Generalized Brokerages Are Hollowing Out — and Atlanta Consumers Are Absorbing the Cost

Written by:

Alejandra Rodriguez

Date:

25 Aug 2026

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After a 24-month boom in 2020 and 2021 that pushed annual home sales to 6 million units nationally, the real estate industry has settled into a prolonged flat stretch, around 4.1 million units annually for four consecutive years. The brokerages built for the boom never restructured for the plateau. According to Craig McClelland, a partner at McClelland & Hahn Consulting, a firm that advises enterprise-level real estate and prop tech companies on structural business changes, the result is a slow-motion hollowing out of services at generalized real estate firms that tried to be everything to everyone and now lack the margin to deliver quality at anything.

McClelland, who has worked in the real estate industry for 25 years, says the damage was self-inflicted, and that it plays out directly in what buyers and sellers receive when they hire an agent at one of these firms.

How Generalized Firms Lost Their Margin

The problem started when brokerages stopped specializing in specific transaction types, luxury, first-time buyers, commercial, and instead tried to capture every deal by hiring as many agents as possible.

To attract agents, firms gave away nearly all the commission. With nothing left to fund operations, they slashed spending on technology, training, and marketing support. The agent-broker relationship became purely extractive. As McClelland describes it, the dynamic became “I’ll hold my license here, but you’re going to give me all my commissions.”

That tradeoff created a downward spiral. With less revenue per agent, firms needed even more agents to stay afloat. Technology budgets shrank further. McClelland says a firm that once paid $17 per agent for transaction management software now seeks a $7 alternative because it cannot find the margin anywhere else.

“You can’t charge good money for basic services,” McClelland says. When a firm offers nothing distinctive, it has no leverage to charge for anything, not to agents and not to the consumer who ultimately pays.

Why the Flat Market Makes It Worse

During the boom, the model’s weakness was hidden. Homes were appreciating 20 percent year over year, which meant commission checks grew by 20 percent even without more transactions. Brokerages used that cash, along with PPP loans, to add staff, open offices, and build infrastructure sized for 6 million annual transactions.

McClelland says these firms were too quick to build and too slow to cut. When volume dropped, they held onto overhead hoping rates would fall, and volume would return. Four years later, that recovery has not arrived. The Fed may not cut rates at all this year, McClelland notes, and annual volume remains stuck at roughly 4.1 million units.

The firms without a clear specialty and the margins to support it are now under sustained pressure to reduce costs in ways consumers cannot easily detect.

Who Is Pulling Ahead

Specialized firms, those that chose one lane and invested in doing it well, are gaining ground. “Your agents that are more aligned and more focused on what they’re going after are picking up a bigger market share,” McClelland says. These firms retained enough margin to maintain better tools, better training, and better marketing because they never entered the race to the bottom on commission splits.

McClelland also points to AI as a factor that will widen the gap. He argues that most brokerages are engaging AI in a surface-level way that will not produce meaningful results. Firms that integrate AI more deeply into operations will raise both their floor, pushing out unproductive agents, and their ceiling, making strong agents significantly more effective.

Why Unproductive Agents Don’t Leave

One reason generalized brokerages persist despite low productivity is that the cost of maintaining an active license is negligible. In Atlanta, McClelland notes, an agent can stay on the MLS for $20 a month and hold a license at a firm for $149 a year. Total annual cost: roughly $500 to $600.

At that price, an agent who closes one transaction a year, or even just a cousin’s house, can justify staying active. McClelland says the number of agents who will exit the industry due to low productivity is “minuscule.” The first sign of stress shows up in agents dropping NAR membership, not surrendering their license. He notes that while roughly 1.4 million agents are NAR members, approximately 2.3 million hold active licenses nationwide.

This means brokerage headcount figures can be misleading. A firm may report hundreds of agents, but its per-agent productivity and the revenue available to fund the tools those agents use may be far lower than the number suggests.

For buyers and sellers in a market like Atlanta, the brokerage name on an agent’s card tells less than it used to. The margin compression McClelland describes built up over two decades, and four years of flat volume have exposed which firms invested in capability and which invested only in headcount.

About the Expert: Craig McClelland is a partner at McClelland & Hahn Consulting, advising enterprise-scale real estate, proptech, and fintech companies on structural business changes.

This article is intended for informational purposes only and does not constitute legal, financial, or investment advice. The views and opinions expressed herein reflect those of the individuals quoted and do not represent an endorsement of any company, product, or service mentioned. Readers should conduct their own due diligence and consult qualified professionals before making any investment decisions.