Legacy franchisor RE/MAX posted another quarter of decline in revenue and agent count year-over-year. The latest financial information was released Aug. 8, with a virtual earnings call for investors Aug. 9.
In a statement, CEO Erik Carlson explained that Q2 results were “better than expected,” as financial results were anticipated to be lower than previous years, likely due to the recent National Association of REALTORS® (NAR) settlement. Another factor was a commission settlement of $55 million in the third quarter of 2023, resolving sweeping class-action claims in the wake of the landmark Burnett vs. NAR decision.
During the investors call, Anthony Paolone of JPMorgan asked if Carlson and RE/MAX had “a sense or view as to how much of the pressure on agent count thus far has been as a result of the pending changes that are going to go into effect” versus “just the housing market more broadly?” He continued, asking if in the next three to six months, “we’ll actually start to see some fallout, or do you think that these changes have been pretty well digested by folks?”
Carlson responded saying that the macro environment is “obviously impacting agent count,” and “new buyer representation is impacting agent count,” adding that the changes associated with the upcoming Aug. 17 mandate will certainly continue to put pressure on agent count overall.
In comparison to Q2 of 2023, total revenue for RE/MAX decreased 4.8% to $78.5 million, total agent count decreased 968 agents, or 0.7%, to 143,542 agents and the U.S. and Canada combined agent count decreased 4.4% to 78,599 agents. The company reported earning $3.7 million in profit for the quarter, according to its report, and expects to earn between $75 million and $80 million next quarter, which would be a drop between 1.5% to 8.3% compared to the third quarter of 2023.
Regarding impact from new policies which go into effect Aug. 17, Carlson said that RE/MAX agents are still “a bit more protected” due to having “more productive agents. So when I think about that, it’s more swings of the bat…they’re more experienced at negotiating and dealing with customers and explaining their value.”
According to Carlson, RE/MAX has “got this outstanding network of broker owners that are providing training on a day-in and day-out basis,” which he claimed is imperative to remain effective and transparent in a struggling market—a strength of the RE/MAX network, especially in a time of soon to be industry changes.
He concluded his response in a positive manner, suggesting RE/MAX is starting to “bend the trend” regarding loss of agent count, and the newly implemented settlement practices will not be detrimental to the firm.
“So, do I think that agent count will continue to be under pressure from an industry perspective? Absolutely,” said Carlson. “Do I think it’ll hit part-time harder than full-time? A hundred percent. Are we subject to continued agent count decline? Yes, but I think we are starting to bend the trend a little bit and understand who’s leaving, why they’re leaving and what we can do to course-correct there. So we’re actually kind of excited that there might be more of that for more productive full-time agents here in the future. And we’re excited that RE/MAX can pick up some of that market share.”
“We continue to operate our business as efficiently and effectively as possible, which contributed to better-than-expected second-quarter financial results,” Carlson said in a statement. “Both during and after the quarter, we were pleased to announce notable brokerage and team conversions to RE/MAX, testament to our brand’s strong reputation and value proposition in the market. Our mortgage business also continues to be resilient as we saw a year-over-year increase in open Motto Mortgage franchises.”
Further, he shared that experienced and skilled agents will continue to have an advantage in a post-settlement industry, because skill is no longer just optional to thrive with RE/MAX—or across the industry in general.
“As sector dynamics continue to change, skill is no longer optional. Agents who are experienced, productive, and trustworthy—attributes widely associated with RE/MAX affiliates—have a distinct competitive advantage. Those professionals, supplemented by our extensive support and resources, including outstanding education and marketing, our industry-leading brands, and our abundant presence in local markets, position RE/MAX Holdings to succeed in the months and years ahead.”
