Average real estate company only sells 7 houses?

I heard an advertisement on the radio yesterday.

“Our secret approach to selling houses is why we sold 340 houses last year, and the average real estate group only sells 7!”

That seems incredibly low to me. But is it true?

You can play around with numbers to make it true. I know the average number of real estate transactions (buy or sell) for a single agent per year is somewhere around 7, which is probably the number they’re pulling. This includes part-time agents, agents who are mostly doing non-sales work in their office, and the like. If you start counting single-agent ‘groups’ and groups that aren’t very active, and include groups that both buy and sell houses (so half of their income-producing work wouldn’t count), it would be really easy to come up with an average of 7 that isn’t technically false.

Also remember that “the average number of homes sold by real estate groups” isn’t the same thing as “the number of homes sold by a typical real estate group” - the average will probably include things you wouldn’t really think of when you’re picking a real estate group.

It seems plausible. A huge number of real-estate agencies are basically one or two agents with some office staff. A lot of them are essentially franchises, too. They may have a nationally-recognized brand name but each one is a relatively small business.

So their “secret approach” is probably having lots of agents.

I think I would prefer a group that only sold a few houses per year, as that means they are spending time to get me the best price. But maybe that’s just me.

The few RE “groups” I’ve encountered, it seems like each agent is a “free agent” on their own, and they rent office space in an umbrella group like Century 21 or those balloon people, a sort of cooperative arrangement where they use the name and resources. If you figure they buy as many as they sell, and so get half the commission on 7 sales (1/4 each on 7 buys and 7 sells) then that’s a tidy income for an agent.

The 80/20 or 90/10 rule applies. 90% of sales are made by 10% of agents. The vast majority of agents don’t do much. In any distribution that skew, “the average” is a very uninformative number.

Bottom line: Their claim may well be true. But you’re no more well-informed about anything that matters for having heard it.