As brokerage giants merge, Real Estate One bets on the power of local platforms

Elsea believes independent brokerages with strong local platforms may have an unexpected advantage.

Consolidation has been building for decades

The real estate brokerage industry has seen its share of consolidation, but the pace of that consolidation appears to be accelerating, according to Elsea. The forces driving that trend are straightforward: shrinking margins and the rise of new brokerage models.

“Consolidation is inevitable,” he said. “Margins on a brokerage business can’t go from an average of about 22% to 13% and not have something happen.”

Companies such as eXp Realty, The Real Brokerage and other virtual brokerages are part of that shift, he said. But they are still early in their development and are likely to evolve over time.

“Everything moves to the middle,” Elsea said. “The virtual will become less virtual, and the non-virtual will become more virtual.”

In the long run, he believes most brokerage models will converge somewhere between the two extremes.

The power of a local platform

While many large brokerage companies focus on national scale, Elsea’s strategy centers on local dominance.

The Real Estate One platform operates under multiple brands across several markets. The company’s goal is to maintain a market share of roughly 20% in the areas where it operates. That approach, he argues, allows independent firms to compete effectively with national platforms.

“Our view is that a strong local platform will be stronger and more competitive than a national platform,” Elsea said.

National brokerage platforms, he added, ultimately try to replicate what strong local firms already offer: a network rooted in a specific market with deep relationships and services tailored to local agents.

By building a multibrand structure, Real Estate One has created a brokerage ecosystem where each brand serves a different niche. Some brands target high-service agents willing to pay for support and resources. Others offer low-cost models with fewer services.

“If we have to do that with one brand or 10 brands, it’s the platform that’s the important piece,” Elsea said.

Portfolio approach to brokerage

Real Estate One’s multibrand structure now includes a mix of company-owned brokerages, franchise brands and licensing agreements. The strategy allows the firm to acquire companies without forcing immediate changes.

When Real Estate One acquires an independent brokerage, the brand often remains intact — at least initially. “Usually we can go in and say ‘nothing changes,’” Elsea said.

In many cases, agents eventually decide for themselves whether to remain with their existing brand or transition into another brand within the company’s ecosystem. The approach has helped maintain agent retention rates following acquisitions while preserving local identity. It also creates operational complexity.

According to Elsea, the company’s accounting team jokes that the brokerage operates thousands of commission plans across roughly 2,500 agents. But that complexity also creates a barrier for competitors. “Anything that’s hard to do becomes a competitive advantage,” he said.

Testing new brokerage models

Even as Real Estate One expands, the company is experimenting with emerging brokerage models.

One recent acquisition involved a 40-agent team that previously operated with eXp Realty and completed roughly 700 transactions annually, according to Elsea. The move allowed the company to enter a new adjacent market while instantly achieving a leadership position there.

Another acquisition brought in a brokerage with a low-cost, largely virtual structure. That model offers limited services at a significantly lower price point — something Elsea said the company wants to test as part of its broader platform.

“It’s our first foray into that world to see if that’s a product or service we want to offer,” he said.

By operating multiple brokerage models simultaneously, the company hopes to accommodate agents with varying business strategies.

The most challenging market yet

Elsea describes the current housing market as the most challenging environment he has seen. Unlike the 2008 financial crisis, today’s industry is dealing simultaneously with two powerful forces: economic uncertainty and rapid structural change.

“There’s always two things happening at once in our industry,” he said. “There’s the general economic activity and then the industry changes.”

Today, both forces are moving quickly.

Home sales remain subdued despite expectations for improvement, while new technologies, particularly artificial intelligence, are reshaping how brokerages operate.

Elsea compares the current moment to earlier turning points in the industry, including the creation of computerized MLS systems in the late 1960s and the emergence of smartphones. Now, AI represents the next major shift. “This is the next evolution,” he said.

Opportunity for independents

Despite the uncertainty, Elsea believes independent brokerages are well positioned for the next phase of industry change. He points to potential fallout from large mergers and acquisitions among major brokerage firms as an opportunity.

“When those things [mergers and acquisitions] happen, there will be brokers and agents who don’t want to be part of that network,” he said. Independent companies with strong local platforms can offer these agents an alternative — one that combines scale with community, Elsea said.

At the same time, Elsea said brokerages must invest aggressively in technology, particularly AI. “There’s a moment in time right now where we can dive in and figure out where technology is going,” he said.

Real Estate One’s strategy may not have started with a grand plan, but its willingness to evolve — from acquisitions to new brokerage models to AI — is exactly what Elsea believes the next era of real estate will demand.