In July, the United States housing market saw a year-over-year decrease in existing-home sales for the first time since November 2015, according to the National Association of Realtors (“NAR”) (http://nnw.fm/BZU8n). The reason for this drop-off wasn’t slumping demand. On the contrary, a lack of inventory in many parts of the country is “stifling the efforts of many prospective buyers attempting to purchase while mortgage rates hover at historic lows,” according to Lawrence Yun, chief economist of the NAR. Even with this inventory dearth, home sales are expected to finish 2016 at their strongest pace since the start of the recession, and this is big news for leaders in the rapidly evolving real estate industry.
The impact of technology on the real estate industry over the past decade has been undeniable. While first-time homebuyers may have been fully reliant on the services of a traditional real estate agent a decade ago, today’s homebuyers have more tools at their disposal than ever before. In a 2012 report (http://nnw.fm/b83cJ), the NAR estimated that nine in 10 homebuyers relied on the internet as one of their primary research sources, while an impressive 52 percent turned to the web to begin their search. Still, demand for the services of real estate agents and brokers remains high. A 2015 report by the NAR (http://nnw.fm/9opWP) found that 87 percent of buyers enlisted an agent or broker when purchasing a home. Conversely, only eight percent of home sales studied in the report were FSBO (For Sale by Owner) sales, the lowest percentage since 1981.
“Clients today are much more knowledgeable,” Tamir Poleg, founder of the Real app, stated in an interview with CNBC (http://nnw.fm/tjy5G). “They do online research, know what they’re looking for, and know the neighborhood… The key is for agents to be more responsive, understand better what the client wants, and justify the money that they’re getting.”
Seattle-based Zillow Group, Inc. (NASDAQ: Z; ZG) currently leads the market in terms of providing real estate information to homebuyers. Since its launch in 2006, Zillow has constructed a massive national database that includes information on roughly 110 million homes. Leveraging appropriate public data, Zillow offers basic information on properties, such as square footage and bedroom/bathroom counts, as well as estimated values and aerial images. In 2014, the company greatly expanded upon its consumer offerings through the acquisition of competitor Trulia, effectively adding millions of visitors to its monthly totals. In April 2016, Zillow Group’s network of sites attracted an estimated 83 million users (http://nnw.fm/s4EqE), accounting for 64 percent of online real estate market share.
The success of Zillow has led to major shakeups in the traditional real estate industry. In 2014, Realogy Holdings Corp. (NYSE: RLGY) – operator of Better Homes and Gardens® Real Estate, CENTURY 21® and Coldwell Banker®, among other leading real estate brands – reaffirmed the importance of technology to the immediate future of the real estate industry through the acquisition of California-based ZipRealty, Inc., a real estate brokerage firm with a nationwide network of licensed agents in offices who sell real estate online. ZipRealty, currently operating as ZapLabs, is used by nearly 400 Realogy brokerages across the country.
eXp World Holdings, Inc. (OTCQB: EXPI), through subsidiary eXp Realty, is leveraging an innovative equity sharing initiative to grab a sizable foothold in this changing market. The company’s Agent-Owned Cloud Brokerage™ offers real estate brokerage services alongside a collection of collaborative tools, training and socialization options available to brokers and agents through a fully-immersive, cloud-based office environment. Unlike Realogy’s ZapLabs, eXp Realty gives its agents and brokers the option to eliminate costly overhead expenses related to maintaining a brick and mortar office while enjoying the opportunity to earn a percentage of the gross commission income earned by fellow real estate professionals they attract into the company.
In recent months, EXPI’s real estate division has enjoyed strong growth. The company surpassed 1,500 agents across all of its markets in the United States and Canada earlier this month, up from just 864 at the beginning of this year. In Q2 2016, this expansion translated into strong financial growth. EXPI’s revenues for the quarter were $13.3 million, up 137 percent year-over-year. Cash and cash equivalents at June 30, 2016, were up 207 percent from the previous year. These results led independent research firm Fundamental Research Corp. to raise its 2016 revenue forecast for EXPI from $40.50 million to $48.94 million (http://nnw.fm/F1Ev7).
For more information, visit www.eXpWorldHoldings.com
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