We conduct a study that uses executed sales data in order to evaluate metrics of success affecting brokerage firms. The panel data (longitudinal data) set contains observations on multiple brokerage firms where each company is observed at 2 or more points in time. Data on 3 real estate franchising firm, each company is observed in 7 years, for a total of 21 observations.
Observational unit: a year in a firm
- 3 Real Estate Franchises
- 7 Years (2005, 2006, 2007, 2008, 2009, 2010 & 2011)
- Balanced panel (no missing observations), so total # Observations = 7 x 3 = 21
- Number of associates
- Number of offices
- Initial Outlays
- S&P/Case-Shiller Home Price Index
The data is analyzed in two ways. The first involved a descriptive statistics analysis and second approach to analyzing data utilized a correlation matrix of all vectors and regression weights.
Since the data is heavily skewed, a logarithmic transformation is performed (logarithms with base 10). Logarithmically transformed data exhibit log-normality, and thus allow for using the Pearson correlation coefficient.
As an initial step in factor analysis, the vector data is log normalized before using the Pearson correlation. Therefore, the panel data contains normalized variables.
These are the selected independent variables
The number of offices and associates, initial outlays* (weighted), number of executed sales transactions as well as S&P/Case-Shiller Home Price Index alter sales volume that a real estate brokerage firm produces.
Delighted to share a hypothesis with you:
There are indicators that are predictors of later success / profitability in a real estate brokerage company.
Independent variables (regressors) presumed to affect or determine a dependable variable.
One of the selected independent variables is categorized as "initial outlays" which is directly connected to the brokerage firm.
* Initial outlays (Present Value)
Formula: PV = FV ( 1 + r) - n
FV = Franchise fee + Renewal fee
r = Continuing royalty fee based on a
percentage of sales
n = Term
After the panel data of normalized variables is created, the selection of independent variables is generated from a listing and selling brokerage perspective.
Edgard Asensio, MBA
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Torrance, California 90501 USA
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prepared by Edgard Asensio, MBA