We're actually looking at the same thing as well, except with a travel company in the US. I'll be honest and say that most of our research is showing that it will be difficult to do, especially without a physical location in those cities. Typically, you'll have a local page for every physical location with unique local content.
1. Aggregation and duplicate content will hurt, especially on pages that you are trying to funnel traffic to. Try to offset that with a lot of unique content on the page.
2. Depending on how the agency structured and the actual business relationship, there is a bit of grey area here. Meaning that often smaller companies will act as business partners for local companies. Typically, they will be subsidiaries. Now, I'm not up on the technicality with Google about it, but if they are legally tied together then it may be possible to use their physical location. But I'm willing to bet there will be big issues with business names and listings this way. Someone with more experience may be able to better answer this one, but this is bordering on a spammy tactic. It can be a hard balance at times, especially with service based companies in surrounding small cities.
I would probably recommend that this real estate firm get a physical location in the area in which they want to rank, even a small closet of a location. Here's where internet marketing and business development meet and I love it. If the potential revenue earned from selling those listings in those cities is worth it, then they should be able to find a physical location at a great price (they are real estate pros afterall). That will give you the tools you need to get them ranked in that city. Simple math will tell them if investment, overhead, revenue, and potential profit are worth it. For me, I use this and even sit down with my clients to crunch numbers. If they have their eyes set on "anything and everything" without thinking about it fully, this little tip can help manage the client expectations (I hate saying "lowering their expectations").
3. The address could help build out local content, but if you're aggregating the properties it wouldn't necessarily matter anyways. *I assume the aggregation is coming from some kind of MLS database or regional resource. If not, and again, there is a bit of legal and ethical issues, if you can manually enter all of those properties with unique content that would be best, but typically that is not the case with most real estate solutions.
Other than that I think you're best bet is to rank for the "domain.com/area-you-want" and try to outrank the competition organically. I'm interested if anyone has found a viable strategy to a problem like this. Latest search updates have given a lot of priority to localized results. My research has not shown much is overcoming it and that is primarily due to anti-spam measures and trying to better understand user intent. Hope this points both you and I in the right direction!