In early May, the Speicher Group, whose 21-agent Washington, D.C.-area real estate team did approximately $100 million in sales and approximately 200 sides in 2022, joined The Real Brokerage, the fast-growing virtual brokerage that catapulted into the top 20 of the Mega 1000 with $12.1 billion in 2022 sales and 28,464 2022 transaction sides.
The Real Brokerage, launched in 2014 and traded as a public company on the Nasdaq exchange, has leveraged an accelerative model similar to eXp Realty to achieve its staggering growth: an agent revenue-share program, low-fee commission model and equity programs for agents. It’s now in 47 states and four Canadian provinces with over 10,000 agents.
Without physical offices, the firm uses those savings to invest back into agents in the form of revenue sharing and equity stock grants, which have appealed to agents and teams like Speicher Group and contributed to its growth.
“Our job is to evaluate the competitive landscape and where it’s headed in the next three, five, 10 years, and to partner with those who give us the best shot at revenue and profitability,” Speicher Group Co-Founder Chris Speicher told T3 Sixty. The ability Real provided to give his team stock options, to become joint ownership of title and escrow business and the revenue share opportunity, along with the company’s simple, strong tech stack convinced him to make the move from Long & Foster.
Now a top 20 brokerage in the nation, Real has caught the industry’s attention. Among the nation’s 1,000 largest brokerages, it saw the largest growth in sales volume and transaction sides from 2021 to 2022 with growth of 179.1% and 114.9%, respectively, according to the 2023 Mega 1000.
Like many public real estate companies, Real is not profitable, but it is growing fast and capturing share. The company reported $381.8 million in 2022 with a net loss of $20.4 million.
The Real Brokerage business model details
The company employs a model similar to eXp Realty: no offices, revenue share, equity grants and low caps.
Without the burden of office space (the first or second largest expense most brokerages have), the company can pour resources into agents and its revenue share model, which encourages organic growth. Agents who recruit other agents receive a portion of that agent’s contribution to Real.
The company also provides shares to agents, which encourages a sense of ownership and the ability to directly financially grow as the firm does.
The company has focused on developing a full technology system in-house that allows the firm to process transactions at support agents at an extremely efficient clip.
“We automate transactions,” Real Brokerage co-founder, CEO and Chairman Tamir Poleg tells T3 Sixty.
For example, the firm’s efficiency ratio, which it defines as the ratio of full-time brokerage employees (minus those in title and mortgage) to agents, stands at 114 agents to every one employee as of March 31, 2023. That’s more than twice the efficiency of March 31, 2022, when it was 55 agents to every employee. The firm is getting more efficient as it scales.
In May, it launched its in-house e-signature Real Signature and generative AI assistant Leo.
In addition, as the company has gained momentum on the agent side of the business, it has expanded its focus on building out its consumer offerings. A major focus for the company in 2023 is building out its end-to-end consumer app.
Like many other brokerages, Real is looking to leverage ancillary business to boost revenue and profits. The company acquired title and mortgage businesses in 2022 and now has Real Title active in 10 states and mortgage active in 20 states (in 12 it is active as a lender).
It has introduced an innovative model in title to align interests with its agents and to encourage them to use Real Title. It has made its title business a joint venture with agents owning 45% of the business. As part owners, they receive dividends based on company profits. Therefore, they are incentivized to send Real Title business. Approximately 300 agents are now participating and the company reports attach rates north of 70%.
Speicher attributes the ability to participate in ancillary profits as another reason he chose to join Real.
As RESPA is a bit more complicated on the mortgage side, the company does not have a similar program for its mortgage business. But, as it builds its consumer app, it is looking to streamline communication and transaction processing for consumers who use its ancillary services.
The Real Brokerage represents the promise of a streamlined brokerage future, one without expensive offices and a model that leverages capital and incentives to support organic agent growth. All brokerages can learn from the model and innovate to leverage similar opportunities.