As profits dip, eXp looks to attract higher performing agents

Despite record high revenue in the third quarter, eXP World HoldingsThe parent company of a fast-growing brokerage eXp real estate, is being tested. Executives said Wednesday that agent cuts are on the rise as profits drop and brokerage courts top-producing agents.

Rising mortgage rates and weakening homebuyer demand in the third quarter of 2022; eXp World Holdings It delivered record Q3 revenue of $1.2 billion, a 12% increase compared to the same quarter last year. Brokerage executives said some of the increase was due to a stronger number of closed transactions and transaction volume, which rose 6% and 8% year over year, respectively, to 138,354 and $50.4 billion.

Despite this strong performance, The company’s net income for the quarter fell to $4.4 million, compared to $23.8 million in the third quarter of 2021. Addition of agents is increasing.

“The two primary drivers of lower operating rates based on higher investments were lower tax benefits in Q3 and year-over-year,” said Jeff Whiteside, the company’s CFO and co-chief executive officer. he told investors during eXp’s third-quarter earnings call on Wednesday morning.

Also Read :  Postdoctoral Fellow, Department of Computing and Decision Sciences job with LINGNAN UNIVERSITY

The founder of the company; Glenn Sanford, president and CEO, said, “We’re not immune to what’s happening. High interest rates are a great indicator of affordability at current prices based on the fact that 70% or more of buyers use mortgages to purchase real estate. That’s why the market has slowed down.”

Because of the slow market, Sanford said he’s starting to see what he calls “market churn,” or agents renewing or canceling their licenses.

According to eXp data, brokerage agents who make two or fewer sales per year have a 77.1% sales rate of 3 to 7 sales per year, but that number drops to 13.6% when agents make 3 to 7 sales per year. Sanford expects this trend to continue, but he believes eXp will continue to grow its agent count in 2023.

“Our focus on building the most agent-centric real estate industry in the world is what really — it’s not just a phrase we use for marketing purposes — makes agents want to be with us,” Sanford said. “We’re really starting to see high-producing agents taking eXp seriously. But in terms of agent numbers, our growth is moderate right now, but we’re still gaining market share because we’re attracting high-performing agents.”

Also Read :  Edge Computing Market Size to reach USD 22.2 Billion By 2026 Growing at 16.6% CAGR | GlobalData Plc

As of September 30, eXp had just under 85,000 agents, up 30% year over year. Despite this progress, Sanford acknowledged the company will fall short of its goal it set late last year of 100,000 by the end of 2022.

eXp executives believe the company is in a good place for another year of higher mortgage rates and lower sales margins, but have made some adjustments to ensure the company’s financial stability.

“Knowing earlier this year that interest rates are going up and we’re going to have to stop hiring, we’re potentially changing the way we work with our head count to create more volatile fundamentals,” Sanford said. “One of the things we’re looking at is how do we adjust our costs to match our transaction load, so I think that’s once we hit the bottom of the market. We are a fairly profitable company because we can shift our resources in a way that allows us to be profitable in good markets and bad markets.”

Also Read :  HPE Weather HPC System Stood up at Meteorological Service Singapore - High-Performance Computing News Analysis

The company continues to invest in Success Lending, its mortgage joint venture, executives said. Kind loanIn addition, it increases its affiliate services.

“While almost every founder shrinks their lending platform, we continue to grow Success Lending,” Sanford said. “We’re in a really interesting place to really attract loan officers who benefit from the platform. That’s not to say we haven’t made a profit in that segment; But we’re optimistic because we’ve formed these businesses at the lower end of the market, so we’re actually in a better position to build the infrastructure when the market returns to normal. It can grow at the right time.”


Leave a Reply

Your email address will not be published.

Related Articles

Back to top button