What’ s happening to RE Business Owner Profitability

In 2023 analysis, every RE business owner and broker I’ve interviewed has shared that while 2023 had high productivity, between Q2 and Q4, fast decreases in profitability occurred. Key contributors in order of financial change include:

  1. A need to heavily invest in marketing again.
    We haven’t had to do this in a while and those that entered the market in 2019-2020 may be surprised that not only is this a requirement to build business, but that marketing made GREAT STRIDES since 2018. It’s now a bigger segment of our required daily activity and a more costly endeavor. Essentially, we’re creating “commercials” every day in the form of video and print. FAST, high-quality, brand-consistent promotion with relevant content in an industry that changes week-to week is a tall order. It’s also pulling listing agents and top salespeople away from being in front of customers which is reducing income.
  2. SWFL increases in cost of living.
    Insurance, taxes and hurricane repairs/business recovery spills over into business. As entrepreneurs, our home life and budgets are tied directly to our business. Expense increases of more than 100% are being reported in car insurance premiums, alone. Our affiliates/contractors and other workers that support the industry are raising fees to compensate. Increased expenses means decreased profitability.

  3. Division & Change.
    The ability to push a button and have anything we want delivered to our doors is changing our brains to expect very similar results in business and even relationships. A significant reduction in leadership/management tolerance for learning curves from team members is prevalent. Conversely, team members have ridiculously high expectations of marketing and lead provision by team leaders & brokers. Although this has always been the case, the decision to “uncouple” is happening much faster – changing the opportunity for correction and improvement. When results aren’t optimal and immediate, instead of course-correcting and working through problems, teams and brokerages are dividing rapidly. The greatest sag on resources in any small business is turnover.

  4. Too many agents, not enough professional vetting.
    Every time we experience rapid market price increases, we also let too many novice agents into the industry. Even though they don’t know what they’re doing, they pull leads away from competent agents through sphere of influence. Therefore, expert agents have to fight harder to protect their niche, keep in contact with their database and may resort to having to buy leads, which is the lowest profit prospecting format.

Stay tuned for upcoming posts on how we combat these issues. Every problem has a solution.