Some Interesting Numbers from Swanepoel’s Mega 1000

Earlier today, T360 released the Swanepoel Mega 1000 report, ranking the top 1,000 brokerages by volume and transaction sides. Obviously, this report is competing with the current industry standard, the Real Trends 500 report. T360 sent me the data they used to compile the list, and told me to write what I found interesting about it.

Your wish is my command, Stefan. 🙂

First, you can find the Mega 1000 on the T360 website. By all means, go check it out.

Normally, I have very little to say about a raw list of brokerages by self-reported numbers. But playing around with the data, I actually found some interesting things. I thought I’d share them with you, because… edutainment: fun and educational!

What made this list more fun to manipulate is the fact that the data contains agent count for 2018. That lets all of us do all kinds of fun and simple math. So let’s do this.

The Top 20, With More Columns

I took the data, which has Sales Volume, Transactions, and Agent Count and simply calculated the per-agent and estimated the total GCI and Company Dollar. Here it is:

The NRT and Redfin are highlighted in blue as I have their numbers from public filings so I used those instead of assuming 2.5% ABCR and 15% Company Dollar margin (average for brokerages in North America, according to my research and confirmed by Steve Murray at Real Trends).

The interesting stuff that pops out at you is the low transactions per agent at companies like Compass and Douglas Elliman. Granted, those companies are heavily concentrated in high-priced core urban metro markets (NYC, San Francisco, etc.) but it’s one of those “Huh!” things.

What About Ordering by Per Agent Productivity?

So I thought, what if we re-sorted the list by transaction sides per agent? Here’s that spreadsheet for the Top 20:

To be fair, I left out two companies whose data just didn’t make much sense. And they’re sort of specialty companies: Homes USA is Ben Caballero’s brokerage, which claims 5,790 transaction sides in 2018 with two (2) agents. Right. USRealty is a NY-based brokerage that appears to be a “list-in-the-MLS” type of a deal, with 4 agents claiming 2,270 transaction sides. I didn’t think those really counted, but you can make up your own mind when you run your own numbers.

The two interesting things here are:

  1. Redfin is the only brokerage to make both Top 20 lists. Most of these brokerages are in the bottom half of the Mega 1000. Other than Redfin at #5 on the main list, we have Intero SoCal at #277, John L. Scott Medford at #367, Kelly Right Real Estate at #423, and RE/Max Peak To Peak at #461. Everyone else is in the bottom half, and quite a few of these brokerages with the highest per-agent productivity are in the 900s, or the bottom 10%.
  2. Boy, there are a lot of RE/MAX brokerages on this per-agent list. They’re backing up their assertions about the best agents in the industry in some ways.

I sure would like to know what the secret is at Intero and Berkshire Hathaway HS Executive Realty, though. 74 and 67 transaction sides per agent respectively are kind of mind-blowing. Is it new construction? Property management feeding the brokerage? Huge teams that throw off the average number? Just unbelievable leadership and unbelievable agents?

Whatever it is, inquiring minds want to know.

Finally, Profitability Per Agent

The last metric I was curious about was computed/assumed Company Dollar per Agent. Let me repeat my assumptions here: 2.5% ABCR (Average Broker Commission Rate) and 15% Company Dollar margin. Obviously, these are private companies for the most part, so we have to just make assumptions. Redfin’s numbers are actually using their Gross Profit figures, which they reported in their financials.

Company Dollar is a rough stand-in for profitability, since that’s the amount of money left in the brokerage’s pocket after the agent split is paid. The brokerage then has to pay for all of its overhead, salaries, etc. from that. The final profitability number is a “who the hell knows” deal, but those expenses are far more controllable by the broker. The split number is far, far harder to control. So I often use the Company Dollar number as a measure of profitability.

First of all, on profitability, there are a lot more brokerages in the top half of the main Mega 1000. That implies many of these brokerages are in the high end luxury markets, like Hilton & Hylands and The Agency and various other Sotheby’s brokerages showing up.

Now, the bad assumption here may be that those luxury brokerages may be on higher splits with their agents than 85/15, since some of those agents are superstars who might demand and get more. But who knows?

Once again… note Redfin…. There’s a reason why I’ve been saying for years that Redfin is the most important brokerage in real estate today. Not the largest, not the flashiest, but the most important.

What I’d Love to See

It’d be great if brokerages would start sharing some other numbers as well, such as # of offices, ABCR, and Transactions/Volume by quartiles (that is, top 25% did X, next 25% did Y, etc.) so we can see just how concentrated the action is. But I realize nobody is sharing that information without an NDA in place, or with their accountants.

Maybe when more brokerages go public, we’ll get more for compare & contrast purposes. Here’s to hoping!

-rsh

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9 Comments

Join the discussion and state your opinion. Some comments may be held in moderation. I try to get to them as soon as possible, but may be traveling or unable to approve comments immediately. I do not censor comments, but reserve the right to remove anything that looks like spam, trolling, or just outright inappropriate.

  1. Hi Rob,

    I agree that productivity per agent is super important these days. Keep in mind one thing in terms of your re-sort. It appears you divided total number of transactions by the total number of agents. It appears (although I don’t know this for sure) that the total number of agents is measured as of year end. Since transactions were accumulated over the entire year, an agent who joined a company on December 31 would be counted in the total agent count but have no impact on transaction count. For any company that grew rapidly over the year (e.g. Compass), this will cause their trans/agent to be understated relative to a company who maintained more static agent count during the year.

    Keep up the good work!

    1. That’s an excellent point! Of course, I can only play around with numbers I have at my disposal. 🙂 But if any company wants to share their detailed production numbers, I’d be happy to run some analyses on them. 🙂

  2. Redfin showed up a few years ago as a major player in our MLS (Most of MA). Thank you Rob for doing all this work. The numbers you put together have to be time intensive. The data is both amazing and fascinating. No one else is doing this type of work. Thank you!!

    1. Well, the real credit goes to Stefan Swanepoel and the T360 organization for gathering the data. I just did some spreadsheet manipulation 🙂 But thank you!

  3. Hi Rob,

    Greetings from Greenville SC. I just recently came across your blog and truly enjoy your perspective!

    Redfin’s numbers may also a little skewed as they refer out lower priced properties to their referral partner agents from other companies

    1. Thank you Gene!

      On Redfin’s numbers, those are just their brokerage numbers; that doesn’t include the partner referrals. 🙂

  4. Nice work Rob! I am sure we will debate the methodologies you used next time we get together as this is a fun space for us to ‘play’! It is great to see what comes out of this primary research and how we can learn more about our dynamic industry!

    Jack

  5. Another interesting and insightful post Rob. I find the luxury market data starts to skew as your average commissions and average company dollar change, but with that said in the high end as the former drops the latter tends to raise. I have also found after digging around in a good sampling of company financials personally from various brands, while the older 100% (RE/MAX, Realty Execs, Etc.) still run around 15% average on Company $ when you add all the fees, the newer breed are pushing that number lower and lower and running on much smaller margins.

    I was also fascinated by the Per Person Productivity numbers when you take out search driven companies like Redfin (which I agree is an important company to watch) and also looked at productivity by office (you can get office counts for companies out of the Real Trends reports) which was also interesting from a “Who’s really doing the best training and coaching” perspective.

    After watching these lists for the last 20 years, it is fascinating to see what stays more or less the same and where the trends are. But when you really geek out and channel your inner nerd, you can find the emerging trends buried deep in the data. Thank you again Rob for the perspective and insight.

  6. RE/MAX franchisees are keeping nowhere near 15%. In their 95/5 model, 1% goes to corporate. Franchisee keeps 4%. Granted, some offices offer splits to agents but high quality, productive agents don’t do that. They take the 95/5 model.

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