In the past few years, real estate brokerage and franchise giant Keller Williams has doubled-down on technology, launching Kelle, its artificial intelligence-powered virtual assistant and referral platform, Command, its customer relationship management (CRM) system, and in February 2020, its long-anticipated consumer app.
But next year, as the largest real estate brand in the country in terms of annual sales volume, transaction sides and agent count, Keller Williams has set it sights on growing its market share as its competitors nip at its heels.
“In 2021, Keller Williams will have to defend against a growing number of companies looking to gain market share — eXp Realty, Compass and Realty One Group — and see the company at the top as the obvious target,” Stefan Swanepoel, chairman and CEO of T3 Sixty, a real estate consulting and publishing firm, told Inman via email.
“In some ways, the challenges Keller Williams faces are the same that other large legacy companies face. While it has a profitable business, it takes time and lots of effort to adapt to some of the industry’s big changes such as compressing commissions and increased competition pushing agent splits up in favor of agents.
“As technology, new models and branding have increased in the industry, so, too, does the challenge to compete against companies aggressively pursuing these.”
What are Keller Williams’ plans, what might stand in their way, and will the company follow its rivals into the public arena in order to meet its goals? Here’s a rundown.
A new market-share goal
“We have an ambitious goal to help our agents have 11 percent market share nationwide by the next year,” Josh Team, president of Keller Williams Realty, told Inman in a live interview.
Keller Williams’ current market share is 10.4 percent of all U.S. residential real estate transactions as of Oct. 30, the company said. KW declined to say how many more transactions its agents would need to close to reach the 11 percent mark.
According to an internal market trends report obtained by Inman, the company’s agents closed 1.19 million transactions in the 12 months between December 2019 and November 2020.
Given that there are about 12 million transaction sides per year and home sales are expected to leap even further in 2021 than they did this year, achieving 11 percent market share could mean boosting that transaction count by tens of thousands, if not hundreds of thousands, next year.
As of Nov. 30, 95 percent of KW market centers in the U.S. and Canada are profitable for the year, the company said. Although some Keller Williams franchises reduced their profit share for a couple of months at the beginning of the pandemic through an accounting maneuver, that profit was eventually released, Team told Inman.
This year, Keller Williams distributed $149.5 million in profit share year-to-date through Nov. 30, the company said. That’s 4.2 percent lower than the $155.99 million in profit share the company distributed during that same time period in 2019. Keller Williams closed $364.4 billion in sales volume this year through Nov. 30, up 13.1 percent from the $322.2 billion in sales volume the company closed in the first 11 months of 2019.
New a la carte services
In order to accomplish its goal, Keller Williams will be scaling up a rollout of professional services it began in November, according to Team. The services are available to KW brokerages and agents via the KW MarketPlace, an app store on the company’s Keller Cloud platform. The services include lead generation, marketing, technology setup and onboarding support, among others.
Agents and brokerages can choose from the menu of services and pay for them a la carte. For instance, a service called “Market My Listing” costs $90 a listing and includes the creation of digital media for fliers, postcards, a Facebook ad, and more, the company said.
Some agents would rather focus on the relationship aspects of their business than the tech aspects, according to Team. “[They say] ‘I don’t want to push buttons. I don’t want to learn systems. I want you to give me the leads. I want you to help me convert them. I want you to help me build listing presentations. I want you to market the listings I get. I want to go and be in a relationship and be a Realtor and help people find homes. I want to help them sell homes. I want to be with the client, doing real estate,’” he said.
“So we built a whole set of suite offerings in 2020 that we’re going to be scaling up in 2021, doing all those services for agents. You don’t want to market a listing, you can just call us. You want [us] to create marketing collateral for you, you can just call us. You want to get leads and not have to click buttons, you can just call us. So we created that kind of easy button, concierge service … to help people go do that.”
Team said that agents generally have to choose between having an independent relationship with their brokerage but with fewer services or having a more dependent relationship with more services, but more constraints on what they can do.
“[T]he way we see the brokerage community is on a gradient/spectrum,” Team later said via email. “From 100 percent dependent (they offer all their services, very structured, and very little flexibility) to 100 percent independent (a lot less structure, typically less services, and a lot more flexibility).
“[I]t’s our belief that no brokerage offers both: all the services, all the structure, all the flexibility (branding, teams, etc), and independence any agent may want. We aim to change that. And believe we can because of our size and scale.”
No matter which type of relationship an agent wants with a brokerage, “we want to make sure that we’re the best-in-class option for you,” Team added.
Taking more market share means growing agent count, unless the company is able to grow its transactions per agent, which stood at 7.5 in the 12 months between December 2019 and November 2020 — a rise from 7.1 in full-year 2019. In February 2020, another internal report revealed that the company had lost agents for four consecutive months — the first such decline since 2012.
The aforementioned market trends report notes that the company has grown by 5,040 agents in the U.S. and Canada alone year-to-date, from 159,372 at the end of December 2019 to 164,412 at the end of November 2020. That’s a 3.2 percent increase.
By comparison, KW’s agent count grew by 8.3 percent in 2018 and fell 5.9 percent in 2019 after its “ghost agent” purge. Between 2013 and 2017, agent count rose by double-digits, between 12 percent and 18.6 percent.
“Keller Williams had one of the biggest runs I’ve seen in my entire career, from 2000 to 2018 in terms of agent count and growth in sales,” Steve Murray, the president of publishing and consulting firm Real Trends, told Inman in a phone interview.
“[KW co-founder] Gary [Keller] then boldly kind of pivoted a little bit to focus the people, resources and capital into technology to make that the new foundation of how Keller would continue to grow.”
But the company has encountered new competition from companies such as eXp Realty, United Real Estate, Realty One Group and Fathom Realty, and their agent count has “plateaued,” Murray said.
He attributes this to the company’s focus on technology more than on agent growth and development.
“They’re going to keep a strong focus on technology,” Murray said. “That’s probably wise. But they need to give equal concentration on their core business, which is recruiting and developing agents.”
While many real estate brokerages, including Keller Williams, have focused more and more on technology, in part to gain a competitive advantage to recruit agents, Murray said it remains to be seen whether that strategy actually works.
“Everything I’ve ever observed and studied tells me technology is part of the mix of what you have to have to attract and retain agents, but it’s probably not the most important thing,” he said. “I think the relationship you have with agents — building a culture, building a sense of community with your sales force — is probably more important than anything else.”
“In terms of recruiting agents, my entire experience of all these years is that is still very much a personal one-on-one event,” he added. “So Keller, longer term … they have to balance their technology focus with recruiting and developing people, which, by the way, for a long time, they were one of the best in the country at it.”
Compass and Realogy have also revamped their technology in recent years, Swanepoel noted. “Depending on how the value proposition it provides to its agents progresses, it will face pressure from other companies giving agents compelling offerings at competitive pricing,” he said.
What’s next in tech
Murray said he wasn’t able to opine on the quality of the tech tools offered by Keller Williams or whether the quality could be impacting recruiting efforts. Real estate Facebook groups are rife with agent complaints about the functionality of Command and the consumer app, among other tools.
Team told Inman there were bound to be mixed reviews of the tools among 160,000 agents.
“We’ve had bugs, undeniably,” Team said. “Inevitably sometimes we make mistakes. When there’s an issue, when there’s an outage, when something doesn’t work, we have a thing called median resolution time and that’s how long from the time it was reported or it went out until it gets resolved. Over 90 percent of all issues that we have get resolved in under an hour. When we do make mistakes, it’s important that we own up to it.”
Asked whether agents are required to use Command in order to get their commissions, Team said that was a market center by market center decision, but that even if they were, agents were not just using Command for that.
“That wouldn’t explain the 63 million contacts, the almost 30 million consumers on [KW’s automated marketing and task management app] SmartPlans, the over a million design assets created, the millions of tasks being used for it,” he said.
Keller Williams’ chief product officer, Neil Dholakia, departed at the end of 2019 under unclear circumstances. Asked whether he had been replaced, a spokesperson said the company had not publicly announced a new CPO.
Command had 143,104 active users as of September 30, up 7.3 percent from the second quarter. The company defines an “active user” as “a KW associate who has logged into Command through our website, our Kelle app, or their mobile device and took an action to store, craft, or share content within a Command application or an application or website that is integrated within Command.” Its quarterly active user counts refer to active users year-to-date.
Although home sales were higher in the third quarter than in the second quarter, home searches on KW’s consumer app, KW.com and market center and agent websites were down 0.9 percent, to 120.8 million. Keller Williams declined to share adoption rates for Command or its consumer app.
Regarding KW’s tech initiatives for 2021, Team said the company’s reorganization would allow it to streamline the consumer experience. In October, the company announced it had formed a new holding company, KWx, which encompasses all of the Keller Williams brands, including Keller Williams Realty, Keller Williams Worldwide, Keller Mortgage, Keller Covered and Keller Offers.
“The whole idea of KWx is to take the value of the ecosystem — mortgage, insurance, all these adjacent things that are around the transaction — and simplify it,” he said.
“The real estate agent can in one conversation with one technology, the phone, allow their consumer to easily navigate the transaction and doing so in a way that delights the consumer because they don’t have to go chase emails down, do a bunch of text messages, talk to four different companies. It’s all just simple and easy because we have a platform that talks to everything, touches everything.”
Command already “talks to” more than 500 different products, according to Team.
“Going now adding the adjacent companies through this ‘hold co,’ KWx, to create that value is something we’re doubling [down] all the way in next year,” he said.
“We’re going to continue our mission on making Command simpler, easier, smarter. We’re gonna continue adding more and more smart components making agents’ life easier and easier.”
Keller Williams will also launch an entire new suite of tools and offerings in the second quarter, Team said, though he declined to offer details.
“It’s gonna be all around that community aspect,” he said. “How do you take agents in California, New York, Texas and Florida, put them together on demand and allow them to get smarter together in a collaborative interactive way? We have a thesis on that and we’re pretty excited about revealing that.”
Will Keller Williams go public?
After the company announced its reorganization under KWx, many speculated that Keller Williams would follow its rivals in going public.
“They still have a powerful organization, they’re still very profitable. They still have substantial financial reserves. They can do whatever they choose to do,” Murray said.
Swanepoel said there was a “very strong possibility” that Keller Williams would go public.
“[T]he company has been preparing itself to be able to pull the public trigger should Gary Keller choose to do so,” he said. “Whether SPAC or IPO, it will be one of the largest public real estate offerings, if not the largest, of all time.”
“Going public increases capital and improves capital-raising opportunities. That in turn enables companies to improve and accelerate [and] enhance technology platforms/services, expand brand awareness, secure key alliances/opportunities, etc.,” he added.
Murray said he doubted Keller Williams would go public given conversations he’s had with Gary Keller, who became executive chairman of KWx as part of the restructuring and handed the CEO role to Carl Liebert, a retail, financial services and industrial services veteran.
“[Keller’s] strength is as a teacher, a strategist and a coach,” Murray said.
“He’s restructuring the company so he can focus on the things he loves the most, which is coaching his top teams and agents and his regional directors and market center leaders, but not be in charge of operations, day-to-day stuff. If he goes public he becomes an extremely wealthy man, but he’s already an extremely wealthy man.”
“I think Gary wants to see his company become the largest firm in the world as a goal and he’s still got some ways to go to get there to top RE/MAX, measured by transactions or volume,” Murray added. “He’s got a little bit to go to catch them globally. He’s caught them in the U.S.”
Asked point-blank whether Keller Williams would go public, Team said, “No, we’re not.” Keller Williams created KWx because it wanted to integrate all of its different entities in order to behave as one big company, according to Team.
“Most of the companies of our size are public and so it’s sometimes like this false signal that we’re doing things like that, but the truth is, we’re just a big company operating like a big company,” he said.
“There’s no plans to go public. There is plans to create that one organization, so we can all move faster together to serve our agents at a higher level, so they can serve their consumers at a higher level, and that’s the whole goal.”
Editor’s note: This story has been updated to remove a screenshot of an old email editor feature.