In the constantly evolving real estate landscape, Multiple Listing Services (MLSs) today face a significant challenge: agent attrition. As interest rates have remained comparatively high and property prices have soared, the for-sale market has stalled, resulting in many agents now selling only a few properties a year. Nearly half (approximately 49 percent) of about 2,000 real estate agents surveyed by the Consumer Federation of America sold fewer than two homes last year. Plus, as a result of the current lawsuits, starting in August, real estate databases won’t be including offers of compensation for agents representing the buyer in a transaction. That means, these agents aren’t guaranteed a percentage of the seller’s proceeds. By some estimates, this could result in a loss of as much as 30 percent of commissions revenue in the U.S.
The challenge of agent attrition
All these developments have had a significant effect on the stability and growth of the real estate industry. While during the pandemic the number of real estate agents in the U.S. increased notably, it has dropped significantly since then. The National Association of Realtors (NAR) currently has about 1.5 million agents registered, down more than 100,000 from 2022, according to industry research.
For MLSs, the repercussions of agent attrition can be quite profound. A shrinking member base impacts revenue from membership fees, reduces the pool of listings, and diminishes the collaborative network that is crucial for a thriving MLS. Therefore, finding ways to retain agents and provide them with sustainable income opportunities is paramount.
The rental market is rife with opportunity
Amidst all of this uncertainty, the rental market can present a significant opportunity for MLSs to address agent attrition. Traditionally, many real estate agents have focused on sales, often overlooking rentals. However, the rental market is robust and growing, offering a steady demand for rental space, especially in urban areas and among younger demographics who are delaying homeownership. While the rental market has softened year over year due to an increasing supply of new apartments, the segment is still highly competitive and active. In 2024, on average seven renters are competing for one apartment (in some high-demand markets such as Miami that doubles to 14), as opposed to eight last year, according to research by RentCafe. The average monthly rent in the U.S. currently stands at $1,517, a 0.6 percent increase over last year.
By integrating rentals into their offerings, MLSs can help agents diversify their income streams. Rentals provide a quicker turnaround compared to sales, enabling agents to generate consistent revenue. This can be particularly beneficial during slow sales periods, helping agents maintain financial stability while also serving as a lead generation tool for when the for-sale market turns more favorable again.
Enhancing MLSs with rental support
To effectively support rentals, MLSs can implement several strategies:
- Expand Listing Databases: Incorporating rental listings into the MLS database can attract a broader audience and provide agents with more opportunities. Ensuring these listings are comprehensive and up-to-date will enhance the value of the MLS to its members.
- Offer Specialized Training: Providing training programs focused on rental transactions can equip agents with the necessary skills and knowledge. This includes understanding rental market trends, legal requirements, and best practices for property management.
- Provide Rental-Specific Tools: MLSs can invest in tools and technologies that streamline rental processes. Features such as online rental applications, credit screening services, and digital lease signing can make it easier for agents to manage rental transactions efficiently.
Benefits for agents and MLSs
Supporting rentals offers a dual benefit: it provides agents with a stable income source as well as a lead generation tool, and it strengthens the MLS. Agents who can rely on rental commissions are more likely to stay in the industry, reducing attrition rates.
Furthermore, embracing rentals aligns MLSs with current market trends. As remote work becomes ever more prevalent and lifestyles change, the demand for flexible living arrangements is expected to grow. By positioning themselves as leaders in the rental market, MLSs can stay relevant and meet the evolving needs of both agents and clients.
Agent attrition is a significant challenge for MLSs, but by embracing the rental market, they can turn this challenge into an opportunity. Supporting rentals provides a valuable income stream for agents, enhances job stability, and strengthens the overall MLS network. In a dynamic real estate environment, diversifying services and adapting to market trends are crucial for long-term success. By integrating rentals into their core offerings, MLSs can ultimately help secure a more resilient and thriving real estate community.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the editor responsible for this piece: zeb@hwmedia.com