In a shifting real estate market, the guidance and expertise that Inman imparts is never more valuable. Whether at our events, or with our daily news coverage and how-to journalism, we’re here to help you build your business, adopt the right tools — and make money. Join us in person in Las Vegas at Connect, and utilize your Select subscription for all the information you need to make the right decisions. When the waters get choppy, trust Inman to help you navigate.
Are you receiving Inman’s Broker Edge? Make sure you’re subscribed here.
This post has been republished with permission from Mike DelPrete.
EXP has an exponentially more efficient cost structure than any of its brokerage peers.
Why it matters: In the highly uncertain market of 2022, with transaction volumes falling and brokerages responding by cutting costs, financial efficiency is more important than ever.
- During my previous research on Compass’ Cash Burn Problem and the Coming Brokerage Slowdown, I stumbled across a fascinating metric: operating expenses per transaction.
- This metric measures the amount of company overhead — support staff, office expense, technology, etc. — per closed transaction.
While its publicly listed peers Are all in the same ballpark, eXp has a remarkable advantage when it comes to operating expenses — 10x more efficient than its peers.
- And with over 110,000 transactions in Q1 2022, eXp is leveraging this advantage at scale.
The bottom line: The real estate industry is entering a period of heightened uncertainty with rising interest rates and falling transaction volumes, leading to a shrinking commission pool.
- With a limited ability to affect revenue, brokerages will be forced to cut costs — and in this environment, brokerages like eXp have a distinct advantage.
Mike DelPrete is a strategic adviser and global expert in real estate tech, including Zavvie, an iBuyer offer aggregator. Connect with him on LinkedIn.