Change is hard, and one of the most challenging things to do in business – or even life – is to change as the world does around you. However, as Jimmy Dean once greatly put it – “I can’t change the direction of the wind, but I can adjust my sails to always reach my destination.” That’s why it’s so important to always have your weather vane up, so you can tell when the winds are changing and prepare to adjust your sails to reach your goals. 

I’ve used a number of different sources to gauge the wind over the years, however, one of my favorites year in and year out is the Swanepoel Trends Report published by T360. It’s a comprehensive piece of research for the Real Estate Industry, that includes timely facts and data, that have been carefully compiled and analyzed in order to help brokers and executives make better decisions for their businesses in the coming year. 

As an agent, you might not always have an opportunity to change the winds, but with the right information about trends, you can adjust your sails and use that change to propel your business forward.

What are the Trends?

The 2021 Swanepoel Report covers 9 trends for the industry, but there were 4 categories that really stood out to me that agents should take note of:

1. Housing Affordability
2. Franchising, eXp and Realogy
3. The Lead Generation Model
4. The Post Pandemic “New Normal”

Housing Affordability

MLS statistics keep surfacing and we’re hearing from agents all over the country that low inventory has become a serious challenge. However, this isn’t just an inventory issue but part of a larger housing affordability challenge that we’re facing.

The Swanepoel Report points to a number of factors that have caused increased demand at certain price points, that haven’t been met by supply. Demand growth has largely been driven by a population increase, mortgage rates and investors. However, the supply shortage is a bit more complex. New buildings have become more expensive (land costs, labor shortages, regulations) and builders are still wary to overproduce homes after the 2008 to 2009 crash. This has resulted in a building shortage across the board, as well as an even bigger problem with new construction at lower price points.

When you add all of this together, you end up with a particularly challenging situation for first-time buyers, lower-income buyers and renters. I wish I had an immediate solution for you, but sadly this is a challenge we’re going to need to work on for years to come.

At a macro level, we need to work within our communities to foster new construction at the right price points in order to meet demand. At a micro level, when it comes to working with clients every day, the best we can do is educate them about the current reality and help them make the best decisions for their goals. By setting the right expectations you’ll save yourself a lot of problems in the long run.

Franchising, eXp and Realogy

The next theme was split among 3 trends in the Swanepoel Report: 06 – The Real Estate Franchising Landscape, 05 – Real Estate’s Cloud Based Brokerage Takes Flight, and 04 – Revitalizing Real Estate’s Largest Franchisor and Brokerage Company.

These chapters outline how the franchising landscape is changing, eXp is thriving, and Realogy is making a comeback. As an agent, this means the waters might be a little choppy as these franchises and mega-brokerages keep rapidly changing to compete with one another.

Franchising

Franchises continue to do well, even as mega-brokerages keep growing. The Swanepoel Report did a great job of outlining the various franchising fee models, and how the support services from these groups have changed over time. Don’t be surprised if you continue seeing some changes within both facets of the business.

eXp Continues to Expand

Some of the competition driving change within franchises comes from the growth of eXp. In just 12 years they’ve skyrocketed to 32,000 agents and the 4th largest brokerage by sales volume. This has largely been fueled by their commission sharing and cap model, team structure, “Brokered By” options, and their Revenue Sharing and Equity Program. Now that eXp has become such a large part of the market, they will continue to have an influence on the evolution of franchises.

Realogy Makes a Comeback

A great example of a group adapting to this change is Realogy. Between 2012 and 2019 both the Brokerage Operations and Holding Company saw significant drops in their EBITDA. (98.09% Drop to Brokerage Operations) In order to right the ship, they brought in Ryan Schneider, John Peyton and Ryan Gorman.

The new team has managed to start a revitalization by:

• using their size and data as an advantage
• reorganizing the management structure to streamline operations and shift culture
• refreshing technology across their brands
• focusing on one-stop-shopping for the consumer

It will certainly be interesting to see how Realogy works to stay nimble even at such a large scale.

How Can You Adapt?

Your best course of action going forward is to keep an eye on what you’re paying in brokerage or franchise fees, and exactly what they’re providing for that money compared with what’s available in the market. In many cases you’ll find that your fees are well worth what’s being provided, but at times you may need to push back a little to stay competitive with what else is out there.

Stay tuned next week as we cover the final 2 trends: The Lead Generation Model, and The Post Pandemic “New Normal”, and how they affect your business. 

The chapter about lead generation left me absolutely shocked, so you won’t want to miss this…