As profits dip, eXp looks to attract higher performing agents

Although revenue reached a record high in the third quarter, eXP World Holdingsthe parent company of a fast-growing brokerage eXp Realty, is tested. Profits slumped and agent attrition rose as agent production rates rose for brokerage courts, executives said Wednesday.

With rising mortgage rates and declining demand for home buyers in the third quarter of 2022, eXp World Holdings It generated record third-quarter revenue of $1.2 billion, an increase of 12% over the same quarter last year. Brokerage executives attributed some of the increase to the strength of the number of closed deals and volume of transactions that rose 6% and 8% year-over-year, respectively, to 138,354 sides and $50.4 billion.

Despite this strong performance, the company’s net income for the quarter declined to $4.4 million, compared to $23.8 million in the third quarter of 2021. Agent attrition is increasing.

“The two main factors for that are lower operating margin based on increased investments and the second being lower tax benefits year-over-year, in the third quarter and year-over-year,” Jeff Whiteside, the company’s chief financial officer and head of collaboration, told investors during an eXp third-quarter earnings call Wednesday morning.

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

Founder, Chairman and CEO Glenn Sanford added: “We weren’t immune to what was happening. High interest rates are a huge indicator of a buyer’s ability to buy at current prices based on the fact that 70% or so of buyers are using a mortgage to purchase a property. So There was a slowdown in the market though.”

Because the market has slowed, Sanford said they’re starting to see what he called a “market drain,” dealerships canceling or not renewing their licenses.

According to eXp data, brokerages making two or fewer sales per year have a decremental rate of 77.1%, but that number drops to 13.6% when agents make three to seven sales per year. While Sanford expects this trend to continue, he is confident that eXp will continue to increase the number of its dealerships in 2023.

“Our focus on building the most agent-centric real estate brokerage firm on the planet, and really doing that — not just a phrase we use for marketing purposes — has resulted in agents wanting to be with us,” Sanford said. “We’re really starting to see higher yielding agents, and we’re taking a serious look at eXp. But our growth rate now in terms of agent counts has moderated, but we’re still gaining market share thanks to attracting higher performing agents.”

Also Read :  How to add bullets in Apple Pages

On September 30, eXp had fewer than 85,000 agents, up 30% year over year. Despite that growth, Sanford acknowledged that the company will fall short of its target, set late last year, of 100,000 by the end of 2022.

Although eXp executives are confident that the company is in good shape with another year of high mortgage rates and lower transaction aspects approaching, they have made some adjustments to ensure the company’s financial stability.

“Earlier this year, we learned that interest rates were going up and that we would need to stop hiring and then change the way we work with our headcount to shape more variables,” Sanford said. “One of the things we’re looking at is how we adjust our expense load to match our transaction load because that way I think about it is that once we get to that next level where there are market bottoms, we’re again a fairly profitable company because we’re able to shift our resources In such a way that we are able to make profits in the good markets and the bad markets.”

Also Read :  Weather, technology, truths and more

The executives also said that the company continues to invest in Success Lending, a mortgage joint venture with Lending typeas well as the development of its affiliated services.

“We continue to grow successful lending, while each founder, scales down their own lending platform,” Sanford said. “We’re in a really interesting place to actually be able to get productive loan officers on the platform. That doesn’t mean we’re profitable in this sector yet, but we’re optimistic that we’re shaping this business in a bear market, so we’re actually in a better position to build the infrastructure so that When the market returns to normal, we are able to grow at just the right time.”

Source

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Articles

Back to top button