Trends 2025: Compass, eXp and how the big keep getting bigger
Consolidation has become common in residential real estate as MLSs, teams and brokerage companies strive to win by leveraging economies of scale.
Editor's note: Since 2006, the Swanepoel Trends Report has provided in-depth research and analysis to help leaders understand the forces shaping residential real estate. This exclusive series of excerpts highlights each trend featured in the 2025 report, which was released in November 2024.
Navigating Consolidation and Competition: Brokerages have been getting bigger, with a small number of companies claiming an increasingly larger share of the market. Consolidation has reshaped the landscape for large and small firms alike, and brokerages are employing a variety of approaches to compete in this new environment.
The following excerpt, taken from T3 Sixty's 2025 Trends Report, looks at the latest sales volume data and highlights Compass and eXp Realty as examples of firms that have achieved tremendous growth using different strategies.
Large brokerage dominance
The numbers paint a clear picture of the massive divide between the largest players and the rest of the market. In 2022, the 1,000 largest U.S. brokerages accounted for 60.5% of the nation's total sales volume. That left just 39.5% of the market for more than 100,000 smaller brokerages.
Among the top 100 brokerages, the concentration of market share is even more pronounced. In 2023, these firms accounted for nearly 40% of all sales volume, with the top 10 brokerages alone generating over 25.7% of the industry's sales volume.
Consolidation factors
Consolidation at the top has reshaped the competitive landscape, creating new challenges and opportunities for both large and small firms. For the largest brokerages, consolidation means economies of scale, improved technology infrastructure and greater negotiating power with partners. For smaller firms, it has heightened the need for differentiation, innovation and strong relationships to remain competitive.
As consolidation has redefined the market structure, companies have used different strategies to achieve this growth, some of which are outlined below.
Innovative brokerage growth models
Several of the fastest-growing brokerages today have built their success on innovative growth models. Two companies that have taken very different approaches, yet seen tremendous growth, are Compass and eXp Realty.
Compass has sustained remarkable growth based on an aggressive, sustained acquisition strategy. It continued this strategy in 2024 by acquiring Louisiana-based brokerage powerhouse Latter & Blum in April 2024 and Tennessee's largest brokerage Parks Real Estate in May 2024. It is looking to leverage this growth to take advantage of economies of scale from its technology platform and from higher market share in its markets.
While still not generating a profit, Compass has achieved remarkable scale, which it can use to further develop brand, technology and data advantages.
EXp Realty, one of the pioneers of the virtual brokerage model, has grown exponentially by leveraging a revenue-sharing growth model and by eschewing offices, one of the largest expenses brokerages incur.
Unlike traditional brokerages that rely on physical offices, eXp operates entirely online, allowing it to scale rapidly while minimizing overhead costs. Its revenue-sharing model, in which agents receive a portion of the revenue generated by agents they recruit to the company, has made the company a recruiting machine.
Other firms have emulated this recruiting model to achieve spectacular growth, notably The Real Brokerage, founded in 2014 and now the nation's 10th largest brokerage.
Increased competition
One factor driving consolidation is increasing competition for a shrinking number of home sales. Brokerages need to operate at greater scale to sustain their profit margins.
The data shows just how much the competition is tightening. The number of existing home sales sides per Realtor declined from 8.1 sides in 2017 to 5.3 in 2023, a drop of 34.6%.
Decreasing commissions
At the same time, commission rates have been on a years-long decline. Using the reported commission rates for Anywhere Real Estate's brokerage and franchise operations, the average U.S. commission rate was 4.87% in 2023. This is a slight rise from the nearly two-decade low of 4.83% in 2022. Still, the 2023 rate represents a decline of 19 basis points from the high in 2009.
Read the full chapter: Digital and printed copies of the 2025 Swanepoel Trends Report are available for purchase at T3 Trends.
Note: T3 Sixty and Real Estate News share a founder, Stefan Swanepoel.