Does the Size of a Brokerage Firm Matter?


Written by Attorney-Broker Michael T. Chulak

The size of a real estate brokerage firm does not matter because the overwhelming majority of real estate sales are the result of agents using the Multiple Listing Service.

A Multiple Listing Service, or MLS, is a marketing database established by its member real estate brokers who cooperate with each other by providing accurate data about properties each broker has for sale. It is a mechanism for listing brokers to offer compensation to brokers representing buyers.

Nearly all real estate brokers are members of an MLS. This includes the large franchise brokers as well as small independent brokers.

An MLS has the effect of making every brokerage firm equal in that every property listed for sale can be sold by any real estate agent employed by any member broker. Given that most MLS services have hundreds of broker members with thousands of real estate agents, it is most common for a property listing to be sold by a firm other than the listing firm.

The concept of the MLS is that each broker firm working through its real estate agents will attempt to sell any of the properties listed because commissions are split between the listing firm and the selling firm with each firm compensating its own agents.

An MLS, with its large inventory of listed properties, is designed to provide every real estate agent access to the total inventory of available properties. Most importantly, the shared system of property listings gives every property equal exposure to the market. This arrangement is in the best interest of sellers, buyers, brokers, and real estate agents.

When it comes to selling or buying real estate, the size of the firm is of little importance. It is the performance of the individual agent that matters. His or her dedication, knowledge, and experience is what really matters.