Escrow Agencies and Other Real Estate Services
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 19,800 escrow and real estate services providers in the US facilitate the selling and purchasing of real property as well as securing access to land-based resources. Escrow agencies are neutral intermediaries that collect and hold funds in a trust before they are transferred between buyers and sellers in real estate transactions. Real estate listing services publish information on properties for sale or rent and may also offer special services such as advertising and lead generation to brokers and agents and provide integrated services including financing, title searches, and escrow accounts to home buyers, either directly or through partnerships with third parties. Landmen interact and negotiate directly with landowners to acquire leases for exploration and development of natural resources.
Seasonally Uneven Cash Flow
Cash flow for escrow agencies and other real estate service providers can vary and is affected by seasonal factors that affect real estate activity.
Complicated and Time-Sensitive Transactions
The escrow process is time-sensitive and complicated due to the involvement of numerous third parties in addition to buyers and sellers.
Industry size & Structure
The average escrow and real estate services provider operates out of a single location, employs 4-5 workers, and generates just over $1 million annually.
- The escrow and real estate services industry consists of about 19,800 firms that employ 91,000 workers and generate $23 billion annually.
- The industry is fragmented with the top 50 companies accounting for less than 40% of industry revenue.
- Large listing service providers include Zillow and Costar. Because the escrow process varies by state, most escrow agencies operate within a regional or local market.
Industry Forecast
Escrow Agencies and Other Real Estate Services Industry Growth
Recent Developments
Oct 25, 2024 - First-Time Buyers Defy Lack of Affordability
- Despite the worst housing affordability conditions in decades, some first-time buyers are finding workarounds to buying a home, according to The Wall Street Journal. In August, 55% of government-backed conventional purchase mortgages were for first-time buyers, marking the highest level of first-time home buying in August since 2014, according to Intercontinental Exchange. Millennials are driving first-time home purchases, and that cohort is expected to fuel the market for the next decade, according to Freddie Mac chief economist Sam Khater. However, even as mortgage rates have moderated to just over 6%, they are still about double what they were just a few years ago, which reduces the buying power of people shopping for a home. To cope with the lack of affordability, many first-time buyers are making compromises, including opting for smaller homes, living further away from metro areas, and teaming with family and friends to make financial ends meet.
- Home builder confidence in the single-family market rose in October amid moderating inflation and an expectation of easing mortgage rates in the coming months, according to the National Association of Home Builders (NAHB). Home builder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), rose two points to 43 in October 2024. Any HMI reading over 50 indicates that more builders see conditions as good than poor. The HMI survey also showed that 32% of builders have reduced home prices to lure potential buyers off the sideline. The average price reduction in October was 6%, up from 5% the previous month. In October, 62% of builders used sales incentives to entice buyers, up from 61% in September.
- Sales of existing US homes decreased by 1% in September from August and were down 3.5% year-over-year, according to the National Association of Realtors (NAR). The median existing home price rose 3% in September to $404,500 compared to September 2023. NAR chief economist Lawrence Yun said, “Home sales have been essentially stuck at around a four-million-unit pace for the past 12 months, but factors usually associated with higher home sales are developing. There are more inventory choices for consumers, lower mortgage rates than a year ago and continued job additions to the economy.”
- The number of building permits issued for single-family, privately-owned housing units increased 0.3% month-over-month but fell 1.2% year-over-year in September 2024. Single-family housing starts grew by 2.7% month-over-month and increased 5.5% year-over-year in September. Single-family housing completions declined 2.7% month-over-month but gained 1.6% year-over-year in September. Despite September’s gains in single-family home building, higher interest rates in October could dampen upcoming building data, according to the National Association of Home Builders (NAHB). However, the NAHB expects interest rates to gradually decrease in the coming quarters, which should support single-family construction growth.
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