Even as more traditional residential brokerages start to wade into the fast-growing space of tech-enabled cash offers, aka “iBuyers”, RE/MAX CEO Adam Contos said his company has no plans to go that way.
In a conference call for investors following the Denver-headquartered real estate franchise’s third quarter earnings release, Contos said that the RE/MAX does not have “necessarily any intent to” experiment with fast-cash home offers.
The iBuyer model employed by a new wave of startups and initiatives including Zillow Offers, Opendoor, and Offerpad is simple: homeowners enter the value of their home online and, within days, get an all-cash offer, minus a service fee that can range as high as 13 percent.
“We’re not jumping into that piece at this time, and don’t have necessarily any intent to, but we are always opportunistic and looking for things we can do and that is a good investment for our shareholders,” Contos said in response to an investor question about how RE/MAX was monitoring competitors’ moves into the iBuyer industry.
As for why RE/MAX is not poised to launch an iBuyer, Contos referred back to the notion that iBuyers are not necessarily the most effective lead generation tool for sellers, and that RE/MAX agents are already working with iBuyers to obtain such leads. Most of the existing iBuyers do accept and make referrals to agents outside of their doors, and some such as Zillow Offers partner with them to present prospective sellers with comparative market analysis on what their homes would fetch on the open market with a listing agent. Opendoor also recently announced a co-listing partnership for outside agents.
“When it kind of trickles through to digital lead generation, some of the iBuyers were created for the purposes of generating seller leads,” Contos said, continuing:
“And a lot of our agents have been part of that process in working with that generation of those business models. So it is kind of a hand-in-hand community in our space, regardless of the varied business models and we continue to be part of that. Our agents continue to evolve with it. And that’s the beauty of us having these high-producing agents is the experts come to them and say ‘what do you think?'”
“So we’ll continue to evolve our lead generation, continue to evolve our lead cultivation, but ultimately it’s fascinating because when I talk to our a lot our million-dollar GCI producers — we call them the ‘Diamond Club,’ and these are folks that are over a million dollars a year in gross commission — you hear a lot of them say, ‘I don’t buy electronically. I go out and I make my leads through community involvement.’ Because ultimately this is a boots-on-the-ground business where everything is a micro market and everything has to do with relationships in communities.”
In the last year, RE/MAX did experiment with mortgages and lead generation. But the iBuyer model, Contos said, are not part of its strategy.
“Some of the competitors have been using agents for this process, others have not,” Contos said. “We keep an eye on all of these different things and maintain a great deal of competitive intelligence when it comes to what’s going on with the iBuyers.”
iBuyers, which hit the market in 2013, were first the domain of heavily funded startups such as Offerpad and Opendoor. But in the last year, traditional brokerages started embracing it — in September, both Realogy and Keller Williams announced that they will be launching their own iBuyer services in select markets
A Keller Williams spokesperson told Inman that the company has, before launching officially, has already closed close to 100 such transactions.
As part of the conference call, RE/MAX also revealed its operating and financial performance. Over the last year, it added 6,337 new agents, bringing the total number of agents working for RE/MAX to 123,905, an all-time record. However, the company noted that it only grew agent count by 1.2 percent in the U.S. and Canada combined, down from an expected 2 percent, and Contos said that due to “a lower growth environment,” the company expects flat to slightly positive agent growth in the U.S. for all of 2018.
RE/MAX revenue grew 11.8 percent to $54.9 million. But as home prices continued to reach record highs, the number of sales fell by 11.6 percent in September, mirroring similar drops across the industry as a whole.