As the 1990s opened, experts predicted that the decade would see the end of the mom and pop real estate office. Large, multi-office players would rule the roost, and the rolls of the National Association of Realtors would be pared from nearly one million to a couple of hundred thousand agents and brokers. However, the way it has turned out is that after 11 years of acquisitions and mergers, small, independently owned residential real estate firms continue to dominate the industry.

That was the conclusion of a study of real estate brokerages published late last year by the NAR. The survey was sent to 9,321 licensed Realtors; 2,792 responded.

About 77 percent of the companies are single-office operations. Only 4 percent have four or more offices. Seventy-five percent of smaller firms are not affiliated with a franchise, the survey shows. It also says the same percentage of firms indicate that they are not considering such affiliation.

In fact, the survey shows that franchise affiliation has stabilized following a spike of growth in the early 1990s.

Agents, often known as sales associates, are independent contractors. As such, they do not receive health and financial benefits available in other industries.

Such benefits as health insurance, disability insurance, life insurance, long-term care, and pension or 401(k) plans are offered to few.

For example, just 3 percent of real estate brokerages pay health-insurance premiums for their agents -- mostly the single-office firms with fewer than 20 employees.

Administrative staffs of larger firms fare better, but among those big firms, less than 1 percent pay health-care premiums. A few do split the costs, the NAR study showed.

A full 94 percent of all firms do not participate in 401(k) or pension programs for agents, according to the survey.

Affiliation with franchises and acquisition of smaller firms by larger independent brokerages have leveled off considerably over the last two years, the survey shows.

Six percent of firms affiliated with franchises such as Century 21 and Re/Max have ended such arrangements since 1999, while 3 percent of the firms surveyed were considering affiliation.

Does affiliation or association with a "brand" such as Re/Max or Century 21 make a difference in a firm's bottom line?

The survey says about two-thirds of the franchised companies responded that their profits had risen at least slightly because of the affiliation. About the same number attributed higher sales to such an affiliation.

Still, 19 percent reported that profits had actually declined because of the association, while 22 percent said sales had dropped because of the affiliation.

Real estate experts had long ago promised that technological advances would help reduce the red tape involved in a transaction and cut costs.

But how adept are the rank and file in the use of technology?

Although 15 percent of all companies responding to the survey said they had closed some part of their transactions on line, 88 percent of all agents and brokers were using the Internet and e-mail for less than 25 percent of their business.

Even fewer agents were generating leads from the Internet.

That is certainly much less use than was anticipated five years ago, and is surprising considering the emphasis that the industry had been placing on technology during that time.

The reason might be the case of going too fast too soon. For example, the National Association of Realtors' annual conventions between 1997 and 2000 saw the introduction of software programs that would practically sell houses by themselves; virtual tours; and Palm Pilots, laptops and digital cameras.

The 2001 convention in Chicago, on the other hand, saw less innovation. Instead, programs offered the basics of computer use, including sending an e-mail and using a Palm Pilot.

That’s not to say that the public isn’t embracing technology being employed by real estate firms. Many prospective buyers use national Web sites such as Realtor.com or those sites maintained by local and regional firms to look at houses in particular locations and in certain price ranges so they can narrow their searches and save time.

Consumers also are using the Internet for first contact with real estate agents and to save time.

But few consumers are buying houses on the Internet without seeing them first. Real estate, therefore, remains a personal contact enterprise.

Why has the merger-and-acquisition frenzy cooled, and why have affiliations remained at the same level as in 1999?

No one seems to have a foolproof answer, although many experts suggest that all firms have been so busy selling real estate over the last two years that they haven't had the time.

Published: April 4, 2002

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Al Heavens writes about real estate and home repair and improvement. He is the author of What No One Ever Tells You About Renovating Your Home: Real-Life Advice For Hassle-free, Cost-Effective Remodeling.