In the same week, Real Trends released their Real Trends 500 broker rankings, RIS Media released their Power Broker rankings and T3 Sixty released their Mega 1000 ranking of the largest Brokerages, Franchisors, and Holding companies.
For a large part, these firms use self-reported dollar sales volume and unit sales volume data from brokerages and franchises to construct the rankings. As we noted in our article about the Real Trends list, not all firms report. When you are missing data from companies like Weichert and Redfin, it skews the rankings.
T3 Sixty provided their 2019 rankings to WAV Group and spoke to us about their research. In an interview, Swanepoel indicated that where they were not provided data from a firm, they would use multiple other avenues to research and analyze the sales volume, transactions, and agent count to enable them to then include those companies on the Mega 1000 to make their rankings more comprehensive. He also indicated that although none of these ranking lists are perfect, but they do provide the industry with meaningful quality information that can be very useful in business planning.
We agree with both Real Trends and T3 Sixty that these rankings are enormously valuable to understand what is happening with the brokerage community.
Some of the insights that WAV Group pinpoints in these reports are related to brokerage business models. The real estate industry is rich with variety in the way that firms operate. There are traditional firms that charge full commission, some offer fixed fee transaction prices to consumers, others offer 100% commission to agents. Many firms in America are independent, but there is a strong representation of firms that align with franchise companies.
Overall, WAV Group’s view is that success in real estate brokerage comes down to leadership and execution. We have noticed that there has been a massive amount of consolidation led by purchases by HomeServices of America, a Berkshire Hathaway HomeServices company (BHHS). Not only has BHHS invested heavily in company-owned firms, but they are doing a great job with their franchise division. Compass and Howard Hanna have also been very active in buying large independent firms. It is important to note that the purchases post 12/31/18 are not included in the reports. For example, Howard Hanna’s numbers do not reflect Allen Tate Realtors ($5.7 Billion). Compass data does not reflect the consolidation of Alain Pinel Realtors or Stribling & Associates.
Our view is that brokerages that have been able to develop full-service offerings to consumers are best positioned for long term success. In this regard, HomeServices of America and independent brokerages like Howard Hanna, William Raveis, John L Scott along with many others have developed strong businesses in mortgage, title, insurance, property management, commercial real estate, and relocation. WAV Group believes that this “future proofs” a brokerage firm and makes them immune to the many cyclical peaks and troughs of the real estate industry. This was proven out in the last recession.
If you are a firm on the list – be sure to celebrate it! Do a press release and look for something newsworthy. For example, if you are ranked as the largest brokerage in your area, the largest independent firm in your area, or the fastest growing in your area – put out a press release to the business journals or local news. You can also use this information in your recruiting. Agents love being part of a winning team and your ranking relative to your competitors demonstrates the strength of your business and leadership team.
If you are not happy with your ranking, pull your management team and top agents together to develop a strategic plan on how you can improve. This may sound sophomoric, but simply developing a plan for success and focusing on key areas of improvement is the number one reason why companies achieve better results. Our industry often talks about the lack of business plans by agents. The truth is, very few brokerage companies do market research, internal productivity audits, technology audits, benchmarking analysis, competitive analysis, or strategic planning. This is an enormous shortfall in managing a company.
WAV Group is very excited to see the powerful results that our clients are producing. We help firms develop a path to success because we clearly understand how to identify a company’s weakness and turn it into a strength or center of excellence. Contact us if you need help.
Here is a link to the T3 Sixty research – https://www.t360.com/mega1000