Compass, eXp top RealTrends 2022 rankings

UPDATED March 15, 10:30 a.m.: There’s been a changing of the guard atop one measure of real estate’s top firms. 

Compass claimed its second year as the top brokerage by national sales volume, according to the 2023 RealTrends 500 rankings. The ranking, based on 2022 data, named eXp Realty rose  the number one firm by transaction sides, up from third the year before.

The full list, which relies on firms’ self-reported figures that are not subject to verification by independent auditors, will come out March 24.

It’s a departure from the past two decades, which saw Anywhere Real Estate and Berkshire Hathaway HomeServices consistently dominate the top two spots in both categories. 

“It is frankly amazing that in less than 10 years these two relatively young firms rose to these positions in our rankings,” said Steve Murray, senior advisor for HW Media and founder of the rankings. 

Whether the two upstarts retain their positions remains to be seen Compass has been unable to post a profit despite its massive sales volume, and virtual brokerage eXp invested heavily in the metaverse but also suffered at the hands of last year’s slowing market. 

“We expect competition to intensify in the years to come,” said Murray.

Compass lost $602 million in 2022, up from $494 million in 2021 for a total of over $1 billion over the past two years. 

The brokerage moved to cut losses last year with three rounds of layoffs as the market turned and it came under pressure to post a profit for the first time. While it still isn’t profitable, executives say the $338 million they slashed from the budget and a third round of layoffs in January put it in line to be cash-flow positive by June.

The firm’s losses have echoed out to its investors. SoftBank, the Japanese investment giant that put $1.08 billion into the brokerage over three rounds, disclosed in August about half of its investment had been wiped out as Compass shares fell. More investors bailed on the company’s stock in the fourth quarter, including Robert Citrone’s Discovery Capital Management and Montreal-based Wishbone Management, which liquidated 25 and 30 percent of their holdings, respectively.

EXp only posted its first loss of 2022 in only the fourth quarter with a relatively slim $7.2 million deficit. Its focus has been on keeping expenses low by embracing virtual reality — its operating expenses per broker in the third quarter was $1,096 and it spent only $673 per transaction, figures it claimed in its annual report to be industry-leading. 

Correction: A previous version of this article said Compass lost $1 billion in cash over the past two years and Softbank pulled back its investment in the brokerage. The $1 billion figure stemmed from GAAP accounting net loss, which includes non-cash items such as stock-based compensation, and Softbank only disclosed the dive in value for its stake.