“Buying a home is a little bit more complicated than buying food, but at the same time we would want to simplify as much of it as possible,” Tamir Poleg, the CEO and co-founder of The Real Brokerage, said during the firm’s fourth quarter and full year 2021 earnings call with investors Friday morning. This statement came in response to a question from an analyst, comparing the brokerage’s goal of streamlining the home buying process, to an UberEats transaction, where one can buy a cheeseburger, but also opt to add a delivery of Gatorade or aspirin.
Simplifying the homebuying process is a major goal for The Real Brokerage, which reported $122 million in revenue 2021 and $11.1 million in gross profit, which was a 415% increase from a year ago. The brokerage attributed what CFO Michelle Ressler called “phenomenal growth” to its rising agent count and an increase in the average revenue generated per agent.
In 2021, Real’s agent count grew 161% to more than 3,850 agents, however, this is still a ways off from the brokerage’s goal of 100,000 agents. The amount of revenue per agent also rose, growing 182% to $31,600 per agent, compared to $11,200 in 2020. In addition, the number of transactions per agent also increased, rising 84% to 6.1 in 2021 from 2.99 transactions per agent a year prior.
In total, the value of completed transactions grew 648% in 2021 to $4.4 billion, up from $589 million a year ago.
The high-growth brokerage said it hopes to continue to attract more agents through the firm’s culture and tech solutions offering, as well as increase the number of transactions per agent to roughly seven or eight in 2022.
While many of the statistics shared by Real were promising, the firm did record a net operating loss of $11.7 million in 2021, up from a $3.6 million loss in 2020. Its net loss for the year came in at about $12 million, including a $4.3 million net loss in the fourth quarter.
Ressler attributed the financial losses to investments in building the firm’s team of agents, team management, employee personnel and technology infrastructure.
In 2021, Real expanded into Iowa, Michigan, Idaho, Kentucky and Ontario, Canada. At year’s end the brokerage was operational in a total of 40 U.S. states, Washington, D.C., as well as Alberta, Canada and Ontario, Canada. Since the start of 2022, Real has launched in New Mexico and Arkansas.
On the call, Poleg also discussed the brokerage’s plans to bring in a variety of ancillary services.
“We are focused on adding ancillary services and building consumer facing technology that further improves the home buying experience,” Poleg said during the call. “Doing so, we will also add additional streams of revenue.”
In January 2022, Real acquired title and escrow firm, Expetitle, rebranding it as The Real Title. While Poleg said that he expects The Real Title to have a major impact on the firm’s revenue starting in the second half of 2022, it is currently contributing roughly $120,000 of revenue a month. At the moment, the title firm is only operational in Texas, Georgia and Florida.
In addition to ramping up its title services, Poleg said Real is considering creating joint ventures between Real Title and high producing real estate teams, as well as automatically giving Real clients a quote from Real Title when purchasing a home.
“The existing homebuying process is just broken,” Poleg said during the call. “It is not friendly. It is not convenient to buy. It creates a lot of anxiety. There is no transparency. They have to deal with different stakeholders. They talk to a lender, a title company, they have an agent, there is an appraiser and an inspector, and at the end of the day, as a buyer, when you actually starting the journey, you have no certainty that you will end up owning the home the you would like to purchase. When we look at this, we understand there is an opportunity to create something very different.”
Poleg told RealTrends last year that Real offers agents an 85/15 split, with a cap at $12,000. Once the cap is reached, agents pay $225 per transaction. There are no monthly fees but there is an annual fee of $500. Agents can also benefit from a revenue sharing agreement that’s broken into five tiers – 5% on the first tier, 4% on the second tier, 3% on the third, etc.