eXp Realty focuses on the real estate agent value proposition as it looks to grow

With company executives predicting that things will get messy in the US real estate landscape in the coming months due to the changes in business practices outlined in the National Association of Real Estate Agents (NAR) commission settlement agreement, eXp World Holdings — the parent company of eXp Real Estate – is aimed at improving the company’s value proposition for agents.

In the second quarter of 2024eXp’s global Net Promoter Score (aNPS), a measure of agent satisfaction, was 76, up from 72 a year ago.

“NPS is a leading indicator of both our future growth and retention, which ultimately translates into the company’s long-term financial viability,” eXp World Holdings CEO Glenn Sanford said on Wednesday’s Q2 2024 earnings call of the company with investors. evening.

Sanford stepped down as CEO of eXp Realty a few months ago. He now focuses primarily on the international markets in which the company operates and on evaluating how the company’s value proposition works in each market.

“What we’re doing is actually going back to the agent value proposition question, and going back to each country and reevaluating whether we have the right value prop mix for that country,” Sanford said, “because every country is different, and some of the tools and technologies we initially rolled out – while good for the brokerage because it helped us streamline – were not as agent-friendly as we needed and that has created a challenge for growth in some countries.”

Back in the US, eXp executives are confident that their understanding of the business practice changes outlined in the NAR settlement – ​​and their initiative to prepare for them – will help the brokerage continue to grow.

“I fully expect this messy middle to emerge over the next six to 12 months, where people will likely become fatigued by the breakup and the headaches that come with it,” said Leo Pareja, the CEO of eXp Realty. “And they’re going to want to work with a team that understands these things, because it’s probably going to be more meaningful than people are dealing with it now.”

Ahead of the August 17 deadline for implementing the NAR settlement-related changes to business practices, Pareja told investors and analysts on the earnings call that the company has focused heavily on providing as much education as possible to its agents and partners.

“Our Buyer Representation Toolkit, which includes the Buyer Broker Representation Agreement that the CFA (Consumer Federation of America) which was recently recognized as being much simpler, clearer and more consumer friendly than any other agreement, is something we have made open source so that all agents in the industry have access to what is considered the best in class document to help make this transition as smoothly as possible,” says Pareja.

“After August 17, we will likely go through an adjustment period, which I have dubbed the ‘messy middle’, as both agents and consumers adjust to the new rules of engagement.”

Pareja believes it will be important for agents to be with a brokerage firm that will support them in navigating the terms of NAR’s settlement, as the penalties for failure to comply can be severe.

“It all comes down to enforceability. And the MLSs are the ones being targeted to enforce this and the early signs are that they are going to do this through penalties,” Pareja said. “So officers could be subject to fines of $2,500 or $5,000 fines with immediate removal of their listings, and some have already suggested they may even suspend officers.”

While Pareja noted that some buyers may choose not to be represented, as some do occasionally these days, he believes many “will still choose representation and continue to need expert guidance throughout their process.”

eXp certainly hopes that these efforts, both in the US and abroad, will help increase its agent count, which fell 1% year over year globally to 87,111 agents. But the company noted that 75% of agents who left had closed between zero and two transaction sides.

When it comes to the number of agents, Sanford made it clear that he has big expectations for his company.

“If we look at the fact that there are probably somewhere around 20 million real estate professionals in the markets that we want to compete in over time, those are our target markets where we can reach a similar size to the US. , that would be nearly a million agents worldwide that could ultimately be on the eXp platform,” Sanford said. “We are very excited about that long term.”

Despite the slight decline in the number of agents, eXp Realty reported a 1% increase in the number of US transactions in the second quarter of 2024 to 120,613, with a total value of $51.9 billion, good for an annual increase of 7% .

These increases helped eXp World Holdings report a 5% annual increase in second quarter revenue to $1.295 billion, along with net income of $11.8 million, up slightly from earnings of 11. $4 million reported in Q2 2023.

“We delivered a solid second quarter,” said Kent Cheng, Chief Accounting Officer of eXp. “We continue to improve business efficiencies and reduce costs even as we aggressively invest in our agents. We believe this winning formula will deliver superior growth and greater value for our shareholders over the long term.”