The Real Brokerage looks to build on 2023’s explosive growth

With its supercharged growth over the past two years, it is no surprise that The Real Brokerage topped the 2024 RealTrends 500 Top Movers list for both transaction side count and sales volume.

In 2023, Real recorded 48,905 sides, up 14,721 sides from 2022, and a sales volume of $21.2 billion, up $6.80 billion over the prior year. Not only were these figures good enough for the top mover spot, but Real ranked at No. 6 and No. 10 nationwide for transaction sides and sales volume, respectively.

But for Real, which runs a virtual brokerage model with revenue sharing for its agents, the goal is to get better, not necessarily bigger.

“The growth we’ve had is great, but if that growth doesn’t deliver what the business needs from a volume and a transactions perspective then you don’t have the kind of growth that is connected to the core part of the business,” Sharran Srivatsaa, Real’s president, said in an interview. “What I am really grateful for is that we are not just seeing agent growth, but based on the rankings we have had significant transaction and volume growth.”

Real’s big splash on the 2024 RealTrends rankings come as its agent count has soared to over 16,000 agents spread across the U.S. and Canada. In comparison, at the end of Q4 2021, Real’s agent count was just 3,850 agents, a figure that already represented a 161% annual increase from Q4 2020.

Srivatsaa said there are three main components that is driving agents to Real: the firm’s culture, its model, and its platform.

“At traditional firms there has always been a silo effect,” Srivatsaa said. “But the overall network is a powerful thing and what we have noticed with these silos is that they take away and power and size of the network. We have this idea that we call ‘One Real,’ which is that there are no silos, and it creates an even collaboration field.”

According to Srivatsaa, this means that trainings and resources brought in by one team leader or broker are available to all agents at the firm.

“Culturally speaking it has been super powerful,” Srivatsaa said. “Because of the power and size of the network people have access to everything and can pick and choose what they want to utilize.”

Sharing the rev

As for Real’s model, Srivatsaa cited agents’ ability to unlock multiple different revenue streams as a reason for agent growth. In addition to the firm’s revenue share program, which pays agents for recruiting productive agents, Real agents can also set up joint ventures through Real Title and One Real Mortgage.

“The best part of this is that they are just options,” Srivatsaa said. “Giving people options of multiple revenue stream is really powerful.”

Real also operates on a standard 85/15 commission split for all agents with a cap of $12,000, which Srivatsaa said helps the firm maintain its agility even as it continues to grow. Agents who reach their commission cap receive stock bonuses, which has aided in agent growth.

Agents can also gain stock by purchasing it, attracting productive agents to Real, as well as stock awards for teaching agent training programs at Real or doing community service projects.

“If I am working in a dog shelter for 12 months an serving my community or I am volunteering at the Red Cross and I get that pre-approved, then at the end of the 12 months I can get a stock award for that,” Srivatsaa said.

Though Real made progress financially, like virtually all of its brokerage peers it was in the red in 2023. Real posted a net loss of $27.2 million on $689.1 million in revenue. Its net margin was -4%, largely because it pays such a large amount of revenue in the form of stock-based compensation.

The white label tech stack

Real’s technology has a 100% adoption rate by all agents, as they must use it in order to receive their commission. It has also fostered collaboration, Srivatsaa said. Everyone in the company has visibility into how agents are progressing and growing their businesses.

Founded in 2014 by CEO Tamir Poleg and chief technology officer Gal Weiss, Real managed to fly mostly under the radar until it went public in 2020. Its profile continued to rise in 2021, when it began trading on NASDAQ in June of 2021. While Srivatsaa is pleased with the growth his firm recorded in 2023, he has even bigger plans in store for 2024.

In January, Real launched its Private Label and Pro Teams business avenues. Under the Private Label program, independent brokerages or teams that join Real can keep their own branding but be powered by Real.

“It is a straight white label,” Srivatsaa said. “You keep your brand on the front end and it is powered by Real on the back end.”

With Pro Teams, not only do teams or independent brokerages that join Real get to keep their branding, they can also keep their model.

“Last year we did five Private Labels as a pilot, just to see how it would work and the thing we quickly realized is that all of them had very different business models, one was a flat fee, one was a high cap, and when they came to Real they kind of had to force their model onto ours and that caused friction with their agents because their split program changed,” Srivatsaa said. “With Pro Teams, the team leader can tell their agents that nothing changes for them, they just now have access to everything Real has to offer, then on the backend our software reconciles everything from a model perspective.”

So far, these programs have helped attract many independent brokerages and teams to Real including the 200-agent strong PREMIERE Group. While Srivatsaa expects these programs to continue to drive agent count growth throughout the year, a positive for the firm, he is also excited about the launch of Real Wallet.

Real Wallet, the company’s first fintech product, is a digital debit and credit card platform specifically for Real agents. The product enables Real agents to consolidate all commission income, revenue share payments and equity earned through Real into one digital platform with the ability to access these funds through a Real-branded debit or credit card. Agents can then use points they accumulate from their card transactions to reduce their brokerage transaction fees.

“That goes live in the first part of Q2, and we expect it to be in production in Q3 and Q4,” Srivatsaa said. “So, a big part for us in 2024 is stabilizing the agent base out with Private Label and Pro Teams and launching the Real Wallet.”

Source link

About The Author