To all the agents in the house,
The NBA playoffs start this weekend after a strange, COVID-shortend regular season. With that sporting spirit in mind, let's toss out some numbers and declare winners and losers among residential brokerages.
In the past couple of weeks, brokerages that are publicly traded companies reported their financials from the first three months of 2021.
The "winners," companies that posted a positive net income, included Zillow, Realogy, RE/MAX and eXp. Realogy had the biggest turnaround, going from negative $462 million in the first three quarters of 2020 to positive $34 million.
The "losers," companies that lost money in the first three months of 2021, include Opendoor, Compass and Redfin. Compass and Redfin each increased revenue, but Opendoor saw a revenue drop.
Where the basketball analogy is arguably helpful (if extremely annoying to non-sports fans), is that companies, like NBA general managers, throw out measurements that I'm not sure how much credence to give to.
Like a losing team telling fans that they have a lot of draft picks and money under the salary cap, money-losing brokerages on earnings calls say that they are well-capitalized and ready to expand into new areas. Like a losing team that beats the betting line, brokerages that lose money can sometimes say they outperformed Wall Street's expectations.
Also, financial measurements are perhaps more open-ended in brokerage compared to other industries, because all the publicly-traded companies except RE/MAX and, effectively, Realogy, started within the last 20 years. (HomeServices is part of publicly traded Berkshire Hathaway, but does not consistently make its financials public.)
Like a young sports team, or teenager, brokerages can often reply, "Hey, we're still growing."
That's where I'm asking OpenHouse readers for some guidance. When your affiliate brokerage fires off a press release on its Q1 earnings, does it mean anything to you?
If no, why not?
If yes, what are you checking for? What numbers might affect your confidence in your brokerage? What numbers are just noise?
Please email me anonymously at mblake@housingwire.com.
Sincerely,
Matthew Blake
Senior Real Estate Reporter
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