The warmer weather and longer days are finally here and that means everyone is thinking about the hottest looks for summer. For real estate brokerage companies, it seems like the new must-have accessory for summer 2026 is a franchise operation.\u00a0<\/p>\n
On Thursday, a little over a week after The Real Brokerage<\/strong> announced its acquisition <\/a>of real estate brokerage franchisor REMAX<\/strong>, and roughly five months after Compass<\/strong> closed <\/a>its acquisition of Anywhere<\/strong>, eXp World Holdings<\/strong> announced its acquisition <\/a>of franchisor NextHome<\/strong> for an undisclosed sum.\u00a0<\/p>\n In response to the news, eXp\u2019s stock price rose slightly on Thursday, jumping from $6.52 per share on Thursday morning to $6.99 per share on Friday morning after the acquisition announcement. This is markedly different from the market\u2019s reaction to Real\u2019s acquisition of REMAX, which saw the firm\u2019s stock price drop from $2.68 per share to $2.02 per share immediately following the announcement. As of Friday morning, nearly two weeks after the announcement, Real\u2019s stock price was hovering between $2.20 and $2.10 per share.<\/p>\n Industry analysts attribute these differing reactions to a variety of factors involved in the two acquisitions and weigh in on whether this is the future of the industry.<\/p>\n \u201cWe know that eXp is a very healthy financial organization and they have the capital to get behind this and do something with it and they are acquiring a smaller franchise entity,\u201d Craig McClelland, a partner at McClelland and Hahn<\/strong>, said. \u201cThey are not biting off more than they can chew by any means and nobody is going to question if eXp can operationalize around NextHome and facilitate keeping it together. Combining eXp with NextHome, means that NextHome has the chance to really explode \u2014 whether that is by bringing in other franchise models or just organic growth. That is why this is exciting and why it has a different flavor.\u201d\u00a0<\/p>\n Steve Murray, the co-founder of RealTrends Consulting<\/strong>, agrees.\u00a0<\/p>\n \u201ceXp can provide NextHome with capital, technology and systems that could rapidly expand the growth of NextHome without hurting themselves and I don\u2019t think eXp is done, they still have a lot of dry powder, but Real doesn\u2019t. They kind of spent it all in one go with REMAX<\/a>,\u201d Murray said.\u00a0<\/p>\n In addition to this acquisition being the right size for eXp, McClelland sees a variety of other reasons to be excited by this deal.<\/p>\n \u201cThe talent is aligned, the cultures are aligned, I have a hard time finding a negative on this one,\u201d McClelland said. \u201cIf Leo [Pareja]<\/a> and James [Dwiggins]<\/a> put their heads together, which I am sure they are, I don\u2019t see a reason why they can\u2019t go big with this. eXp is very well positioned to do this, they are acquiring some great talent, so the question is where are they going to go next with this? Everyone has been waiting for eXp to jump into the game and how they are jumping in, I think, is extremely intelligent.\u201d\u00a0<\/p>\n Murray sees many of the same benefits for eXp through this acquisition that McClelland does.<\/p>\n \u201cI think it was a great move by both parties. They get a good franchise system that is already in the market and on top of that they get one of the brightest and most energetic young leaders in the industry in James Dwiggins and no one should underestimate the value of talent.\u201d\u00a0<\/p>\n Although Tom White, a stock analyst at D.A. Davidson<\/strong>, was a bit surprised by the announcement, he also feels this was a smart move for eXp, especially when it comes to the firm\u2019s financials.\u00a0<\/p>\n \u201cIf you look at eXp\u2019s model, they are marginally profitable because they are keeping very little of the economics for themselves because they have revenue share for the agents,\u201d White said. \u201cI feel like the franchise model is more profitable for the parent company and it has this appealing cash flow, which can improve the financial profile of eXp.\u201d\u00a0<\/p>\n Additionally, White noted that providing more options for agents and brokers, by allowing them to either be part of a cloud-based national firm or affiliate or start their own franchise, is not a bad thing either.<\/p>\n While all of the large scale acquisitions the industry has witnessed over the past year may have felt a bit surprising, industry analysts agree that this is just another tool brokerage companies use to grow, except it isn\u2019t one we have seen many large firms use in a while.\u00a0<\/p>\n \u201cEverybody is acting like this is a new thing, but if you look back at Cendant<\/strong> <\/a>\u00a0[the predecessors to Anywhere Real Estate] and HomeServices<\/strong>, back in the day they were doing a lot of acquisitions and roll ups,\u201d McClelland said. \u201cThis isn\u2019t new to the space \u2014 it is a healthy way to expand a brokerage company and it is being leveraged in a unique way now.\u201d\u00a0<\/p>\n But when it comes whether or not a franchise operation is the new must-have for brokerages, industry analysts are split.\u00a0<\/p>\n \u201cI think this 100% where we are going,\u201d McClelland said. \u201cThe profile of a publicly traded national brokerage has changed. And it seems that the components of that, is that they have to have the brokerage-owned shop, they have to have the franchise arm, the leads department, internal technology \u2014 and we are starting to see that develop and be necessary to have a significant valuation on the public market.\u201d<\/p>\n For White, growth and profitability are two the primary things investors look for and if acquiring franchisors can help a company achieve these two goals, that would explain why they have become popular acquisition targets.\u00a0<\/p>\n \u201cWith these cloud-based platforms, if even at scale they couldn\u2019t be really profitable, then maybe it is worthwhile for them to explore other offerings and structure for their agents,\u201d White said. \u201cWe\u2019ll see if this enables them to grow more, but we\u2019ll have to wait and see if this strategy provides that combination of growth and meaningful profitability.\u201d\u00a0<\/p>\n Murray, however, doesn\u2019t believe the recent spate of franchisor acquisitions signifies any particular trend.<\/p>\n \u201cI think all of these guys are just looking at a different vehicle to help them grow as fast as they want to,\u201d Murray said. \u201cEveryone says Robert Reffkin bought Anywhere so he\u2019d have more listings for private exclusives<\/a>. No, Robert just wants a company worth at least tens of billions of dollars and he is not going to get there organically.\u201d<\/p>\nWhy eXp and NextHome are a good fit<\/h2>\n
Providing more options for agents<\/h2>\n
Is this the future?<\/h2>\n