Despite a 10.6% annual decline in revenue and a 6.3% drop in U.S. agent count, RE/MAX Holdings, the parent company of the real estate giant RE/MAX, stayed in the black during the second quarter of 2023.
Overall for the quarter, RE/MAX generated a net income of $2 million, down from $5.8 million a year ago, as its revenue dropped to $82.4 million. The firm attributed this to negative organic growth due to lower broker fee revenue and reduction in U.S. agent count, but it noted that it was partially offset by growth in Motto Mortgage and wemlo.
Although the firm’s total agent count has ticked up slightly, rising 0.4% year over year in Q2 to 144,510 agents, its U.S. agent count has taken a massive hit over the past several quarters, dropping to 56,987 agents. This decrease has been somewhat offset by a 1.5% annual increase in the firm’s Canadian agent count to 25,218 agents, and a 6.9% yearly jump in its international agent count to 62,305 agents.
“Canada continues to be an amazing growth story,” Nick Bailey, the president and CEO of RE/MAX, told investor and analysts during the firm’s second quarter earnings call Thursday morning. “Despite the rebalancing market, our presence continues to grow north of the border.”
That Canadian agent count has grown every month of the year so far, except for January. Bailey also noted that the firm has also seen a fair share of boomerang agents in recent months, who have returned to the firm from a variety of other brokerages.
RE/MAX is also pleased with its international agent count growth.
“Agent count outside of the U.S. and Canada accelerated to 7% during Q2 with countries including Turkey, Peru, Brazil and South Africa adding a notable number of agents,” Bailey said. “We believe the enduring global appeal of the RE/MAX brand and the impact of our recruiting campaigns are the primary drivers of our success.”
As U.S. agent count continues to decline, firm executives said RE/MAX remains focused on its growth pipelines.
“The combination of higher interest rates and tight inventory has made for a challenging housing market and agent-recruiting-and-retention environment,” Steve Joyce, the CEO of RE/MAX Holdings, said. “On a positive note, the pace of our U.S. agent count losses slowed quarter over quarter — which is encouraging, given the market conditions.”
Bailey also noted that RE/MAX is continuing to focus on its initiatives surrounding real estate teams.
“The team pilot we launched last August is helping our affiliates gradual expand and retain existing teams and build pipelines for large teams in the five pilot states of Texas, California, Florida, Maryland and New Jersey,” Bailey said. “Whether it is RE/MAX growing to six members, large teams joining the network or existing teams staying with us at a higher rate, this initiative is showing promise.”
Due to the success of the initial pilot, Bailey said RE/MAX has expanded it to Arizona, and is extending it into next year in the existing five states.
Even with higher mortgage rates and fewer purchase transactions nationwide, RE/MAX Holdings reported strong quarters for both Motto Mortgage and wemlo, its third-party mortgage loan processing service.
During the second quarter, Motto Mortgage reported a 17.5% annual increase in franchise sales, with office count rising to 235 offices. However, executives noted that Motto Mortgage’s annual revenue will be about $1 million less than expected in 2023 due to the uncertain mortgage rate environment.
“On the mortgage side, wemlo is ramping up, and we continue to expand our Motto franchise sales operation,” Joyce said. “The addition of experienced personnel with in-depth franchise experience to our inside sales team is just one reason we are optimistic about increasing the pace of Motto franchise sales in the second half of 2023 and beyond.”
Looking ahead, RE/MAX executives were optimistic about the future growth of the firm, noting that they expect agent count to remain relatively flat for the third quarter and that revenue will fall in a range of $78.5 million to $83.5 million, including marketing funds.