Real, a four-year-old mobile app-based real estate brokerage, has begun giving stock options to agents for joining the firm, closing deals and recruiting colleagues, Inman has learned.
Real CEO Tamir Poleg believes the program will foster loyalty and boost productivity. The compensation plan comes after Real let go roughly 40 percent of the 1,000 agents that were working at the brokerage a year ago and replaced them with new recruits, according to Poleg.
He hopes that agents will own 15 to 20 percent of Real within a few years.
EXp Realty, a publicly-traded virtual brokerage, has used a similar program to grow at break-neck speed. EXp’s CEO recently stated that “about 15 to 20 percent of the company is agent-owned.”
Poleg said he and Real’s investors, who he said have poured about $13 million into the brokerage, came up with the idea after realizing that the only way to put agents first would be to “offer ownership in this asset that we helped build.”
Like eXp Realty, Real doesn’t provide physical offices. It centers around a mobile app that lets agents perform various business tasks, and exchange advice with colleagues.
A recent round of stock options that Real awarded to its agents would let them purchase Real stock at a share price of 13 cents. He said Real’s investors have purchased Real shares at a higher price, but declined to say much.
Agents could cash out the stock options if Real goes public or is acquired, or if they find a buyer, Poleg said.
Under the equity compensation plan, Real agents will receive 2,500 options to purchase shares of company stock at a set price over a three-year schedule just for joining the firm. (To exercise the options, an agent will need to have closed at least one deal over the preceding six months.)
Real agents also will get 250 options for every transaction they close, along with 400 options for every new agent that they recruit to Real if the recruit closes at least one deal with the brokerage.
Real, which offers an 85-15 commission split to agents, will also award 2,500 options to agents who pay out $11,250 in commission splits to Real — the brokerage’s annual cap for agents.
Real’s agent count has remained flat at roughly 1,000 over the last year, but the firm’s gross commission revenue has doubled, according to Poleg.
That’s because the brokerage terminated about 40 percent of the 1,000 agents it had a year ago and filled their shoes with more productive ones, he said.
“We approached those agents that we saw had no engagement and no interactions with us and no transactions, and we just asked them, ‘Are you serious about practicing real estate?'” he said. “And whoever wasn’t, we kindly asked that they leave.”
Real declined to disclose the number of transactions it’s closed over the last year.
The brokerage is adding a feature to its mobile app that lets agents sign option agreements and view their equity stake in real time. The app also lets agents track social media, leads and referrals; chat and collaborate with colleagues; and give a listing-search app with their personal branding to clients.