Tracey Velt breaks down the latest RealTrends 500 rankings
March 30, 2021
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Today’s HousingWire Daily episode features an interview with Tracey Velt, managing editor at RealTrends, a HousingWire sister company. In this episode, Velt discusses the latest RealTrends 500, which ranks the largest real estate brokerages in the country by transaction sides and sales volume.
During the episode, Velt highlights which brokerages achieved top rankings in both categories for 2020, and shares what stood out to her the most about the rankings.
For some background on the interview, here’s a brief summary of HousingWire’s coverage of the RealTrends 500:
HomeServices of America Inc. reigned supreme as the largest residential brokerage in America by transaction sides last year, according to the latest annual RealTrends 500 ranking. But such activity didn’t result in more sales volume than its chief rivals, publicly traded brokerage colossus Realogy or controversial New York upstart Compass.
HomeServices of America, a subsidiary of Warren Buffett’s Berkshire Hathaway conglomerate, was involved in 343,220 brokerage sides and etched out $150.4 billion in sales volume, according to the RealTrends 500 ranking, which was published this week. Realogy, meanwhile, participated in 333,737 deal sides but won the overall volume game with $184.6 billion in 2020 sales.
There were familiar faces in the next three spots, though the RealTrends 500 analysis took note of some leapfrogging. Publicly traded virtual brokerage eXp Realty, which has grown fantastically, in part due to an unusual revenue-sharing agreement with agents, again placed third by transaction sides, with 238,981 in 2020. Its sales volume in 2020 climbed to $72.2 billion. Compass, which hopes to go public in 2021 at a valuation north of $10 billion, ascended by participating in 144,784. It notched $151.7 billion in sales volume, more than that of HomeServices of America. Top independent brokerage Howard Hanna/Allen Tate was involved in 105,455 transaction sides last year, good for $26.7 billion in sales volume, rounding out the top five.
HousingWire Daily examines the most compelling articles reported from the HousingWire newsroom. Each afternoon, we provide our listeners with a deeper look into the stories coming across our newsroom that are helping Move Markets Forward. Hosted by the HW team and produced by Alcynna Lloyd and Victoria Wickham.
HousingWire articles covered in this episode:
Below is the transcription of the interview. These transcriptions, powered by Speechpad, have been lightly edited and may contain small errors from reproduction:
Victoria Wickham: Hello, HousingWire listeners. Today, I’m joined by Tracey Velt, managing editor of REAL Trends, a HousingWire sister company. Tracey, thanks for joining us today.
Tracey Velt: Yeah, thanks so much for having me. I appreciate it.
Victoria Wickham: Absolutely. Well, I’d like to get started by discussing the RealTrends 500 that was released last week. So, let’s dive right into this because there’s a lot to cover here. But for those who may not know, the REAL Trends brokerage rankings include firms that are ranked nationally by both transaction sides and sales volume. So, as the survey is now in its 34th year, can you talk about the RealTrends 500 itself and what it consists of?
Tracey Velt: Sure. So, the RealTrends 500 is so much more than the top 500 brokerages. We also feature the next level of achievers and our nation’s best rankings. So, overall, we have 1,750 of the most productive real estate firms on the list. We also rank the top movers both year over year and over the last five years among many of our different rankings. And this year, we’ve seen explosive growth due to a couple factors. First of all, the average sales price has skyrocketed. It’s gone from $376,000 to $410,000 spurring massive sales volume gross of 22.7% increase year over year for the RealTrends 500. Second, we’ve seen huge growth from eXp Realty, which has been all organic, and Compass, which is a combination of organic and acquisitions. eXp and Compass alone accounted for 38.6% of the growth in sites and 32.5% of the growth in volume for the RealTrends 500. And we also had firms like United Real Estate, [inaudible 00:01:45] Properties, and Latter & Blum, and they all had key acquisitions that pushed them higher in the rankings this year.
Victoria Wickham: Yeah, I’m excited to jump into this a little deeper with you, but, you know, as the COVID-19 pandemic likely impacted operations for many of these companies that appear in this year’s rankings, you know, what were some of the specific challenges do you think they face when it came to operations?
Tracey Velt: Yeah. It definitely did impact operations, not necessarily sales, but definitely operations. So, when the restrictions were lifted or real estate was deemed essential, sales really came booming back. However, when the pandemic first hit, brokers immediately went tactical. I think every broker I spoke with, they immediately took a paring knife to their budgets. They cut services, mostly services that didn’t impact the real estate agents specifically. And with their offices closed, they had to furlough some workers as well. But the main thing they really did was reach out to their agents. Real estate is all about relationships and brokers know the value of communication with their agents. It’s the key to retention. So, they immediately employed Zoom and virtual meetings to guide their agents so that they could sell safely because agents needed information on how to do that. They wanted to stay connected with them, and they also wanted to develop some new tools so that the agents could effectively market and sell the properties. So, it was a huge undertaking for brokers, but it paid huge dividends and it will continue to pay huge dividends because I think a lot of the things that they implemented are going to be time tested. They’ll continue to do them as we move forward.
Victoria Wickham: Right. Yeah. That’s interesting. Well, you know, looking at the top of the RealTrends 500 rankings, the largest residential brokerages in the country, HomeServices of America ranks first by transaction size last year. According to the RealTrends 500 ranking, HomeServices of America had 343,220 transaction sides and $150.4 billion in sales volume. And taking a look at the top of the volume list, Realogy Brokerage Group came in at number one, Realogy followed close behind HomeServices in transaction sides, but ultimately took first in sales volume at $184.6 billion for 2020. So, what stood out to you the most about these rankings? And do you believe there is a potential for a brokerage to rank first in both transaction sides and sales volume in the future?
Tracey Velt: Yeah. Really as for the Latter, Realogy Brokerage Group, which was formerly NRT, was on the top by both sides and volume as recently as 2017, so there’s no reason it can’t happen again. As for what stood out the most, kind of not to repeat myself, but the staggering growth of both Compass and eXp. In particular, Compass is overtaking HomeServices at number two in sales volume. I can’t remember the last time Realogy Brokerage Group and HomeServices weren’t number one and two in both sides and volume. And given the higher-end markets Compass focuses on, Realogy Brokerage Group better not get too comfortable in the number one spot by volume because Compass is definitely hungry.
Victoria Wickham: Yeah. We’re definitely going to keep an eye on that. But rounding out the top five brokerages firms in sales volume, following behind Realogy, you know, Compass ranked second at $151.7 billion, HomeServices of America ranked third at $150.4 billion, eXp ranked fourth at $72 billion, and Redfin ranked fifth at $37 billion. So, these companies all have to share a piece of the pie, but do you anticipate the pie will be getting smaller in 2021? And do you expect that market share will remain the same for these companies going forward?
Tracey Velt: You know, it’s funny to predict that. You know, there will always be opportunities for brokerages to increase their market share and there will always be newcomers to the real estate market. I mean, if you think about it, 10 years ago, Compass wasn’t even in existence. eXp was founded in 2009, compare that with RE/MAX, which was founded in 1973, and Keller Williams, which was 10 years later in 1983, and you can see how quickly new real estate companies can move up into the rankings and increase their market share. But we’re also seeing the low-cost, fee-based, and flat-fee model firms roar up the leaderboard. Firms like JP & Associates, Fathom Realty, My Home Group, Silver Creek, Equity Real Estate, and Samson Properties all had big years and they’ll continue to chip away at the incumbents’ market share for sure.
Victoria Wickham: Interesting. Well, you touched on this a little earlier, but outside of the transaction size and volume rankings, the RealTrends 500 also highlights the nation’s best, which are the unranked top-performing brokerages in the country, a billionaire’s club, which consists of the top brokerage firms in the country that close at at least $1 billion worth of real estate in 2020 average sales price, as well as top movers, which consists of top independent firms that had the largest increase in close sides from 2019 to 2020. So, could you discuss a little bit more about these category rankings for our listeners and anything in these rankings specifically that surprised you or stood out to you or something that our listeners should know about them?
Tracey Velt: Sure. Yeah. And for the billionaire’s club, we saw a huge increase in new membership. We had 46 new firms this year. And as always, the average home price leaders are concentrated in resort markets, Colorado, California, Hawaii, and then also in higher price metros like LA, San Francisco, D.C., and New York City. As for the top movers, the five-year lists are once again, dominated by Keller Williams. And while we don’t publish per agent productivity because we can’t verify agent numbers, we do have insight that we’ll be sharing on this topic.
I thought it was really interesting that 8 of the top 25 brokerage firms in the country are low-cost or flat-fee model firms. That’s more than ever before in the rankings and double the number from three years ago. In addition to the best of our knowledge, I think eXp is the fastest, organically growing brokerage in the history of our ranking. So, a lot of really new, exciting things. I mean, we’ve never seen a firm grow so quickly in such a short period of time. And I’m hoping to interview eXp CEO, Glenn Sanford, on this in an upcoming podcast.
Victoria Wickham: Definitely looking forward to that. And that’s the “REAL Trending” podcast, correct?
Tracey Velt: Correct. The “REAL Trending” podcast.
Victoria Wickham: You know, before we go, is there anything else that you’d like to add today or anything else our listeners should know about RealTrends 500?
Tracey Velt: Yeah. I mean, just watch for more insights to come. This is just a little tease of what we’re working on. Our team is analyzing the report. We’re using our historical data to uncover some very interesting trends that can help brokerages going forward. So, stay tuned and check the realtrends.com website and our “REAL Trending” podcast for more.
Victoria Wickham: All right, Tracey. Well, we appreciate your time today. Thank you for joining us on “HousingWire Daily.”
Tracey Velt: Thanks so much.
