The Future of Real Estate Brokerage: Challenges and Opportunities for Realtors presents an overview of business models and strategies—old and new. In-depth data analysis provides perspective on the drivers of change in the real estate business to help broker-owners and firm managers make long-range plans that ultimately will affect the consumer.

Realtor Dale Klippel of Prudential Realty sees a lot of changes taking place within the industry. He isn't so sure anyone can predict with certainty what will happen in three to five years. He also believes the impact is already here.

"If I rendered a guess, I'm reasonably sure that change will have taken place two years prior and would be past history already," Klippel said.

Klippel identifies technology as one of the biggest factors in the changing real estate industry.

"I know the industry is changing rapidly right now, heading deeper into the technology age. I see where a lot of the smaller brokerages are either folding or merging with bigger offices. The same is true of the top 1 percent of agents and teams out there. They are merging with the more technologically savvy offices," Klippel said.

Klippel is now experiencing almost 90 percent client contact and new working relationships via the Internet only. The days of sitting at what Realtors call the "up desk" and waiting for a customer or potential client to call is almost old history. Today there are few buyer and seller calls, since most people are finding everything they need on the Internet.

"It's really a waste of good time to sit at the up desk in today's marketplace. Your time is better spent promoting information via the Internet to your clients during this time. Normally the only calls that come through the up desk are from other real estate agents wanting to know if a certain property is still available or from those clients needing a rental," Klippel said.

The study by the National Association of Realtors also explores how growth opportunities spawned by the Internet and potential changes in regulatory policy have given rise to three emerging business models. They include bundled service providers that present an a la carte menu to consumers; market makers that employ varying electronic platforms that may include auctioning, with the real estate professional adding value through new services during the process; and corporate ownership of residential real estate brokerage firms owned by non-brokerage companies. The last model has the potential to change the competitive landscape of the industry most quickly by acquisition of existing brokerages with great market share.

The study adds data to other established research on firms, members, homebuyers and sellers and creates a picture of past, present and future changes in the real estate industry. The report also looks at how firms adapt to developments in technology and economic and regulatory environments and how those developments have influenced the evolution of business models that may become dominant in the future.

Jim Meader of RE/MAX Today is convinced the biggest changes in the industry will come from legislative changes. Many of these legislative issues could also impact technology since they could govern how the real estate industry uses the Internet. Other issues revolve around whether banks should be allowed to enter the real estate industry, who is allowed to own and operate the Multiple Listing Service system and what kind of services can be combined by law or what business models will be allowed.

"The biggest changes and impact will come from legislative changes. These will become the sources of change in our industry's future," said Meader.

The study is helpful for those in the real estate industry as they begin to examine areas that are forecast for change. For example, in the area of consolidation, the study notes that concentration is low in real estate brokerage but the market share of the top firms is increasing, and by 2001 the top 250 companies represented 24 percent of all agents and one in six home sales.

"This is a think piece with a long shelf life that will serve broker-owners and managers for a long time to come. It examines the deeper issues facing today's real estate brokerages and suggests models based on what business strategies a broker decides to embrace and how to be successful in every business model," said David Lereah, the association's chief economist.

One thing that won't change as the real estate industry evolves is the way Realtors deal with their clients, said Silicon Valley Association of Realtors President Judy Ellis, who is a Realtor with Alain Pinel Realtors in Palo Alto.

"The number-one concern all Realtors share is their commitment to their clients. Even with the advent of the Internet and new technology, Realtors continue to be an important part of the mix when buying and selling a home due to their ability to bring professionalism, knowledge and expertise to the table. As the industry changes, Realtors will adapt to change but will always keep their clients at the center of their focus," Ellis said.