On REAL Trending episode 82, Steve Murray discusses second quarter results for the large national companies, findings from our recent agent and team rankings, and a comment about, now more than ever, focus is the key.
From REAL Trends, the trusted source for real estate industry trends and news, this is REAL Trending episode 82. We're analyzing the most important trends affecting brokerage companies and their agents. I'm Steve Murray, president of REAL Trends.
Today we're discussing second quarter results for the large national companies, findings from our recent agent and team rankings, and a comment about, now more than ever, focus is the key. What do these trends mean and how can brokerage firms best deal with them?
So, the second quarter results are out for eXp, Keller Williams, Redfin, Realogy, RE/MAX, and Zillow. What can we take from all of these reports? We expected all to have a rough second quarter and, as a result, a rough first six months of the year.
And indeed, for many, that's what happened. Realogy, RE/MAX, and Zillow all saw their earnings results deteriorate in the first six months of 2020 versus the first six months of 2019. Keller Williams saw a decline in agents, but also saw a fairly significant increase in the interaction with agents and housing consumers with their new command platforms and apps.
Probably the brightest star among all six of these companies was eXp. They reported an over 50% growth in agents as of June 30, 2020, compared to the prior year. And their revenues were up. And, in fact, for the first time in some time, they had a significant earnings in the second quarter and in the first half of 2020. So, kudos to eXp. Their model seems to be working. Their agent counts are growing.
At Realogy and RE/MAX, agent counts are flat to slightly off. And, while both are still cashflow positive, and I emphasize cashflow positive, their earnings were severely impacted in the second quarter. They're still in very healthy shape. Redfin, in their core business of brokerage, had a rather flat 2.3 to 2.4% increase in their transactions and volume in the first six months of '20 versus 2019.
They, like Zillow, have most their growth in the revenues from home-buying and home-selling activities. As we've said before, however, we wonder about a business that they're growing in this kind of environment with a scarcity of inventory, and we do note that neither company appears to be making any money yet in their home-buying and home-selling activities.
All in all, it was a mixed quarter for these six large companies. Realogy, RE/MAX, and Keller Williams, being more incumbent, saw declines in their agent counts, modest, but declines, nonetheless.
Zillow saw a great growth in their home-buying revenues, but a widening operating loss while their core business, or their original business, what they refer to as IMT, online marketing and digital advertising, was rather flat year over year. Nothing we didn't expect from any of these companies except for eXp's continued rapid growth.
What does this mean for brokerage companies? Not one heck of a lot. For traditional firms, brokerage companies, whether they be flat fee, graduated commission, cap company dollar, whatever kind they are, the focus should be on your business. And how these companies perform doesn't really yet impact their competitors.
Second, some findings from agent rankings that we wanted to share, looking at the 2020 REAL Trends Wall Street Journal The Thousand and REAL Trends, Tom Ferry, America's best real estate professionals, here's some interesting findings.
For the first time, we segregated teams into four categories, small, medium, large, and team owned brokerage. Small teams where you have two to five licensed realtors, medium teams from six to ten, and large teams with 11 or more. Here's what we found interesting.
Small teams, average 3.5 licensed realtors per team. They average 31.3 transactions and over nine million in volume per team member in 2019. For medium teams, the average transactions per team member fell to 18, little over 18, and about 6.1 million in closed volume. And the large teams, transaction counts fell to 12.8. They averaged 4.8 million in closed volume.
We would expect that these numbers, when you compare overall... by the way, of all the teams over 7,200 teams that we ranked this year, the team's average 17.1 transactions per team member, and just shy of 7 million in volume for all teams of all sizes. We would expect that the smaller teams would have higher productivity. But the decline was from when you look small teams average 31.3 transactions per team member and large teams, 12.8, without looking at actual financial results, we would expect that clearly profit margins are going to be higher also among small teams, while the aggregate profit will be larger among large teams.
But it is interesting to see the difference, significant differences in productivity between small, medium, and large teams. The overall productivity is, again, 17.1 per team member comparing that to the national average, which is somewhere between seven and seven and a half transactions per realtor, tells a very interesting story about why teams are multiplying, both in number and their average size.
Lastly, just a comment. Now more than ever, focus is the answer. We have dozens of conversations a week with brokers of all shapes, and sizes, and brands, and models, and regions of the country. Some, obviously, have done quite well the last 60 days. June and July were, for many brokers, phenomenal months. And August is shaping up to be another good one.
We expect that the fall will probably be decent to reasonable results, although inventory shortages, which are more than low now, they're acute low inventory circumstances, may slow the market down further. But, with all of the news about COVID, with all of the news about unemployment, and the economy, and all of the news about the elections coming up this fall, the one thing we find ourselves talking to our friends in the brokerage community about more than ever is kind of all the distractions that COVID, and the economy, and the elections are causing.
All we can suggest, and we have, to our friends in the brokerage community is very few of those things are actually things that any one broker can effect. And so, we have strongly urged them, and we urge you, if you're listening, you stay focused on staying and getting close to your agents, your staff, but primarily also to your family and your friends. You stay in close contact with people because, if you're feeling a bit anxious, you can trust that many of them are as well.
And secondly, keep a tight lid on those costs because we don't know what the fall will show. We don't know what post election economic conditions will be like. And, as we said earlier in this podcast, there's not a heck of a lot you can do about the elections, or COVID, or the economy in general. So, now more than ever, stay focused on the fundamentals of your relationships and running your business very carefully, financially.
Learn more about industry trends and successful tactics for brokerage firms, agents, and teams, as well as listen to past REAL Trending on Apple Podcasts, Spotify, Google Play, and others. Visit www.realtrends.com/channels/. This has been Steve Murray speaking for all of us at our company to all of you out there. Stay safe. Stay healthy. Stay well.
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