To all the agents in the house,
Much like Captain Steve McCroskey in Airplane! picked the wrong week to quit smoking, it looks like I picked the wrong long weekend to traipse around the Pacific coast. I have returned to a lot of real estate news, much of it with possible long-term ramifications. The most important developments:
* The proverbial "protracted litigation" between housing consumers and the National Association of Realtors took a turn when an unsealed filing from Coldwell Banker CEO Ryan Gorman revealed that Gorman, and his parent company Realogy, do not quite believe in NAR's "cooperative compensation" policy.
The policy mandates listing agents specify the commission they are set to pay a buyer's agent. Realogy, a co-defendant in the lawsuit, believes that the listing agent should have the option to say, "Well, we can't guarantee exactly what your share of the commission will be, right now."
Moreover, Realogy, perennially the largest brokerage in the U.S. by sales volume, said its legion of agents do not have to follow any NAR policy, besides the trade group's code of ethics.
Stay tuned for a story later today on what exactly this means. To tease that article, I will say that while Gorman fended off fierce criticism from assorted agents, few, if any, national brokerages are taking a stand, either way.
* HomeSmart, the Scottsdale, Arizona, brokerage that quietly ascended to the be the 7th most prolific U.S. real estate company by transaction sides, filed an S-1 with the Securities and Exchange Commission. If all goes well, shares of HomeSmart will trade on Nasdaq by the end of this year.
Like many S-1s, HomeSmart's pitch to investors is the length of a Bronte sisters novel. One part that immediately stands out is the central role held by Matthew Widdows, the company CEO and founder. Widdows is set to receive the majority of company shares, draws a $981,000 annual salary and he is slated for "two notes payable with initial principal balances of $7.0 million and 3.0 million."
That's a lot of money moving around for a company reporting $392 million in 2020 total revenue with $362 million going right back to HomeSmart agents as "commissions and other related costs."
* Adam Contos is out as RE/MAX CEO effective March 31, though he will get his $750,000 annual salary for the next 24 months. Per RE/MAX's SEC filing, Contos is departing "in order to spend more time with his family and pursue new entrepreneurial endeavors."
This is purely from a "who interacts with the media" perspective, so take it with a grain of salt, but Contos was a low profile CEO, with President Nick Bailey more the corporate face of RE/MAX.
RE/MAX expects to form a CEO search committee, according to the filing. I wonder if Bailey, a former Zillow executive, might be the choice.
* Brokerage/iBuyer/listings website/research and media team/rental listings platform Redfin is also a mortgage lender, and on Tuesday the company reinvented their mortgage division. Redfin is slated to acquire Bay Equities Home Loans, and Redfin plans to fold their mortgage operations into the Corte Madera, California, outfit.
That means laying off 121 employees who were part of Redfin's mortgage arm.
Redfin reminds me of an NBA general manager arming their team with assets, but never quite pulling off a trade for a superstar, or, in Redfin's case, finding a company division that will make the business profitable. But perhaps this move is a wise ratcheting up of Redfin's mortgage business, as mortgage is arguably a safer money maker than brokerage.
…Agents, my head is spinning, so please let me know what you make of all this. What stands out to you as perhaps the most important, or most interesting, of these myriad changes?
Email me anonymously at mblake@housingwire.com.
Sincerely,
Matthew Blake
Senior Real Estate Reporter
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