“Make hay while the sun shines.” Medieval English farmers harvesting their hay coined the phrase as they watched the gloomy weather closely, making the most of small windows of changing circumstances. Most real estate brokers and agents today are enjoying the euphoria of rebounding market conditions as buyers and sellers are working at a feverous pace. Everyone is extremely busy with activity that is at a pre-COVID-19 level, although most feel the current pace is temporary.
Aside from the growing inventory crisis, the real estate sun is now shining and many brokers at the moment are looking beyond the continuing health economic and political challenges for opportunity ahead. For brokers looking to invest in their future growth, the pandemic presents an opportunity to acquire companies whose futures are uncertain, financial positions are precarious or whose ownership is ready for a change. Conversely, others would like an exit plan to cash out with proceeds in hand for rainy days. Larger acquiring brokerages will get bigger, strengthening their market positions, while many small-to-midsize firms as well as agent teams are finding opportunities to fortify by teaming up against larger rivals. By joining forces, their collective efforts enable them to reach goals much sooner through their synergies.
According to Harvard Business review, data from the financial crisis from late 2007 through 2010 shows companies that made significant acquisitions during the economic downturn outperformed those that did not. History suggests there will be a relatively short M&A window in which bargains will be had by those with the liquidity and the risk tolerance to move forward quickly, and who have done their strategic planning. For sellers, it’s the perfect time to start having exit strategy discussions. As always, it all boils down to money.
How are these deals financed?
Funding goes beyond the capital needed simply to fund the transaction. Often investment is required for the growth of the newly merged companies, such as technology, branding, marketing, recruiting, management, etc., and these transactions require deep pockets or a very rich uncle. Industry publications would give the impression that opportunities and funding could be a problem for many would be buyers and sellers with the top acquiring companies such as Realogy Brokerage Group (previously NRT), Berkshire Hathaway, Howard Hanna and other large players slowing their acquisitions.
Not true. In all size ranges there is still activity as companies take advantage of funding that is available to brokerages and often at acquisition pricing structures that have adapted with the recent industry upheaval. There is a window now in which brokers are able to take advantage of opportunities to buy, sell or merge. Realogy is committed to providing capital to fund growth and strategic opportunities for companies looking to scale their operations.
While the coronavirus pandemic and associated challenges has changed some of the dynamics of real estate broker mergers and acquisitions, deals continue to happen. The number of companies I meet with seeking to acquire as well as those looking for purchasers or investors for their firms is at all-time high. Yes, I know you’re busy, but this is a very good time for us to talk about the options available to you and your firm. Click here to Contact Rick!
Housing Reaches Pre-COVID 19 Levels – for Now
Brokers and agents are relieved to feel the current pace of activity. Online searches are up, there’s increased buyer activity, multiple offers, etc. If it feels like activity is getting more normal, you are correct.
For the week ending July 18th, the REALTOR.com Housing Market Recovery Index finally reached 101.0 nationwide, bringing the index above the pre-COVID recovery benchmark.To measure the market, the index leverages a weighted average of four key components of the housing industry:
- Housing Demand – Growth in online search activity
- Home Price – Growth in asking prices
- Housing Supply – Growth of new listings
- Pace of Sales – Difference in time-on-market
The pace of home sales has now recovered with inventory moving faster than this time last year – but supply remains the critical missing piece in the recovery.Many in the industry are predicting more bumps ahead as the anticipated supply of listings is expected to drop sharply. https://www.realtor.com/research/housing-market-recovery-index-trends-july-18-data/
Corcoran Welcomes a New Affiliate
The Corcoran Group, Realogy’s premier residential real estate brand, is excited to announce another West Coast acquisition by its largest affiliate, Corcoran Global Living who joined the brand earlier this year – https://www.inman.com/2020/07/28/corcorans-biggest-franchise-expands-again-by-acquisition/
Are you and Corcoran a mutual fit?
Mortgage and real estate trends to watch for in the rest of 2020
Rates will probably go even lower, but don’t expect to find many homes on the market. One of the 2020 forecasts was that mortgage rates wouldn’t change much, and the pandemic rendered that one flat-out wrong. Something more interesting happened to three other predictions: COVID-19 rendered them right but for unexpected reasons. Read more.
2020 is the summer of booming home sales – and evictions
The affluent are taking advantage of the cheapest mortgage rates in history to buy bigger homes. Meanwhile, renters face more job losses and fear eviction. See link to full article.
Realtor.com wades into iBuying at last
Even as rivals rushed into iBuying, Realtor.com resisted the home-buying craze. Until now. The listings portal said Thursday that it is launching a seller’s marketplace, where sellers can request offers from Opendoor, EasyKnock, HomeGo and WeBuyHouses.com instead of listing directly on the open market. Learn more.
Economists say the 7 things the U.S. needs to do to recover from the coronavirus recession
As Congress debates what to include in the next stimulus package, the key to fixing the U.S. economy is fairly straightforward, economists say: Get the coronavirus under control. Economic recovery can only come if citizens feel safe. Unfortunately, “straightforward” doesn’t necessarily mean simple… Full article.