HomeSmart is a growing real estate brokerage that may go public, but the company faces questions about its business model and the compensation of founder and CEO Matt Widdows.
Founded in 2000, Scottsdale, Arizona-based HomeSmart is the seventh largest brokerage in the country by transaction sides, or how many times a HomeSmart agent represented the buyer or seller in a deal, according to RealTrends.
Last Friday, HomeSmart filed an “S-1” with the Securities and Exchange Commission, a document that conveys HomeSmart’s intention to sell company shares to prospective investors and the public.
HomeSmart has yet to give itself a valuation or declare how much money it seeks to raise in a public offering. The company generated $478 million revenue in the first nine months of 2021 – a figure that includes what income is earned by their independent contractor agents, and posted a $2.3 million net loss, according to the filing.
HomeSmart, like Compass, Keller Williams, eXp and other brokerages, states it has unique technology to modernize real estate.
“HomeSmart is a revolutionary real estate enterprise powered by our proprietary end-to-end technology platform,” declared the first page of the voluminous SEC filing, later elaborating: “We have been developing our software in-house over the last 20 years and have a 100% adoption rate across our agents.”
There’s substance to HomeSmart’s claim, argued Steve Murray, senior advisor at RealTrends and longtime real estate industry consultant.
“HomeSmart does have one of the most interesting tech platforms out there as it has been internally built and basically covers all aspects of a brokerage firm’s operations,” Murray said. “The fact that it has been used for years and built upon and it’s a totally cloud-based platform does make it both unique and useful to its own operations.”
And HomeSmart has grown its agent base 30% the last two years from 17,841 agents at the end…