Realogy Corp. on Wednesday reported a net loss of $50 million in the third quarter, which follows a $27 million net loss in the previous quarter. Revenues fell from $1.62 billion in third-quarter 2007 to $1.34 billion in third-quarter 2008.
The international brokerage giant — with company-owned and franchise brands that include Coldwell Banker, Century 21, ERA, Sotheby’s International Realty and Better Homes and Gardens Real Estate, among others — reported that its home-sale transaction sides fell 15 percent among its franchisees and dropped 10 percent among its company-owned offices year-over-year in the third quarter.
"The current economic conditions of this country are weighing heavily on consumer confidence and thus on the housing industry," said Richard Smith, company president and CEO, in a statement.
He added, "We are not immune from the macroeconomic shocks to the credit and financial markets. In spite of these extraordinarily difficult circumstances, we have remained focused on reducing our operating costs and investing in the growth of our business."
In the past two years, according to Smith, managers have improved the company’s "profitability profile" by more than $350 million "through brokerage office consolidations, business optimization activities and other cost-saving measures."
The average home sales price among Realogy franchisees fell 7 percent and dropped 12 percent among company-owned offices in the third quarter compared to the same quarter last year.
"These price declines were driven by various factors, including high inventory levels, the increased prominence of short sale and foreclosure activity, and, particularly as it relates to NRT, a relative shift in the mix of business from higher price ranges to lower- and middle-range homes," Realogy reported Wednesday.
Meanwhile, the average broker commission rate for a transaction side among Realogy franchisees rose slightly, from 2.49 percent in third-quarter 2007 to 2.52 percent in third-quarter 2008. And this rate rose from 2.46 percent in third-quarter 2007 to 2.48 in third-quarter 2008 percent among company-owned brokerage offices.
But gross commission income per transaction side slipped 10 percent among company-owned offices — from $13,894 in third-quarter 2007 to $12,468 in third-quarter 2008. A single home sale has two transaction sides: the seller side and the buyer side.
The company remained within its maximum secured leverage ratio that is required for the company to be in compliance with its credit agreement — the ratio stood at 4.8 to 1, or 0.6 times below the maximum 5.35 to 1.
Realogy’s Better Homes and Gardens Real Estate franchise network has signed 40 franchised offices in six states since its July 2008 launch, the company also announced.
Realogy retained 92 percent of its most productive sales associates at company-owned offices — those who rank in the top 50 percent among its sales associates.
The company plans to discuss its earnings during an 11 a.m. ET conference call on Friday, Nov. 7. Questions can be submitted in advance to Investor.Relations@Realogy.com by 5 p.m. ET on Thursday, Nov. 6. The conference call will be available via live webcast accessible at the Investor Information section of the Realogy.com Web site. A replay of the call will be available from Nov. 7-21.
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