Do real estate brokerage firms have any intrinsic value?

David Goldsmith

All Powerful Moderator
Staff member

Elliman sells most in Chelsea, but Compass leads in resales​

Sponsor sales tip balance in overall neighborhood ranking

Chelsea is one of those neighborhoods where a brokerage’s place in the home-sales hierarchy depends on how much business it does in new developments.
Just 20 percent of Chelsea sales last year were by sponsors, but those shiny new units accounted for nearly 40 percent of the $2 billion in sales volume — and two firms scooped up 64 percent of that business.

Douglas Elliman sold more than $253 million worth of new developments in Chelsea last year, followed closely by the Corcoran Group’s nearly $245 million in sponsor sales. That helped put those two firms at the top of the ranking for overall volume with $510 million and $444 million in sales, respectively.
But looking only at resales — which accounted for 62 percent of 2022 dollars spent — Compass is the clear leader in Chelsea with more than $326 million, besting Elliman’s $257 million in resales and Corcoran’s nearly $200 million.

To measure brokerages’ share of the Chelsea market, TRD tapped into the dataset of 58,000 deals from 2022 in our citywide brokerage ranking, and created separate rankings for resales and new development. On a percentage basis, resale commissions are typically larger.
Behind Compass, Elliman and Corcoran in the resale ranking was Brown Harris Stevens, No. 4 with $94 million in volume, and Sotheby’s International Realty, with over $60 million.

Of the 206 new development deals in Chelsea last year, only 63 were closed by a firm other than Elliman and Corcoran. CORE sold nearly half of that remainder — good for a volume of nearly $152 million and the No. 3 spot. Resale leader Compass placed fourth in new dev with nearly $53 million in volume, and Serhant rounded out the top five with $15 million.

Only seven firms sold new developments in Chelsea last year.


David Goldsmith

All Powerful Moderator
Staff member
I've been saying for a while that the large firms will need to lower commission splits. According to Mike DelPrete Compass is bragging that they have.

Mike DelPrete
to me
16 hours ago

Agent Compensation at the Top U.S. Brokerages​


Agent compensation structures at U.S. real estate brokerages vary, with some firms paying out a significantly higher percentage of their revenue to agents than others.

Why it matters: Commission and fee structure is foundational when it comes to agent loyalty and recruitment; as agents seek to maximize their earnings, they're naturally drawn to brokerages offering higher splits and lower fees.

Dig deeper: Brokerages generate revenue from the commission on the sale of a house.
  • The brokerage and agent then effectively split the commission, through a varied combination of commission splits, fees, and revenue sharing.
  • Once added up, the result is a percentage of total brokerage revenue that is paid out to agents – ranging from 77 to 96 percent in this analysis.

The low-fee / high-split brokerageslike eXp Realty, Real, RealtyONE, Fathom, and United end up paying significantly more of the commission out to agents.
  • Compass, which famously offered agents high commission splits as a recruitment incentive, is, on aggregate, closer to traditional industry stalwart Anywhere (home of Coldwell Banker and Sotheby's) than the others.
Compass is paying its agents lessover time, through a combination of reducing existing agent splits, recruiting new agents with lower splits, and higher fees.
  • The one percent reduction in revenue paid out to agents over the last two years represents about $9.5 million retained by Compass and not paid out to agents in Q1 2023.

Compass highlights this achievement, which it is clearly proud of, in its quarterly earnings, declaring that its “commissions expense as a percentage of revenue” is “improving.”
  • In fact, Compass is so pleased with this achievement that it is the first data point in its earnings press release and the second financial highlight, behind total revenue, in its investor presentation.
  • Enjoy it while you can; after this article, I doubt Compass will be highlighting these numbers so strongly in the future – and it certainly won’t kick off its agent gatherings with the same metrics.

Agents like to make money, so it’s unsurprising that as natural entrepreneurs they flock to brokerages where they can maximize their earning potential.
  • It’s no coincidence that the top 5 brokerages that grew agent count over the past quarter are the exact same brokerages that paid the most out to agents: eXp, Real, Fathom, RealtyONE, and United.

The bottom line: It’s a simple equation: More money attracts more agents, and more agents sell more houses.
  • Brokerages paying a smaller proportion of revenue to agents is an effective strategy to improve short-term financials, but the long-term implications around agent recruitment and retention are significant.
  • In a period of fewer transactions and overall belt-tightening, it's more important than ever for agents to carefully consider commission splits when deciding where to work.

David Goldsmith

All Powerful Moderator
Staff member
I have been saying for over a year that commission split cuts are coming at the big legacy firms.

Mike DelPrete
to me
7 hours ago

Brokerage Profitability​


A common response to my previous analysis, Agent Compensation at the Top U.S. Brokerages, is that the brokerages paying the most out to agents couldn’t be profitable or sustainable – but, perhaps counterintuitively, the evidence suggests otherwise.

Why it matters: In a shifting market, the low-fee brokerage models are structurally designed to thrive, and are operating much more profitably than legacy brokerages.
  • To recap, the low-fee models are paying out a significantly higher percentage of their revenue to agents than legacy brokerages.

Those same low-fee brokeragesare also profitable or closest to profitability: eXp Realty, United, Real, and Fathom (RealtyONE declined to share this information with me).
  • The only companies that were profitable in Q1 2023 were eXp Realty and United Real Estate, and the largest legacy brokerages were really unprofitable.
  • Note: This analysis uses Adjusted EBITDA (think of it as Adjusted Earnings) as the metric of profitability – it allows a company to portray its earnings in the best possible light by backing out expenses like stock-based compensation, one-off legal or restructuring charges, and other non-cash expenses.

To account for variationsin brokerage scale, we can look at Adjusted EBITDA per transaction, which yields similarly revealing results.
  • It’s worth directly comparing the two fastest-growing models of the past five years, Compass and eXp: in Q1 2023, Compass lost $1,900 per transaction, while eXp generated a profit of $130 per transaction – quite the difference.
  • The outlier is Douglas Elliman, which has a much smaller transaction volume (4,600 in Q1 '23, compared to 36,000 at Compass), so its loss per transaction is much higher than its peers.

The next most commonresponse to this analysis asserts that the low-fee models don't provide as much support to their agents.
  • Therefore, while agents are able to “make more money,” they’re on their own and, without brokerage support, are less productive.
  • Once again, the evidence suggests otherwise.
Across the nine brokeragesin this analysis, the average production was one transaction per agent in Q1 2023.
  • The average for the legacy brokerages (Compass, Anywhere, Keller Williams, and Douglas Elliman) was 1.03 transactions per agent, while the average for the low-fee brokerages (eXp, Real, RealtyONE, United, and Fathom) was 0.98 transactions per agent – effectively the same.
  • In aggregate, agents at low-fee brokerages, with “less support,” were just as productive as agents at the legacy brokerages with “lots of support.”

Variability in the number of transactionsper agent over time provides further evidence: between Q4 2022 and Q1 2023, the average number of transactions per agent dropped 10 percent across the same nine brokerages.
  • Four low-fee brokerages (eXp, Real, Fathom, and RealtyONE) were at or below that average – meaning that their agents saw less of a decline in transaction volume than agents at legacy brokerages.
  • Support or not, agents at low-fee brokerages were more resilient and saw less variability in production during a changing market.

Yes, but: These are averages, and as with all averages, there will be overs, unders, and outliers.
  • Not all low-fee brokerages and legacy brokerages perform similarly.
  • Furthermore, inside of each organization, there is significant variability in individual agent performance and compensation.
The bottom line: The dual hypotheses that low-fee brokerages aren’t sustainable, and that their agents are less productive due to less support, are false.
  • Low-fee brokerages are in fact more profitable than the legacy brokerages, even after paying out a significantly higher proportion of their revenue out to agents.
  • This is classic Innovator’s Dilemma: while the legacy brokerages are racing to cut costs, the low-fee models – built from the ground up with a lower cost operating model – are taking market share and competing where they can win.

David Goldsmith

All Powerful Moderator
Staff member
Serhant moves into second NYC office
Brokerage takes 10K sf to host education production, 70 employees

After moving into six new markets this spring, Serhant is expanding again — but much closer to home.
The firm will later this summer be opening a 10,000-square-foot office at 205 Hudson Street for roughly 70 executives and staffers. The new location — within walking distance from the brokerage’s inaugural Soho office — will also host production space for founder Ryan Serhant’s education business, “Sell It Like Serhant.”

Brokers, the firm’s main in-house production studio and Serhant himself will stay at its inaugural office location on West Broadway in Soho.
Serhant’s eponymous firm has expanded aggressively this year, just shy of the third anniversary of its launch. After debuting in the throes of the pandemic with a social media-centric pitch, the company now employs more than 150 people and has roughly twice as many agents.

Serhant finished sixth in The Real Deal’s 2022 ranking of New York City brokerages, nearly doubling its on-market, sell-side revenue to $542 million from 2021, when it finished 11th with $235 million in volume.
About 50 agents joined this year as part of a six-state expansion into Florida, South Carolina, North Carolina, Pennsylvania, New Jersey and Connecticut, aimed at targeting New York City feeder markets and markets with strong referral ties to the city. Serhant has since teased an expansion to Chicago on his Instagram account and last year hinted at a Texas branch.
The expansion hasn’t been entirely smooth: Serhant and his brokerage have been sued in Pennsylvania and Florida by brokerages from which he recruited agents. The firms allege the on-boarded agents in both markets stole proprietary information.
Serhant isn’t the only brokerage making moves: Douglas Elliman has plans to enter four new markets this year, Compass acquired its first upstate New York team and its first Arizona team, and Corcoran has been expanding its reach in the tri-state area.


David Goldsmith

All Powerful Moderator
Staff member

JLL Earnings Drop As Sales, Leasing and Financing Decline​

Executives at World’s Second-Largest Brokerage Point to Signs of Recovery in Results​

JLL, the world's second biggest commercial real estate brokerge, said its earnings dropped 99% as sales, leasing and financing declined because of higher interest costs hitting the industry.
The Chicago-based firm said there are signs of a recovery emerging in the lower results. Its own research shows that the decline in industrywide global commercial real estate investment has been smaller in each of the past three quarters.
Office leasing also improved in the second quarter from the first three months of the year, though it remains slower than normal as tenants keep taking more time to make decisions on what to do in terms of real estate after a year of interest rate increases, CEO Christian Ulbrich told investors in an earnings call.
“While investment sales and leasing volumes remained muted across the industry this quarter, we are beginning to see recovery signs as credit spreads narrow and asset prices adjust to the current rate environment,” Ulbrich said.
JLL follows CBRE, Newmark, Cushman & Wakefield and Colliers in reporting financial results for the quarter disrupted by lower property transaction volumes as the commercial real estate industry reels from rate hikes that drove up borrowing costs, slowed capital markets activity and kept buyers on the sidelines concerned about a possible recession.
Marcus & Millichap, the last publicly traded real estate brokerage to report financial results, is scheduled to release earnings Friday.

Lower Revenue​

For JLL, profit for the second quarter fell 99% to $2.5 million from $194 million the same time a year earlier, while total revenue slid 4% to just under $5.1 billion.
Fee revenue from capital markets, leasing and other services fell 14% in the second quarter, overshadowing revenue growth in investment, property and project management.
“The second-quarter decline in investment dollars was in line with the deceleration seen over the last two quarters, which would support the view that the market has found its bottom with regards to transaction volumes,” Ulbrich told investors during the company’s earnings presentation today.
Also contributing to the profit decline was lower revenue from sales, financing, leasing and other services, paired with investments in the company’s JLL Technologies division that is rolling out what the company calls the first service model for commercial real estate based on generative artificial intelligence.
“We grew our resilient business lines while also effectively managing through the industrywide slowdown in investment sales and leasing activity,” Ulbrich said.
In its industrywide research, JLL found that global commercial real estate investment fell 53% to $139 billion in the second quarter, a slightly lower rate of decline than the 54% drop in the first three months of the year and the 56% decrease at the end of last year.

David Goldsmith

All Powerful Moderator
Staff member

RE/MAX Holdings cuts 7% of staff​

Second wave of cuts in 14 months aimed at “streamline” of operations

The parent company of RE/MAX announced the brokerage is making another cut to its staff.
RE/MAX Holdings plans on laying off 7 percent of staff, according to a Securities and Exchange Commission filing reported by Inman. Based on the 594 employees reported in its most recent recent annual filing, the outlet estimated that more than 40 jobs will be eliminated.

The layoffs are expected to be completed by the end of next month, according to the SEC documents. It will result in between $2.75 million and $3.25 million for one-time termination benefits pre-tax.
One already departed worker is the brokerage’s principal accounting officer, Adam Grosshans. Leah Jenkins, executive director of financial reporting and technical accounting with the parent company, was named his successor.
In addressing the layoffs, a spokesperson for the company cited “current economic headwinds in the real estate and mortgage sectors.” In addition to the brokerage, other subsidiaries include Motto Mortgage and wemlo, a mortgage loan processing company.

The cuts come slightly more than a year after a previous round of layoffs at RE/MAX, which resulted in the termination of 17 percent of the staff, or roughly 120 people. Those cuts accompanied the end of RE/MAX’s booj platform, a suite of digital products to help agents and brokers.
RE/MAX’s revenue fell 10.6 percent year-over-year in the second quarter, totaling $82.4 million. Net income, which was slightly on the negative side in the first quarter, jumped into the positive column by $2 million.
As the housing market has turned upside down in the past 18 months, many residential brokerages resorted to layoffs to keep themselves afloat. The wave of layoffs has largely trickled down to the occasional splash, however, as brokerages have hunkered down into a new normal.

David Goldsmith

All Powerful Moderator
Staff member

Here’s where Compass, Anywhere stand after year of cost-cutting​

Mike DelPrete pens post-mortem on brokerage giants’ austerity
A year after a “bloodbath” of layoffs began in residential real estate, brokerages are adapting to the realities of tighter bottom lines.
Two of the country’s largest brokerages, Compass and Anywhere Real Estate, moved to trim expenses as interest rates rose and sales fell. Compass slashed its expenses by almost a quarter last year and Anywhere cut them by 22 percent.

An analysis one year later shows the two have had mixed success compared with rivals in keeping revenues up through a period of austerity.
Transactions have declined for both brokerages, according to research from analyst Mike DelPrete. Anywhere’s transactions plummeted more than any firm’s except HomeServices of America’s, and while Compass was cash-flow positive last quarter, it still isn’t profitable.

Low-fee brokerages such as eXp and Real have added agents at a much faster rate and eXp has closed the revenue gap between itself and the larger firms.
But Anywhere and Compass are growing their headcount despite trimming expenses, a critical metric for each company as they cut fat from their budgets. Fewer employees can mean less support for agents, who may leave as a result. So far, there’s been no sustained outflow from either, DelPrete found.
Compass had perhaps the most at stake over the past year. The brokerage giant announced a $320 million cost reduction program near the end of last summer. Critics questioned whether the firm would be able to make money and retain agents in a down market. A year later, it posted its first cash-flow positive quarter and has managed to add agents, albeit at a lower rate than in the past.
Compass laid off about 40 percent of its staff, or 1,700 employees, by February, DelPrete estimated, to get to a point where he forecast it can break even this year if market trends hold and the year ends with 4.15 million transactions. The precise scope of the reductions likely won’t be known until Compass, which is offshoring many jobs, releases its annual report early next year.

In the worst-case scenario DelPrete projected, in which annual transactions tumble to 4 million, Compass would need to trim its operating expenses to $850 million to break even. Compass CEO Robert Reffkin said during the company’s second quarter earnings call he expects the number to be $900 million this year and through 2025.

“The broader lesson is around adaptability,” DelPrete wrote. “It matters less how you got to where you are, and more how quickly you can adapt to a rapidly changing environment.”
But cutting expenses is moot if a brokerage can’t retain agents.
Compass’ agent count grew in the second quarter after falling in the first and likely grew last quarter as a result of the acquisition of a 630-agent Texas brokerage. Compass bought a 300-agent Arizona brokerage in the second quarter.
Anywhere’s results also show the importance of agent recruitment and retention. The brokerage’s transactions decreased more than 50,000 year-over-year. Only HomeServices of America had a larger drop. A key difference between the two is that Anywhere’s agent count grew by roughly 10,000 while HomeServices’ stayed flat.
“Brokerage growth (and revenue) is still very much tied to agent count — agents sell houses,” DelPrete concluded.


David Goldsmith

All Powerful Moderator
Staff member

Christie’s makes new dev bid with Reuveni partnership​

Agreement adds to brokerage’s renewed New York City footprint

Christie’s International Real Estate Group is adding to its New York City push with a foray into new development.
The residential brokerage has partnered with Reuveni Development Marketing in what the firms said is a bid to pair Shlomi Reuveni’s connections with developers and Christie’s global brand recognition for an enticing pitch as competition heats up for dwindling supply.

Reuveni is also joining Christie’s as chief strategy officer, where he’ll advise on business development, brand growth, expansion and agent recruitment.
Christie’s re-entered the Manhattan market in January, two years after Chicago-based brokerage @properties bought Christie’s New York City real estate operation. The tri-state affiliate acquired Manhattan operations in the deal before opening a flagship office.

Christie’s lists more than 30 agents as part of its New York City office. Reuveni has a team of 14, including corporate employees.
“We’re talking today about expanding with some new offices,” said Christie’s president and CEO Ilija Pavlovic. “Shlomi will be a very important part of that growth.”
Reuveni last year partnered with Coldwell Banker Warburg, a venture which was “terminated amicably and mutually” in September, he said, adding the partnership ending was not related to his new partnership with Christie’s. A spokesperson for Coldwell Banker Warburg said the company “extends our best wishes” to Reuveni’s firm and is continuing its new development work.

The United States could be the center of refreshed demand and a target for capital amid political tensions elsewhere in the world, according to Reuveni. New development in particular is ripe for attention from buyers around the globe, including India and the Middle East, who could set their sights on New York.

“Anywhere you look, South America, Middle East, Europe, Asia, people are concerned about the social and political [situation],” Reuveni said. “I think in the next 12 to 24 months we’re going to see a huge migration of capital from all these different areas into New York.”
But the Big Apple might have trouble capitalizing on a swell in demand from investors.
It’s a difficult time for new development in the city after the June 2022 expiration of the 421a tax incentive. Only 13 multifamily building permits were filed in Manhattan in the first six months of the year, according to REBNY, the lowest number since 2010.
Quarterly filings fell citywide by 30 percent year-over-year. In all, the projects are slated to produce about 3,100 apartments, a 60 percent drop from 2022.

David Goldsmith

All Powerful Moderator
Staff member

Ranking NYC’s biggest brokerages by headcount​

How the biggest names in residential stack up in Manhattan, Brooklyn and Queens

As the city’s luxury market perks up with the promise of lower interest rates this year, brokerages are preparing to do battle to capture the most of the gains.
To get a handle on how many agents brokerages have in the most populous boroughs of New York City, The Real Deal analyzed data from the New York State Secretary of State’s office on current real estate broker licenses as of Dec. 15, 2023. Only those licensed as an “Associate Broker” or “Real Estate Salesperson” associated with a brokerage office in New York, Kings and Queens counties, resulting in a list of all the 39,126 licensed agents working in those boroughs.

The vast majority of those agents are based in Manhattan brokerages — nearly 58 percent. Of those 22,529 brokers, nearly 10 percent of them work for one firm.
That firm, Compass, remains Manhattan’s heavyweight champion by agent headcount, though its 2023 total of 2,104 brokers is down a bit from over 2,400 in 2022.

Its two closest rivals also shed agents in recent years. The Corcoran Group took second place with 1,599 brokers and Douglas Elliman fielding 1,506 at the end of 2023.
Brown Harris Stevens came in at No. 4 with 947 brokers, and R New York rounded out the top five with 654 agents.
Altogether, the borough’s top 10 brokerages have 9,133 agents competing to sell slices of the Big Apple — over 40 percent of the borough’s total.

In Brooklyn, Corcoran took the top spot with 533 agents and Compass came in second with 335 active salespeople.

Third place was eXp Realty with 271 agents, followed by RE/MAX with 253 and Douglas Elliman rounded out the top five with 212.
Most of the agents selling Kings County don’t work for the big players, however. Just 32 percent of the borough’s 7,002 active salespeople work for one of the top 10 brokerages there.

Queens topped Brooklyn in terms of number of brokers, with 9,595 agents, and the top five firms fielding nearly twice as many agents as the top five in the borough to the south.

E Realty International maintained its top spot in Queens with 866 agents in the field, followed by Keller Williams’ subsidiaries combining for 707 brokers. Homegrown brokerage Winzone Realty placed third with 660 agents.
Exit Realty came in a distant fourth with 284 brokers and eXp Realty rounded out the top five with 275 active salespeople.