Darlene,
I think there are a couple of issues here that may be causing confusion. First and foremost, are the sites "microsites?" It does not sound like they are in the most exact sense. Because you are not giving an example, it is more problematic. Secondarily, it is easy in SEO to get caught up in should you or should you not do a specific thing and what are the effects of that, as if all is in a vacuum. Obviously, it is not and there is more at play than just the variables you describe.
Otherwise, if it were simple the question would be: We can build an RE Site with listings, title tags, etc. based on location such that BigCity/neighborhood/address (All - I am being simplistic for brevity only). Or we can build big city with listings in that city then build micro sites based on the neighborhoods.
If that were the case, I am going with big city and sub directories as opposed to multiple sites due to competing against myself. Also, if you are really the same company, and you are using the sites to appear as 5 different companies and be in the rankings 5 or 6 times (to "lock" others out) that would be against Google guidelines.
From what you have, I would say you have this:
MainTownRESiteExample.com (This site receives all MLS listings)- I am assuming using IDX or RETS feeds for the MLS to sites. You covered your duplicate content bases for the listings by using a canonical tag for each back to the main site (and this was likely not necessary IMO if using IDX or RETS feeds)
AreaofGeoSiteA - you said each covers a niche which to me means say TownHome sales or Leasing, etc. Do you mean niche to mean geographic niche?
AreaofGeoSiteB
AreaofGeoSiteC, etc. (I am assuming there is over lap of each of the 50mile radius points. If not, and main site is city center, you are in a city larger than Houston in area.
You state: "We then created a microsite for each branch..." I am assuming therefore, that each of the "microsites" has its own physical location with its own NAP.
Most importantly, you state
The reason we created a microsite for each branch is that the searches for each branch are very specific to their location and we felt that having only a subfolder would take away from the relevancy of the site and it's location.
To this, I would say, uhhh, nope, it does not decrease the relevance of the main site in the least. Nor, would a search on neighborhood X be more or less relevant due to the whole site being neighborhood X versus being MainSite.com/neighborhood-X. Either way, what ranks in the serps is a page, not a site and that is relevant to what you say about the site. If main site has a ton of DA, and small site has OK DA, where does the page better reside?
You also state:
**I understood that if the main site could support the separation of a section into a microsite, this would help local search. **From where did you understand that? I have not heard of separating sites into locations to support local. I am not saying you are wrong, just had not heard of it.
So the big questions are: will your arrangement hurt your client and if so, how? It can end up just competing with the main site and even if it wins, why do you have the data in two places to start with? But, if you are seeing no harm and the client is ranked well for a given area, you have to walk them through how a change would take place and what might happen, etc. Then, they get to make the decision, not you. (At least in my shop that's how we do it).
For me, for real estate, I would rather use small sites for an individual listing and the big site for the mls feeds. So, while I would not do it the way you have done it, it does not mean you are not getting a result you want. I personally believe you could have done it with sub directories, but you are where you are. Again, personal preference for me is in RE to have a site for Townhomes, Single family, Condos, etc., but again, the SEO in me says you can accomplish the same with other means.
Yes, if you change back to main site, you will lose your rankings when you remove your pages but you can 301 to capture some of that juice, etc. It won't guarantee that ranking though.
When people say you are taking "power" away, I believe they mean you are competing with yourself and your efforts on one site would be better served. Not that the micro site in some way leeches from the main.
Dave is on the right track from a business perspective and I would caution rushing out and taking the sites down. But, again, having done a LOT in dating starting back in the late 90's, I can tell you the microsite in its original iteration was meant to look like a different business and be able to rank organically and in PPC five different ways. That is against the rules and will get you penalized no matter how unique the content might be.
So, I hope I helped you out a bit and let us know what you did. If the decision is to take them down, get the clients to agree to start with one and track what happens, etc. Then learn and go to number two.
Best to you and to Dave,
Robert
PS - I am a vegetarian really.