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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.