earnings

Apache is functioning normally

In the competitive world of real estate recruitment, brokerages fight for the attention and loyalty of talented agents who can drive their success. As the lifeblood of the industry, agents play an important role in attracting clients, closing deals and determining the ultimate profitability of a brokerage. For real estate firms, recruiting a high number of agents as well as recruiting the best-fit agents for your firm is the key to long-term success. 

Today, new brokerage models and disruptors are the norm. A firm’s ability to adjust to new competitors and evolve its way of doing business will determine if it comes out ahead in the agent attraction showdown.  

At the heart of our comparative analysis, we’ll examine two popular brokerage models: the flat-fee model and the traditional model. Each one boasts its own approach to compensating and supporting agents, promising distinct advantages and challenges. By examining the data, we aim to gain a deeper understanding of each and determine which ultimately comes out ahead. 

The flat-fee model: Simplifying compensation, embracing independence

In the flat-fee model, the traditional commission-based structure takes a backseat. Instead, agents are charged a fixed fee or a flat monthly rate, which allows them to retain a more substantial portion of their commissions from transactions. This straightforward approach grants agents the freedom to keep more of their hard-earned income, resulting in potentially higher take-home pay.

  1. Pros:
    1. Perceived enhanced earnings with a reduced fee structure.
    2. Flexibility to structure their services and marketing strategies to fit their needs.
    3. Lower financial risk by keeping costs low, particularly during leaner times.
  1. Cons:
    1. Typically, limited support and resources in the form of training, marketing, etc. 
    2. Usually, less brand recognition as compared to well-established traditional firms.

The traditional model: Commission-driven powerhouses

In the traditional model, agents are compensated through the classic commission-based structure. They earn a percentage of the commission from each completed transaction, but a portion of it is shared with the brokerage. This model has been the bedrock of the real estate industry for decades, with established firms carrying well-known brand identities.

  1. Pros:
    1. Extensive support and training with a significant investment in agent development, mentorship, and marketing resources.
    2. Established brand recognition, attracting clients and contributing to an agent’s credibility.
    3. High-value transactions due to their market position and network.
  1. Cons:
    1. Higher cost structure, leading to potentially lower take-home earnings.
    2. Limited flexibility with agents sometimes bound by brokerage policies and practices, typically leaving less room for individual business decisions.

The analysis 

To assess the agent attraction expertise of the flat-fee and traditional brokerage models, we looked to the data. We meticulously examined a collection of 20 of the largest real estate firms; 10 flat-fee firms collectively closing $100B in annual sales volume versus ten traditional firms which were also collectively closing $100B in annual volume [2022 RealTrends 500 brokerage data]. We excluded from our analysis any alternative models, disrupters, luxury brands and any other firms that may skew our findings.

Agent count & average sides per agent comparison

Using 2022 data from RealTrends, we first looked at the number of agents associated with each model as well as the total number of sides transacted. The data reveals that flat-fee firms collectively had a 136% higher agent headcount than their counterparts, the traditional models.

As a whole, the flat-fee firms also transacted more sides than traditional firms; approximately 19% more sides closed. We would expect that flat-fee firms would transact a higher number of deals since they have a significantly higher agent count. However, agents within the flat-fee model on average closed four deals per agent while agents within the traditional model closed eight deals per agent.

Average volume per agent & average home price per transaction comparison

Another critical data point to review is found in the average closed volume per agent. A higher closed volume can indicate an agent’s future earning potential as well as longevity in the business. In addition to examining the total volume, it’s also helpful to review the average size of the deals closed by agents within each model, which will provide insight into experience level and expertise.   

The data shows that agents within flat-fee firms close less in average volume per agent, approximately 52% less. We can also see that they also closed smaller deals, on average.  

Attracting new-to-the-business agents

Based on the statistical analysis, it becomes apparent that flat-fee firms often focus on a large agent count with high transaction volume. A notable trend emerges where agents drawn to flat-fee models are frequently those who are relatively new to the industry or are brand new licensees. Additionally, individuals attracted to the part-time flexibility that a real estate career offers are inclined towards flat-fee firms.

Consequently, a greater number of agents are required within flat-fee firms to achieve equivalent volume targets. Remarkably, this demand for increased agent numbers has not posed a deterrent for flat-fee firms, as evidenced by their substantial growth in recent years.

Historical shifts

While the initial data analysis reinforces existing assumptions, a more interesting and unexpected dimension emerges when historical shifts in volume and sides across both brokerage models are examined. Following the post-COVID real estate boom, both flat-fee and traditional firms experienced a surge in sides transacted as well as increasing property values, contributing to an upswing in overall sales volume.

However, the scenario shifted in 2022 with the market downturn. Traditional brokerages experienced a sharper decline in sides, attributed in part to agents leaving due to high costs, whereas flat-fee firms exhibited greater resilience. The notion that flat-fee models attract individuals who do not rely primarily on real estate as their main business is worth noting. Most intriguing is the fact that although sides decreased more significantly, the impact on overall sales volume was less severe for traditional firms compared to flat-fee firms.

A plausible theory suggests that agents within traditional firms specialize in higher value properties than flat-fee firms, leading to increased value growth. Their higher production per agent, coupled with greater experience and support, equips them to navigate market fluctuations more adeptly.

Takeaways:

  • Stability in challenging times:
    • Flat-fee models were less affected by side reductions in bad years, possibly due to part-time agents with diverse income sources.
  • Traditional brokerage strategy:
    • Traditional models maintained stable sales volume despite fewer sides, likely due to experienced agents handling higher-value deals.
  • Diverse model strengths:
    • Flat fee emphasized transactional efficiency, accommodating a larger number of transactions.
    • Traditional models prioritized experienced agents and larger deals, ensuring steady revenue despite lower transaction count.
  • Market adaptation:
    • Both models should consider adapting strategies to market conditions and leveraging their unique strengths.

As we conclude our analysis, it’s evident that the many seasons of change in real estate demand a strategic negotiation between innovation and tradition. Agents, the driving force of the industry, now have the luxury of choice. To win in agent attraction, flat-fee models can further bolster their appeal by offering targeted support and mentorship, enhancing their brand recognition, and cultivating a sense of community among their diverse agent base. 

Conversely, traditional models can leverage their established brand identities to attract experienced agents while embracing flexibility in their offerings to cater to the changing preferences of a new generation of real estate professionals. By embracing the strengths of both models and charting a course that resonates with modern agents, brokerages can ensure they remain at the forefront of the industry’s evolution.

Diana Zaya is the founder and president of Maverick RE Consulting.

Source: housingwire.com

Apache is functioning normally

In the competitive world of real estate recruitment, brokerages fight for the attention and loyalty of talented agents who can drive their success. As the lifeblood of the industry, agents play an important role in attracting clients, closing deals and determining the ultimate profitability of a brokerage. For real estate firms, recruiting a high number of agents as well as recruiting the best-fit agents for your firm is the key to long-term success. 

Today, new brokerage models and disruptors are the norm. A firm’s ability to adjust to new competitors and evolve its way of doing business will determine if it comes out ahead in the agent attraction showdown.  

At the heart of our comparative analysis, we’ll examine two popular brokerage models: the flat-fee model and the traditional model. Each one boasts its own approach to compensating and supporting agents, promising distinct advantages and challenges. By examining the data, we aim to gain a deeper understanding of each and determine which ultimately comes out ahead. 

The flat-fee model: Simplifying compensation, embracing independence

In the flat-fee model, the traditional commission-based structure takes a backseat. Instead, agents are charged a fixed fee or a flat monthly rate, which allows them to retain a more substantial portion of their commissions from transactions. This straightforward approach grants agents the freedom to keep more of their hard-earned income, resulting in potentially higher take-home pay.

  1. Pros:
    1. Perceived enhanced earnings with a reduced fee structure.
    2. Flexibility to structure their services and marketing strategies to fit their needs.
    3. Lower financial risk by keeping costs low, particularly during leaner times.
  1. Cons:
    1. Typically, limited support and resources in the form of training, marketing, etc. 
    2. Usually, less brand recognition as compared to well-established traditional firms.

The traditional model: Commission-driven powerhouses

In the traditional model, agents are compensated through the classic commission-based structure. They earn a percentage of the commission from each completed transaction, but a portion of it is shared with the brokerage. This model has been the bedrock of the real estate industry for decades, with established firms carrying well-known brand identities.

  1. Pros:
    1. Extensive support and training with a significant investment in agent development, mentorship, and marketing resources.
    2. Established brand recognition, attracting clients and contributing to an agent’s credibility.
    3. High-value transactions due to their market position and network.
  1. Cons:
    1. Higher cost structure, leading to potentially lower take-home earnings.
    2. Limited flexibility with agents sometimes bound by brokerage policies and practices, typically leaving less room for individual business decisions.

The analysis 

To assess the agent attraction expertise of the flat-fee and traditional brokerage models, we looked to the data. We meticulously examined a collection of 20 of the largest real estate firms; 10 flat-fee firms collectively closing $100B in annual sales volume versus ten traditional firms which were also collectively closing $100B in annual volume [2022 RealTrends 500 brokerage data]. We excluded from our analysis any alternative models, disrupters, luxury brands and any other firms that may skew our findings.

Agent count & average sides per agent comparison

Using 2022 data from RealTrends, we first looked at the number of agents associated with each model as well as the total number of sides transacted. The data reveals that flat-fee firms collectively had a 136% higher agent headcount than their counterparts, the traditional models.

As a whole, the flat-fee firms also transacted more sides than traditional firms; approximately 19% more sides closed. We would expect that flat-fee firms would transact a higher number of deals since they have a significantly higher agent count. However, agents within the flat-fee model on average closed four deals per agent while agents within the traditional model closed eight deals per agent.

Average volume per agent & average home price per transaction comparison

Another critical data point to review is found in the average closed volume per agent. A higher closed volume can indicate an agent’s future earning potential as well as longevity in the business. In addition to examining the total volume, it’s also helpful to review the average size of the deals closed by agents within each model, which will provide insight into experience level and expertise.   

The data shows that agents within flat-fee firms close less in average volume per agent, approximately 52% less. We can also see that they also closed smaller deals, on average.  

Attracting new-to-the-business agents

Based on the statistical analysis, it becomes apparent that flat-fee firms often focus on a large agent count with high transaction volume. A notable trend emerges where agents drawn to flat-fee models are frequently those who are relatively new to the industry or are brand new licensees. Additionally, individuals attracted to the part-time flexibility that a real estate career offers are inclined towards flat-fee firms.

Consequently, a greater number of agents are required within flat-fee firms to achieve equivalent volume targets. Remarkably, this demand for increased agent numbers has not posed a deterrent for flat-fee firms, as evidenced by their substantial growth in recent years.

Historical shifts

While the initial data analysis reinforces existing assumptions, a more interesting and unexpected dimension emerges when historical shifts in volume and sides across both brokerage models are examined. Following the post-COVID real estate boom, both flat-fee and traditional firms experienced a surge in sides transacted as well as increasing property values, contributing to an upswing in overall sales volume.

However, the scenario shifted in 2022 with the market downturn. Traditional brokerages experienced a sharper decline in sides, attributed in part to agents leaving due to high costs, whereas flat-fee firms exhibited greater resilience. The notion that flat-fee models attract individuals who do not rely primarily on real estate as their main business is worth noting. Most intriguing is the fact that although sides decreased more significantly, the impact on overall sales volume was less severe for traditional firms compared to flat-fee firms.

A plausible theory suggests that agents within traditional firms specialize in higher value properties than flat-fee firms, leading to increased value growth. Their higher production per agent, coupled with greater experience and support, equips them to navigate market fluctuations more adeptly.

Takeaways:

  • Stability in challenging times:
    • Flat-fee models were less affected by side reductions in bad years, possibly due to part-time agents with diverse income sources.
  • Traditional brokerage strategy:
    • Traditional models maintained stable sales volume despite fewer sides, likely due to experienced agents handling higher-value deals.
  • Diverse model strengths:
    • Flat fee emphasized transactional efficiency, accommodating a larger number of transactions.
    • Traditional models prioritized experienced agents and larger deals, ensuring steady revenue despite lower transaction count.
  • Market adaptation:
    • Both models should consider adapting strategies to market conditions and leveraging their unique strengths.

As we conclude our analysis, it’s evident that the many seasons of change in real estate demand a strategic negotiation between innovation and tradition. Agents, the driving force of the industry, now have the luxury of choice. To win in agent attraction, flat-fee models can further bolster their appeal by offering targeted support and mentorship, enhancing their brand recognition, and cultivating a sense of community among their diverse agent base. 

Conversely, traditional models can leverage their established brand identities to attract experienced agents while embracing flexibility in their offerings to cater to the changing preferences of a new generation of real estate professionals. By embracing the strengths of both models and charting a course that resonates with modern agents, brokerages can ensure they remain at the forefront of the industry’s evolution.

Diana Zaya is the founder and president of Maverick RE Consulting.

Source: housingwire.com

Apache is functioning normally

The North East of England, with properties priced at 4.9 times average earnings, and Scotland, with houses priced a five times average earnings, have the most affordable homes. Inverclyde – where homes cost 2.9 times average earnings – is recorded as having the most affordable homes of any local authority area, the Halifax said.

Source: bbc.com

Apache is functioning normally

The Social Security Administration (SSA) considers depression to be a disability as defined under the American Disabilities Act (ADA)

. You may qualify for SSDI benefits and work accommodations if depression prevents you from either doing the type of work that you previously did or adjusting to other work.

Here’s what to know about what kinds of depression qualify for SSDI benefits and work accommodations and how to apply.

Work accommodations for depression

Under the ADA, you have the right to reasonable accommodations to help you do your job

. Some examples of possible accommodations include:

  • Altered break and work schedules.

  • Specific shift assignments.

  • Quiet office space or changes to create a quiet work environment, such as noise-canceling headphones, room dividers and soundproofing. 

  • Changes in supervisory methods.

  • Permission to work from home.

It’s illegal for your employer to fire you due to a mental health condition, but make sure to ask for accommodations as soon as possible before your job performance suffers.

SSDI benefits for depression

The SSA pays disability benefits to people with qualifying conditions to replace the income they are unable to earn.

  • The amount of money that you will receive each month is based on your previous earnings and how much you’ve paid toward Social Security taxes.

  • Disabled workers receive an average monthly benefit of $1,483, according to a March 2023 report from the Center on Budget and Policy Priorities

    .

  • The maximum SSDI payment that someone can earn in 2023 is $3,627 a month. 

What type of depression qualifies for disability?

Depressive, bipolar and related disorders are on the SSA’s Listing of Impairments and are considered disabilities that can prevent substantial gainful employment. In other words, if your depression is severe enough that it prevents you from working and operating at your full capacity, then there is a reasonable chance that Social Security will consider it to be a disability. Here are the standards to qualify:

Medical documentation of five or more of the following symptoms:

  1. Depressed mood.

  2. Diminished interest in almost all activities.

  3. Appetite disturbance with change in weight.

  4. Sleep disturbance.

  5. Observable agitation or retardation.

  6. Decreased energy.

  7. Feelings of guilt or worthlessness.

  8. Difficulty concentrating or thinking.

  9. Thoughts of death or suicide.

Also, extreme limitations in one of the following areas of mental functioning:

  1. Understanding, remembering or applying information.

  2. Interacting with others.

  3. Concentrating, persisting or maintaining pace.

  4. Adapting or managing yourself.

Or proof that your depression is “serious and persistent,” which the SSA considers as lasting for at least two years. You’ll also need evidence of the following:

  1. Medical treatment that is ongoing and helps reduce the symptoms.

  2. A limited ability to adapt to changes in your environment or additional demands.

You’ll also need to have earned enough “work credits” to be considered insured for SSDI benefits. This typically means that you worked for at least five out of the last 10 years, though younger workers can qualify with fewer credits.

How to apply for SSDI

  • You can apply for SSDI online, through your local Social Security office or by phone. 

  • You’ll need to gather information on your medical and work histories.

  • After filing your application, you have the right to be informed of the SSA’s decision and the right to appeal that decision within 60 days. It normally takes around six months to receive an initial decision from the SSA.

How likely is it that the SSA will approve my SSDI application?

An average of 21% of applicants are awarded SSDI benefits with their initial application

. After appeals, an average of 31% of applicants are awarded benefits.

Frequently asked questions

How much does it cost to hire a Social Security disability attorney?

If your SSDI application is approved, then your disability attorney will be paid 25% or $7,200 of your retroactive benefits, whichever amount is less.

Is there a waiting period for disability benefits?

There is a five-month waiting period for Social Security disability benefits, meaning you’ll receive your first benefit in the sixth full month after the date that SSA finds your disability began. If you were previously disabled within the last five years, the waiting period is waived.

Can you work at all if you are receiving disability benefits?

You are allowed to return to work while receiving SSDI benefits. Social Security has special rules and several programs that allow recipients to work and still receive benefits, including the Ticket to Work program and a nine-month Trial Work Period.

Source: nerdwallet.com

Apache is functioning normally

Retail lender Guild Mortgage announced Monday the acquisition of First Centennial Mortgage, a privately-held Illinois-based lender with 15 branches predominantly in the Midwest and a presence in 17 states. The terms of the deal were not disclosed.

Guild has been acquiring lenders to expand in local markets in a purchase mortgage-focused environment. Since December 2022, Guild has closed deals with Inlanta Mortgage, Legacy Mortgage and Cherry Creek Mortgage.  

Established in 1995 by brothers Steven and David McCormick, First Centennial Mortgage offers a wide range of mortgage products, including conventional, FHA, VA building and construction, per the mortgage data platform Modex. 

The company had 227 active loan officers and originated $830 million in the last 12 months. Of the total origination volume in the period, purchase mortgages accounted for 82% and refis consisted of 15%, the data shows.

“We continue to effectively execute our strategy to grow and gain market share through acquisitions where there exists a strong cultural match and the potential for value is present for both parties,” Terry Schmidt, CEO of Guild, said in a statement. 

This is the first Guild acquisition under Schmidt’s leadership. She went from president to CEO when Mary Ann McGarry retired from the CEO position in late June. McGarry remained on the California-based lender’s board of directors after retirement. 

Steven McCormick, president of First Centennial Mortgage, said in a statement that the company has a similar culture and platform to Guild as both focus 100% on retail, local sales and operational fulfillment.  

On the back of a purchase market-focused strategy, Guild posted a net income of $36.9 million in Q2 2023, an improvement from the loss of $37.2 million in the previous quarter. Originations came in at $4.45 billion from April to June, up from $2.7 billion last quarter. According to Modex, Guild has 2,179 active LOs and 564 branches. 

Schmidt said during the Q2 earnings announcement that the lender continues to execute its strategy to gain market share through organic growth and acquisitions while broader industry challenges persist due to higher interest rates and limited home inventory. 

Regarding its products, Guild rolled out in June a 1% down payment advantage program that allows customers to buy a home with a minimum down payment of 1% of the purchase price. Guild will also cover 1% of the borrower’s interest rate for the first year with a lender-paid temporary buydown. 

Source: housingwire.com

Apache is functioning normally

Better — which went public after merging with special purpose acquisition company (SPAC) Aurora Acquisition Corp. on Thursday — funded a loan volume of $1.7 billion across 4,768 loans in the first six months of 2023. In Q2, Better’s origination volume was $900 million across 2,421 loans, compared to production of $800 million across 2,347 loans funded in Q1.

Of the $1.7 billion in production volume in the first half of 2023, refis accounted for $131 million and purchase loans consisted of $1.6 billion. Better’s funded loan volume of $1.7 billion in the first half of 2023 declined from $9.7 billion during the same period in 2022.

The lender’s gain-on-sale margin increased to 2.34% for the six months ended June 30, 2023, from 0.99% for the six months ended June 30, 2022. The jump in gain-on-sale margin resulted from “market volatility which positively impacted our mortgage platform revenue,” its 8-K filing states.

Better’s total market share of 0.2% during the six months of 2023 declined from 0.7% in the same period in 2022.

“The mortgage market remains competitive among lenders, given the interest rate environment and we continue to focus on originating the most profitable business available to us. As a result, we have pulled back on our most unprofitable channels, resulting in further declines to market share,” according to its filing.

In Q2, Better decided to wind down its in-house real estate agent business to focus on partnering with third-party real estate agents. The pivot was aimed at providing customers with real estate agent services, a business model that better aligns costs with transaction volumes, particularly in market environments with decreased mortgage volumes.

The company’s latest filing shows the firm had less than five agents as of June 8, 2023, declining from 470 agents as of December 31, 2021, and about 80 agents as of December 31, 2022. 

Total operating expenses dropped to $183.9 million for the six months ended June 30, 2023, driven by lower funded volume as well as reductions in headcount-related costs and other operating expenses resulting from restructuring initiatives. Compared to the same period in 2022, operating expenses declined by 80% from $903.7 million.

Better scaled down about 91% of its workforce over an 18-month period to 950 team members as of June 8, from 10,400 employees in Q4 2021. 

“As we have reduced headcount drastically in previous years and have continued headcount reductions in the first and second quarters of 2023, and expect to continue through 2023, we expect employee-related costs to decrease as a smaller administrative function is needed to support an organization with a much lower headcount,” the disclosure states. 

Filings show Better completed the acquisition of Birmingham Bank – a regulated U.K bank – in April 2023. The company acquired 100% of the equity of Birmingham for a total consideration of $19.3 million – consisting of $15.9 million in cash and $3.4 million in deferred consideration.

The acquisition allows Better to grow and expand existing operations in the U.K. by enabling it to offer online deposits to consumers and hold U.K. residential mortgages, the company said. 

Back in April, Better announced plans to create 40 jobs in Birmingham over the next three years following the buyout in fields such as business development, savings management, marketing, operations, finance, risk management and IT.

Its 8-K filing revealed that Fannie Mae notified Better about failing to meet the agency’s financial requirements due to the company’s decline in profitability and material decline in net worth. 

“Subsequent to June 30, 2023, as a result of failing to meet FNMA’s financial requirements, the Company has entered into a Pledge and Security Agreement with FNMA on July 24, 2023, to post additional cash collateral starting with $5.0 million, which will be held through December 31, 2023,” the filing stated.

The company had cash and cash equivalents of $109.9 million as of June 30, 2023, down from $318 million on December 31, 2022. 

Better’s stock opened for trading at $1.20 on August 28. They were down about 93% from $17.45 when blank check company Aurora closed for trading on the stock exchange on August 23.

Source: housingwire.com