RE/MAX executives were not shy about acknowledging the uncertainty that is currently plaguing the real estate industry during the firm’s first-quarter 2024 earnings call with analysts and investors Friday morning.
But despite the uncertainty and the soon-to-beimplemented business practice changes outlined in the National Association of Realtors’ (NAR) commission lawsuit settlement agreement, RE/MAX leaders are confident in the brokerage’s ability to succeed in this changing environment.
“While there are a lot of factors currently affecting the real estate market, one thing remains constant: RE/MAX agents leverage their skills, experience and competitive advantages to serve as many customers as they can,” said Erik Carlson, who was appointed as the firm’s CEO in November.
“The key difference between our business model and that of many of our peers is that our model incentivizes agents to help buyers and sellers reach their housing goals, while some other models have incentivized their agents to recruit other agents, many of whom are not productive.”
Carlson cited RealTrends Verified data to illustrate how productive RE/MAX agents are. He noted that the average RE/MAX agent closed 11.8 transaction sides in 2023, more than double the average of other agents. If the firm hopes to continue growing, its agents must remain highly productive, as RE/MAX’s financial results for the first quarter show that it is still struggling with agent count.
Year over year, RE/MAX’s total agent count in Q1 2024 was down 0.2% to 143,287 agents. A 6.1% annualized decline in U.S. agent count — to 53,919 agents — was the largest contributor to this decrease, but it was partially offset by a 5.5% increase in agent count outside of the U.S. and Canada to 64,322 agents.
Amy Lessinger, the newly appointed president of RE/MAX, attributed at least some of declining domestic agent count to the overall industry contraction.
“We’ve seen this historically and we are not immune, but I think what we expect moving forward is that professionalism and the ability to navigate, given the industry changes, is going to become even more important,” Lessinger said, ”and so we feel like we are sitting in a great position to capture agents who truly need support during this time and who truly need to elevate their skill set, because we are ready with everything they need to succeed.”
Karri Callahan, RE/MAX’s chief financial officer, also noted that the firm expects agent count to possibly drop further in Q2 2024, with a range of -1.5% to +1.5% for full year agent count change.
In addition to a decline in agent count, RE/MAX reported an 8.3% annual decline in revenue to $78.3 million and a net loss of $3.4 million in Q1 2024, compared to a net loss of $0.7 million in Q1 2023. The firm attributed these declines to a reduction in revenue from RE/MAX’s annual agent convention, which executives said was due to hosting a smaller event and shrinkage in its U.S. agent count.
Much of the earnings call was devoted to discussing NAR’s settlement agreement and what RE/MAX is doing to help its agents navigate the outlined business practice changes.
Carlson noted that within hours of the settlement news, Lessinger held information sessions with the firm’s brokers and agents.
“With 51 years of history, we’ve had a front row seat to many sudden changes in our industry, and the wisdom that comes with experience continues to serve us well,” Carlson said. “Education and outreach, two other core strengths of RE/MAX, were our top priorities following the NAR announcement.”
As noted by Carlson, RE/MAX is currently focused on the development of training and educational materials for its affiliates, so they are not only prepared for these changes but also prepared to answer questions from consumers. These training materials highlight four items RE/MAX believes agents and brokers should be focusing on right now.
The first is that RE/MAX agents should “conduct their business with the security of being released and protected from liability related to these industry lawsuits,” as RE/MAX’s settlement agreement, which will have its final approval hearing next Thursday, protects them.
Executives also advised that agents and brokers should be preparing for the business practice changes outlined in the NAR settlement, and that they should speak to their clients in a “clear, transparent way about the value they provide and how they are compensated.” Finally, RE/MAX is advising agents to stay updated on ongoing industry developments.
“The terms of the proposed NAR settlement will change some aspects of the business, but RE/MAX agents are well positioned to navigate these changes and we will help guide them as they evolve,” Carlson said. “Given the extensive experience within our network, our affiliates are able to lean on and learn from the RE/MAX community — that’s the power of a network built with full-time, productive agents.”
Looking ahead, while RE/MAX executives noted that many questions remain unanswered and that only time will tell how exactly NAR’s settlement agreement will impact the industry, the firm remains strongly in support of buyers agents’ value.
“We continue to remain steadfast in our support of buyer agency and buyer broker compensation, emphasizing the significant advantages of having buyers and sellers represented by trustworthy seasoned real estate professionals,” Carlson said. “These skilled agents ensure that consumers receive guidance and advocacy while navigating the complexity of the homebuying and selling transaction. This representation generally drives better outcomes and experiences for the consumers involved.”
