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onsolidation has become a dominant force in residential real estate as MLSs, teams, and brokerage companies seek to gain an edge by leveraging economies of scale. The largest brokerages are claiming an increasingly larger share of the market, reshaping the landscape for both large and small firms.

    The numbers paint a stark picture: in 2022, the top 1,000 U.S. brokerages accounted for 60.5% of total sales volume, leaving just 39.5% for over 100,000 smaller brokerages. Among the top 100 brokerages, the concentration of market share is even more pronounced, with the top 10 generating over 25.7% of industry sales volume.

    Consolidation has created new challenges and opportunities for both large and small firms. For the largest brokerages, it means improved technology infrastructure, greater negotiating power, and economies of scale. For smaller firms, it requires differentiation, innovation, and strong relationships to remain competitive.

    Several fast-growing brokerages have built their success on innovative growth models. Compass has sustained remarkable growth through an aggressive acquisition strategy, while eXp Realty has leveraged a revenue-sharing model and virtual brokerage approach to minimize overhead costs and scale rapidly.

    The competition is tightening, with the number of existing home sales sides per Realtor declining from 8.1 in 2017 to 5.3 in 2023, a drop of 34.6%. Decreasing commission rates have also contributed to the pressure on brokerages, with the average U.S. commission rate falling to 4.87% in 2023, down 19 basis points from its high in 2009.

    Companies like The Real Brokerage, founded in 2014 and now the nation's 10th largest brokerage, have emulated eXp Realty's recruiting model to achieve spectacular growth. As consolidation continues to reshape the market, brokerages must adapt and innovate to remain competitive.