Franchise appeal erodes among real-estate brokers
The real-estate broker's firm is changing, and those changes will become increasingly visible to consumers during 1981 and beyond. Most people know the broker or salesperson better than anyone else in the real-estate business. He or she is the one who sits down at the kitchen table with individual buyers and sellers and works out a plan to solve real-estate problems or needs.
The firm these brokers and salespeople represent is probably evolving in a new era; that is, if indications shown in a recent survey are significant. The study was conducted by the research department of the National Association of Realtors (NAR).
Generally, the survey shows that realty firms are equipping themselves with more and expanded computer capability and are placing more emphasis on the role of the local Multiple Listing Service in marketing listed properties.
At the same time, brokers are showing less interest in joining a national franchise organization. The "big name" benefit of becoming affiliated with a franchise seems to be losing its appeal for brokers.
The NAR survey of 6,000 realtor firms throughout the United States showed that almost half of today's firms have some kind of computer capability to help them serve buyer and seller clients. That reflects a sharp increase in the past couple of years.
About one-fifth of real-estate firms have a computer terminal in their office , the survey indicated.
The terminals are used to gather information on multiple- listed properties, produce property-investment analysis reports, and meet an increasing variety of other informational functions.
About 80 percent of all NAR-affiliated real-estate firms are active members of a local listing service, according to survey responses. Most of these firms are members of one such service, while 15 percent are members and participants in more than one.
The "franchise fever" that seemed to sweep over the real- estate brokerage industry during the past decade is leveling off, the survey said.
The proportion of franchise-affiliated firms that expressed satisfaction with their franchise membership decreased substantially last year -- down 13 percent from 1979. During the same 12-month period, the number of firms expressing dissatisfaction with their franchise increased by 11 percent.
Of those firms not affiliated with a franchise organization, only 4.1 percent now say they are considering such an affiliation. Furthermore, 8.1 percent of brokers surveyed indicated they had been members of a franchise group but had canceled their affiliation.
Brokers who canceled their franchise membership did so primarily because:
* It was not beneficial to their operation.
* The cost was too high.
* The referrals were of poor quality.
Most brokers who join a franchise do so because they feel they need the support of a nationally recognized name. But that big name also results in confusion on the part of consumers.
Many consumers who view the franchise commercials on TV and see the ads in magazines believe that all the affiliated brokers are somehow branches of one giant firm. The fact is, they are competitors.
"I don't need the crutch of a big name," one broker asserts.
"As long as my firm continues to give buyers and sellers the kind of professional service they want and need, the new business and referrals will keep us busy, even in tight-money times."
Another reason some brokers affiliate with a franchise group is to avail themselves of the educational programs. Most independent brokers, however, say the best educational programs are provided by the Realtors National Marketing Institute and state associations.
"It seems strange," one broker says, "that some franchise-affiliated brokers pay substantial sums of money to participate in educational programs put together by organizations that have no significant experience in real estate."
He was referring to the fact that several of today's largest real-estate franchise or chain organizations are owned primarily by large, nonrelated corporations, such as an airline company, stock-brokerage firm, or magazine publisher.
The survey-indicated trend is good for consumers. In 1981, the emphasis will focus more on production service and professionalism, not names, promotional programs, and advert ising.