Nine of the 10 real estate brands ranked on the recently released Franchise Times Top 500 recorded sales growth, marking a strong, and in some cases, historic year in home purchases.
The Franchise Times Top 500 is an annual ranking of the 500 largest U.S.-based franchise systems by global systemwide sales. The highest ranked company in the real estate segment is Re/Max, which came in at No. 9 on the list, an improvement from its rank of No. 12 the previous year. Sales for Re/Max increased to $16.1 billion in 2021, up from $11.4 billion in 2020.
“Last year was pretty monumental,” Re/Max CEO Nick Bailey said. “We hit 2 million transactions across the planet, which was a first for us, and anyone in the business.”
Bailey said Re/Max has a network of 144,000 agents in 118 countries, with personnel having an average of 15 years of experience. Those agents with more than a decade in the field is one of the reasons for the strong sales, Bailey said.
“The industry average is eight years, so, we’re almost double the experience level,” Bailey said. “We see market changes, like what’s happening now, and our agents have been through changes like that before and because of that, they have a much more resilient way of not having to know what the future is, but knowing what to do right now.”
Re/Max CEO Nick Bailey
Keller Williams, the next highest ranked real estate company on the Top 500, came in at No. 11, up from No. 14. System sales grew 31.3 percent in 2021, to $13.5 billion.
The sales increases for both Re/Max and Keller Williams weren’t just bounce backs from the coronavirus pandemic period in 2020, either. Re/Max’s $11.4 billion in 2020 was ahead of its $10.4 billion in sales in 2019, while Keller Williams’ sales grew from $8.9 billion in 2019 to $10.3 billion in 2020.
Total sales for all 10 brands ranked in the Top 500 came to $40.2 billion, a 30.9 percent increase from the previous year. Experiencing the highest percentage sales growth was No. 422 Iron Valley Real Estate, with sales up 89.3 percent in 2021, to $52 million.
The next biggest jump was the 59.9 percent sales increase for No. 160 United Real Estate, which recorded $336 million in 2020 and $538 million in 2021. The third brand with major growth was Realty One Group, which had $786 million in sales for 2020 and $1.14 billion in 2021, a 45.1 percent increase.
In addition to its sales growth, Realty One Group moved up on the ranking, to No. 88.
Realty One Founder and Chief Experience Officer Kuba Jewgieniew called out two factors impacting sales growth: the millennial population becoming active home buyers and sellers, and the support Realty One gives to its agents.
“Our business strategy since day one has been to focus on the real estate professional, giving them everything they need to build a more successful career and even a better life and legacy for future generations,” Jewgieniew said. “As home prices across the nation rise, we coach our real estate professionals on how to generate more leads, work the market they have and have a do-what-it-takes mindset.”
Realty One Founder and Chief Experience Officer Kuba Jewgieniew
The number of agents in the industry may oversaturate markets, though, according to Bailey, who called increased competition one of Re/Max’s big challenges.
“Just 10 years ago, after the Great Recession, there were around 980,000 agents in the U.S. that were licensed,” Bailey said. “In 2021, the National Association of Realtors announced it reached 1.6 million. The increase over a 10-year period, especially with the majority coming the last three to four years, means you have a lot more agents for the same amount of business, because at the end of the day, there’s just an ‘X’ number of houses that sell every year.”
So far in 2022, Bailey said transactions are on pace to drop from 2021 in Re/Max’s case. Despite this and the shifts in the housing market in the last several months, Bailey said 2022 should still finish strong.
“We don’t expect prices to increase at the velocity they were earlier this year, which is good for buyers,” Bailey said. “I think what we’re going back to is a stabilization, where it will be about what markets locally are doing what. Each will be different, with some areas of the country leveling out faster than others.”