At a time when it seems like most real estate brokers can’t agree on anything, one thing they can agree on is that The Real Brokerage’s acquisition of REMAX, announced on Monday, came as a surprise.
“To me it came a bit out of left field because I don’t think anybody had talked about Real,” Gary Ashton, the broker-owner of The Ashton Real Estate Group of REMAX Advantage, said. “There has been lots of talk about acquisitions and mergers, but not with Real.”
John Wood, the broker-owner of North Carolina-based REMAX United, shared a similar view.
“We get that mergers on Wall Street have to happen privately and we, as franchisors, don’t get advance notice, but the initial thought was ‘Wow! This is happening,’” he said.
Despite the initial shock of the news, Wood said he wasn’t too surprised because, in his view, “at some level all brands are for sale.”
Housing market makes consolidation expected
Given the slower housing market conditions of the past four years, Phillip Cantrell, the broker-owner of Benchmark Realty, said consolidations like the deal between Real and REMAX are to be expected.
“In conditions like these past few years, the margins of the traditional model brokerages have been massively compressed. The response has been for the brokerage to either modify its model or scale, and scale fast. For some, this has been a struggle because both the larger traditional and fee-based models that have already achieved scale and are continuing to grow organically, [nibble] away at market share — further eviscerating the margins of those who have not yet scaled. In that light, what we are seeing is very logical,” Cantrell wrote in an email.
So while the acquisition itself was not unexpected, the two partners, Real, a cloud-based firm, and REMAX, a legacy brick-and-mortar franchisor, came as a surprise to many who feel like this is an odd coupling.
“It will be interesting to see how a brand that set up their entire system on desk fees and office space and local leadership is able to merge with a company that has no offices and no desk fees,” Parker Pemberton, the founder and CEO of Pemberton Real Estate, said. “You really have two polar opposite perspectives when it comes to agent recruitment sales pitches.”
Excited about Real’s tech
In the initial announcement, the two firms have expressed excitement regarding the deployment of Real’s technology across REMAX’s network, but some are questioning how that roll out will go.
“I think you are going to see a lot of uncomfortable agents,” Pemberton said. “Thinking about the seasoned agents at REMAX that are used to the systems and processes they have, now having to adopt an online portal — that is going to be a big change for some people.”
Hoby Hanna, the CEO of Howard Hanna Real Estate Services, agrees.
“REMAX has had a tough time in adopting new technology in the past, so it will be interesting to see how they execute on that,” Hanna said. “Can they get adopted by the sales people in an independent culture? That will be their big lift and I think that is what they are betting on, but it will be a challenge across an international platform of independent minded agents.”
For his part, Wood, a REMAX franchisor, is curious as to what new tools and technology his firm will have access to thanks to this acquisition.
“Real is an up and coming company that has a different platform and a different way of doing business, and we are all going to be very interested to see what those tools and steps are that we can integrate into our business,” Wood said.
Coexist and thrive
In the face of some of this pessimism and uncertainty about the coupling of Real technology and REMAX, Ashton and his business partner Debra Beagle, the CEO and managing broker-owner of The Ashton Real Estate Group of REMAX Advantage, believe that new technology and the REMAX model can not only co-exist, but be extremely successful, as they look to their own firm as an example.
Despite being based in Tennessee, the firm has teams in Florida and Denver who work off of their platform, despite being based thousands of miles away.
“We have this hybrid model, which is totally out of the norm for REMAX, but we have been very successful with it and it shows that the two models can live fully together,” Beagle said. “We have found that when you partner the level of professionalism and service our REMAX agents have with that technology, we are proof that this works.”
Ashton agrees that the combination has a lot to offer both agents and consumers.
“I think it is actually a good combination because in the public’s view, REMAX is an established brand with a lot of brand equity, but I don’t think the public is really aware of Real,” Ashton said.
Although the acquisition has generated its fair share of industry chatter, brokers don’t believe this news will change a lot for the day-to-day operations of their agents.
“The reality for those of us out in the field and those of us who own franchises is that nothing is really going to change anytime soon,” Wood said. “We have to continue doing what we do, which is as a company taking care of our agents and making sure our agents take care of the consumers.”
In Pemberton’s view, what will determine the future success of Real REMAX Group is local leadership and local agents.
“At the end of the day, the consumer doesn’t care where you work,” he said. “They care about who you are as an agent, how you show up for them and if your broker helped you do that at a higher level, then that is fantastic.”