Like many other residential brokerages, Placentia-based Impact Properties saw its business boom during the pandemic, a result of homebuyers seeking a new place to live following shelter-in-place orders.
Not too many local firms saw quite the jump as Impact, which more than tripled its revenue in the past two years to $5.4 million.
This was driven by the firm’s expansion in Tennessee, which followed a demographic shift from California.
“We saw a lot of individuals moving from California to Tennessee, and so we have helped a lot of sellers leave the state,” Aaron Zapata, who founded Impact in 2013, told the Business Journal.
Impact now double ends those deals by helping individuals sell their homes in Southern California and finding them a new home in Tennessee, after opening its first office in the state in Franklin in early 2019.
“We have eight agents in Tennessee, and we are seeing significant year-over-year growth,” Zapata said.
Impact Properties ranks No. 3 on the Business Journal’s Fastest-Growing Private Companies list in the Small Company category (see list, page 46).
Impact now counts three offices in total, in Orange County, Los Angeles and Tennessee.
About 60% of the sellers the company represents are moving out of the state. It’s a trend that kicked off before the pandemic, Zapata notes.
“We recognized there was exodus, mostly of families or those looking for a lower cost of living and a slower-paced lifestyle,” Zapata said. The pandemic only bolstered that trend, with remote work essentially “unlocking the middle of the U.S.”
“What we’ve seen is older sellers that don’t have any kids moving to Idaho or Florida, while younger families are moving to Texas and Tennessee.”
Impact plans to expand in those regions via franchising.
“We recently started the process to franchise in new states, so we’re working through the challenges and opportunities that brings,” Zapata said. “Plenty of successful real estate companies, like Century 21, started in Orange County and grew significantly. Why can’t we?”
The company hopes to have 50 offices in 12 states over the next three years.
“We’re eyeing states where we send sellers to, such as Arizona, Idaho, Texas and Nevada.”
Impact Properties is typically involved in home sales between $900,000 and $3 million.
In and outside of OC, Zapata has noticed a cooling of the market because of higher interest rates.
“There are fewer homes on the market and buyers are sitting on the sidelines waiting for lower prices, which is a self-fulfilling prophecy,” Zapata said. “We have 98 active listings in Yorba Linda. Of those, 46 have had price reductions.”
He expects buyers to return to the market when interest rates, currently in the mid-5% range, come down into the 4% range.
“We haven’t seen this behavior in market since the housing collapse of 2007, but I don’t think it’s the same,” Zapata said. “Unlike last time, there isn’t frivolous lending and over-building, there is record equity and buyers are still putting significant down payments.
“Prices simply have to adjust to allow for affordability to return to the market.”
Impact counts 50 independent contractors in total, which isn’t a huge increase over 2020 levels, Zapata notes.
“We haven’t grown significantly in the number of agents, but our agents have grown significantly within the company,” he said.
“Part of our business model is training our agents and equipping them to be the best in the business. We want them to be as successful as possible.”