Real estate broker Joe Rand feels envy and frustration when he reads about the financial valuations of companies like Compass and Redfin — or even ZipRealty when it sold to Realogy for $166 million in 2014.
Zip was valued at six times top-line revenue, while the valuation arithmetic for traditional brokerages — like Rand’s profitable Better Homes and Gardens brokerage — is only four to five times net income.
The difference between the two methods of valuing companies is like the gap between the cost of a Tesla and the price of a skateboard.
“Maybe I should start telling people that I am a technology company — give me $100 million and I can build a kick-ass company,” said Rand.
These sorts of “valuations really don’t make sense, considering their business models ar…