selling only a handful of properties each year. Nearly half (about 49%) of about 2,000 real estate agents surveyed by the Consumer Federation of America sold fewer than two homes last year. Additionally, due to current litigation, starting in August, the real estate database will not include compensation provided by agents representing buyers in transactions. This means that these agents are not guaranteed to receive a certain percentage of the seller’s proceeds. It is estimated that this could result in a loss of up to 30% of US commission income
The Challenge of Agent Attrition
All these developments have had a significant impact on the stability and growth of the real estate industry. Although the number of real estate agents in the U.S. increased significantly during the pandemic, it has since declined significantly. The National Association of Realtors (NAR) currently has approximately 1.5 million registered agents, a decrease of more than 100,000 from 2022, according to industry research.
For MLS, the impact of losing agents could be profound. Declining memberships will impact membership fee revenue, reduce the number of listings, and weaken the collaborative networks that are critical for MLSs to thrive. Therefore, it is crucial to find ways to retain agents and provide them with sustainable revenue opportunities.
The rental market is full of opportunities
Amid all this uncertainty, the rental market could provide a significant opportunity for MLSs to address agent attrition. Traditionally, many real estate agents have focused on sales, often neglecting rentals. However, the rental market is strong and growing, with steady demand for rental space, particularly in urban areas and among younger people who are delaying home ownership. Although the rental market has softened year over year due to an increase in the supply of new apartments, the sector remains competitive and active. According to research from RentCafe, there will be an average of seven tenants vying for an apartment in 2024 (that number doubles to 14 in some high-demand markets like Miami), up from eight last year. The current average monthly rent in the United States is $1,517, an increase of 0.6% from last year.
By integrating rentals into their products, MLS can help agents diversify their revenue streams. Rentals have a quicker turnaround than sales, allowing agents to generate steady income. This is especially beneficial during slow sales seasons, helping agents stay financially stable, while also serving as a lead generation tool when the for-sales market becomes more favorable again.
Enhance your MLS with leasing support
To effectively support leasing, MLSs can implement a variety of strategies:
- Expand inventory database: Including rental listings in the MLS database can reach a wider audience and provide more opportunities for agents. Ensuring these listings are comprehensive and up-to-date will increase the value of the MLS to its members.
- Provide professional training: Providing training programs focused on leasing transactions can equip agents with the necessary skills and knowledge. This includes understanding rental market trends, legal requirements and best practices in property management.
- Provide rental special tools: MLSs can invest in tools and technology that streamline the leasing process. Features such as online leasing apps, credit screening services and digital lease signing make it easier for agents to effectively manage lease transactions.
Advantages of Agents and MLS
The benefits of supporting leasing are twofold: it provides agents with a stable revenue stream and lead generation tool, and it enhances the MLS. Agents who can rely on rental commissions are more likely to stay in the industry, reducing churn.
Additionally, adopting a leasing approach allows the MLS to align with current market trends. As remote working becomes more common and lifestyles change, the need for flexible living arrangements is expected to grow. By positioning themselves as leaders in the rental market, MLSs can remain relevant and meet the ever-changing needs of agents and customers.
Agent turnover is a significant challenge for MLS, but by embracing the rental market, they can turn this challenge into an opportunity. Supporting leasing provides agents with a valuable revenue stream, increases job stability, and strengthens the entire MLS network. In a dynamic real estate environment, diversifying services and adapting to market trends are critical to long-term success. By integrating leasing into its core offering, MLS can ultimately help ensure a more resilient and prosperous real estate community.
This column does not necessarily reflect the opinions of the HousingWire editorial staff and its owners.
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