Is the business model about to change? Ray/Max? The company raised the possibility during its second-quarter 2024 earnings call Friday morning, as the brokerage’s shrinking agent count continues to depress the real estate company’s revenue in an already difficult housing market.
RE/MAX has operated on a flat-fee business model since its inception, but the company website advises that agents looking to earn commissions have several options.
Asked whether RE/MAX was considering changing its model to “take more into consideration the economics of actual transactions,” Chief Executive Erik Carlson said the company was “spending no stone unturned.”
“We’re not naive enough to think that we might not need to change,” he said. “We’re looking at all aspects of the business, whether it’s large-scale changes to the model or future hybrids.”
Investors are clearly bullish on this possibility, as the company’s stock price rose today. In addition, the company’s net profit from April to June was US$3.7 million, mainly due to a 13.3% annual decrease in operating expenses due to lower sales, operating and administrative costs.
The number of RE/MAX agents fell 0.7% year over year to 143,542, but was up from 143,287 in the first quarter of 2024. .
The company’s agent numbers had been declining before the COVID-10 pandemic as competition intensified in the low-cost brokerage space. The annual decrease in the number of agents resulted in revenue falling 4.8% from the same period last year to US$78.5 million.
motto mortgageRE/MAX, a national mortgage brokerage franchise brand launched in 2016, has seen a 2.6% increase in the number of franchises over the past year. The company said approximately 50% of franchise sales come from RE/MAX affiliates; 20% from independent or competitor brokerage firms and teams; 20% from investors; and 10% from loan originators.
RE/MAX expects agent counts to remain roughly flat for the full fiscal year, with full-year revenue expected to be between $305 million and $315 million.
RE/MAX’s settlement of Barton Homebuyers Council lawsuit remains on hold and is not included in national association of realtors‘Settled because the plaintiff represented the buyer, not the seller.
Homebuyer plaintiff James Mullis appeals the May 9 decision to finalize the settlement agreement with RE/MAX and other defendants Keller Williams and Anywhere. Under the agreement, RE/MAX agreed to pay $55 million.
The appeal was filed June 4, and the second appeal was filed by Spring Way Center, the original home seller’s plaintiff in the Cottage Commission lawsuit filed in Pennsylvania last December.
