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This article was reprinted with the permission of Mike DelPrete.
The market crunch is on, with 1,096,000, or 18 percent, fewer residential real estate transactions in 2022 compared to 2021.
Why it matters: It’s said that a rising tide lifts all boats — but a receding tide affects boats differently, once again highlighting important differences across the brokerage landscape.
Context: According to the latest data from RealTrends, the top 20 brokerages by transaction count in 2022 (and the sample set for this analysis) were led by eXp Realty, Anywhere, HomeServices of America, Compass, and Howard Hanna.
To maintain an apples-to-apples comparison, I typically exclude franchise operations like Keller Williams, RE/MAX, and Anywhere’s franchise group because the business model is substantially different.
- But last time I got a lot of questions about Keller Williams, so for comparison here is where KW — and its hundreds of U.S. franchisees combined — ranks (No. 1).
As the tide recedes, it reveals a collection of winners and losers in terms of transaction growth and decline.
- The big winners are eXp Realty and Real Brokerage, which added 65,000 transactions, while industry incumbents Anywhere and HomeServices of America lost a combined 150,000 transactions.
When Keller Williams is added to the list, we see that it lost 190,000 transactions in 2022 compared to 2021 — more than Anywhere, HomeServices of America and Compass combined.
- As a percentage, KW’s 15 percent decline outperformed an overall market decline of 18 percent, but on a unit basis (revenue comes from units, not percentages) the 190,000 decline is substantial.
What to watch: It’s tempting — and imperative — to draw conclusions about brokerage models from the data.
- The winners — eXp, Real, Fathom, Realty ONE, and United Real Estate — have one thing in common: They all offer high agent splits, per-transaction fees or 100 percent commission models.
- Meanwhile, the biggest losers are typically seen as traditional industry incumbents (but somehow also include Compass and Redfin).
The bottom line: A rising tide may lift all boats, but a receding tide slams some boats against the shore.
- In a year of belt-tightening and fewer transactions, agents — and their transactions — appear to be flocking to relatively newer models where they keep more of their commission.
Mike DelPrete is a strategic adviser and global expert in real estate tech, including Zavvie, an iBuyer offer aggregator. Connect with him on LinkedIn.
