At just 40 years old, Ryan Gorman, the CEO of NRT, is one of the younger leaders in the U.S. residential real estate industry. But he’s got a deep background, having worked at NRT’s parent company, the holdings giant Realogy, since 2004.
And Gorman is undoubtedly one of the industry’s most powerful leaders, helming the top-producing brokerage company by sales volume at a time of massive technological transformation for the industry, with well-funded competitors such as Compass, as well as mega franchises RE/MAX and Keller Williams, all fighting it out for clients, agents, market share in a shifting market landscape.
NRT is the brokerage subsidiary of Realogy. It owns and operates real estate companies across the country under Realogy’s brand names Coldwell Banker, Sotheby’s International Realty, Zip Realty, Climb Real Estate, Corcoran and Citi Habitats (Realogy also franchises many of these brands through a separate arm). NRT has more than 50,000 agents that closed $178 billion in sales volume and 346,942 transactions in 2017, and, according to industry analytics firm REAL Trends, has been the top residential real estate brokerage firm by sales volume for the past 20 years.
In the autumn of 2018, the company sent shockwaves throughout the industry with a major announcement that it was getting into the business of competing with fast, tech-enabled cash-offer homebuying startups such as Opendoor and Offerpad (so-called “iBuyers“) by launching its own iBuyer solution through its Coldwell Banker owned-and-operated offices.
While declining to get into specifics Gorman told Inman in a lengthy interview below that NRT is seeing early success with its iBuyer program and even besting some competitors. He also said his focus is on continuing to bolster the open-architecture technology that Realogy offers its agents, allowing them to mix in-house software with apps and services from other outside vendors, a notably varied approach at a time when competitors such as RE/MAX, Keller Williams and Compass are aiming to build comprehensive end-to-end platforms.
Read on for our full interview with Gorman about his thinking on NRT and the state of real estate in 2019.
How is NRT’s vision for 2019 different from NRT’s vision in the past?
I think maybe NRT’s vision aligns with where we think the industry is going to a degree. And I think in 2019 the industry will finally realize that technology enables talent — it doesn’t replace talent. So I think our great real estate industry advisors will leverage our innovative technology, unparalleled support and market uncertainty to grow their business at some of the fastest rates ever.
I think those things are a little different than perhaps in prior years: the technology innovation focus, unparalleled support coupled with that technology and frankly the uncertainty that exists in 2019’s market allows the best to grow their share.
When you talk about technology, can you highlight some of the specific areas where you think technology can solve the industry’s problems?
I think it’s around enabling talent. It’s about ensuring, for us anyway, that agents have what they need to succeed. We, across Realogy, invest $200 million per year in technology and our agents and clients are going to feel that probably more than ever in 2019.
In fact, the industry, in general, is probably going to come around to the point of view that agents can have more of what they need to succeed when an open architecture is coupled with some truly great internally developed products.
I think often times industry watchers ask if a closed system or an open system with no company developed products is best and I think people will come around to the view that the way you help agents succeed is to meet them where they are. An open architecture coupled with great, company developed products can do that really well. [It can] enable some of their already engrained work processes and also give them new products that they’ve never used before to help them be more efficient.
How much of that is dictated by the agents at NRT? How do you determine which products agents bring to you have value?
We often say we don’t build for our agents, we build with our agents, which is a little bit different perhaps than some others. A lot is dictated by what we think agents need. But the beauty of an open architecture coupled with some truly great company-generated and company-developed products is that we don’t need to develop a product to serve every single need.
We just need to ensure our open architecture enables agents to use other great products through our system in ways where it’s just easiest to use them with our system. Where we perceive a great market need or market opportunity, that’s where we can apply our scale and our development talent to bring it to fruition.
While our agents have many needs and many opportunities we’re really elevating those we think are the most impactful for our company-developed products and just making sure they can use whatever they need through our open architecture for everything else.
In a general sense, what are some of the top challenges currently facing NRT and how do you plan to overcome them in the upcoming year?
Well, I think we have some of the same challenges as many in terms of trying to move very quickly. We have some unique advantages over many with our scale. Trying to move incredibly quickly with our scale can be difficult, but once you get momentum is can be unstoppable. That’s where we think we are, going into 2019.
So a lot of what we’re trying to roll out as quickly as possible in 2019 are things we decided late last year or we’ll decide early this year, that will make a difference for our agents.
Most people who observe the industry closely are familiar with our value proposition and our core four values. What we shared more with the industry toward the end of last year are some of the products that we’ll be bringing forth, like Desk, our productivity suite that’s already live across the country in beta today, Listing Concierge which got a lot of traction — sort of unbeatable listing marketing with the push of a button, Design Concierge, which is in testing today in LA — which is a complete visual image design service for agents and teams and we’ve talked at the end of last year about Social Concierge, which we’ve got four different component pilots going right now throughout the country. We’ll formulate and communicate what that final vision is here shortly.
One of our biggest challenges is, we’re trying to do a lot in a hurry to try and get things into the hands of our agents as quickly as possible. But we think we’re up to the challenge.
As such a big brokerage, how do you balance keeping commission splits favorable to NRT but also continue to ensure NRT is attractive to agents that want to join?
Well, just like our agents have tremendous value to deliver for their clients — for instance, listing clients — and they need to be able to communicate that value to that listing client, then deliver on that value to justify and support the fees they earn, we’re in the same position.
So we need to keep innovating and keep delivering better services and coupling that innovative technology with white glove support to be able to support the income we earn from supporting our agents. It is a balance, but it’s a balance that we’ve decided to try — to strike the right balance by investing heavily in the support and service we deliver to our agents to continue to earn our keep but also support our agent’s business.
So rather than move in the direction that some of our competitors have moved, we’re really moving in a support direction.
Realogy CEO Ryan Schneider has publicly talked about standardizing commissions. is that what NRT is planning on doing and can you explain a little about that plan and say what that standard commission will be?
Standard is perhaps a bit of an oversimplification of what we’re doing, but I think I’ll reserve comment on some of the commission plan pilots that Ryan Schneider has talked about on the earnings call, I’ll reserve that for his jurisdiction for communication to investors and the public. We’re pretty excited about what we’re doing and what we’re piloting, but I think further elaboration on that, I’ll let him address.
How has the cataLIST iBuyer program worked so far? Are there plans to expand it soon?
I’m not sure that we and our partners at Home Partners of America are disclosing the actual numbers of purchases and offers, but I can tell you we are very pleased at the early traction — especially how we are beating competitors in the markets we’re operating.
And we’re getting a lot of tremendous feedback from customers, users and sellers, as well as our agents. We had originally launched in one market [with plans of] then going to two and hopefully quickly to three and now we’re in all three [Dallas, Atlanta and Tampa].
We do have visions of not just expanding that product but taking some of the learning that we’ve gotten from that really successful pilot period — that’s still going on— and using those to innovate and create new, some related and some unrelated, products that we’ll be probably teasing some details about in the future. It’s a little premature to get into it yet.
Obviously, there are many competitors and many aspire to build a brand as legendary as Coldwell Banker, or any organization as powerful as Coldwell Banker NRT. I applaud their aspirations. They’re shooting for the stars, maybe they’ll land on the moon.
But our focus is really on ensuring out agents have everything they need to succeed. Our product passion, execution agility in 2019, more than ever, is going to help our agents live exceptional lives. Our focus in 2019 is on execution, laser-focused.
Is there any concern about competing, from the own-side, with franchises also under the Realogy umbrella?
Not so much. Our focus is on growth. While Realogy is significant and holds significant market share, it’s still true that the majority of the market of the U.S. and really any large market in which we operate is not with Realogy. So there’s an enormous opportunity for us today to tap that majority market to ensure that we’re helping more agents live exceptional lives by communicating our value proposition to them and bringing them over.
While we do compete, just like our individual agents and any individual office theoretically compete with one another, they also collaborate quite deeply as we do with many of our franchises in the family. Our focus in terms of competition is on the majority of the market that we don’t collectively hold yet as Realogy.
Is there ever concern that having too many franchises of which you don’t have full control over could dilute or hurt the brand on the own-side?
Not from me, no. Candidly, I’m impressed by our franchisees. Entrepreneurship is sort of the hallmark of our industry, whether it’s individual agents or brokerage franchisees. I’ve been impressed by and learn from Coldwell Banker franchisees all over the country. What they keep telling me is they’re impressed by and learning from what Coldwell Banker NRT is doing as well. So I think that mutual admiration society will continue to be a mutual benefit.
What other trends are you watching in the industry in 2019?
The overall trend toward open architecture with company-developed products for the things that really matter I think will be a trend that we see.
The trend that I think we exited 2018 with was a lot of talk by some competitors of the virtues of a closed system, where a company or franchisor develops everything and anything an agent can need. I think that can sound very attractive but the reality of that will be a lot less productive for agents than the reality of an open architecture where there are great company-developed products.
So I think that the trend that I’m waiting to see where the industry comes around on: I think 2019 will be the year where people realize a much healthier balance can be struck with an open architecture that is coupled with truly great company products.
What sort of fads or trends do you think will die out in 2019?
I’m not sure of ones that will die out this year, but one thing that I hope will die out this year is this concept of technology replacing talent. I hope the world will come around, as we have, to believing very deeply that technology enables talent. And perhaps industry watchers and investors will realize in 2019 that enabling talent with technology is not just a wise investment but the inevitable, successful investment in the future. There are some who believe otherwise and perhaps 2019 will be the year they realize it’s our reality.
How are you preparing NRT and NRT’s agents for a market slowdown?
We’re really focused on executing on our growth plan, more so than anything else. To the extent that there is market uncertainty, then I think the safe harbor of an enormously respected brand, with an enormously powerful organization like Coldwell Banker NRT can be exactly what many agents who are not currently affiliated with Realogy are looking for. So that level of stability and innovation to enable their success is especially appealing when the future isn’t quite as certain.
And storm clouds have perhaps gathered in the minds of some. I think our focus is to continue to execute on that vision and then sharing and communicating that vision in ways we haven’t before. We began to in 2019, but we’re going to be communicating much more openly with the industry in 2019.
What other companies do you view as NRT’s biggest competition?
As I mentioned earlier, entrepreneurship being a hallmark of the industry, competition is extremely fragmented through the country. And of course, we operate in so much of the country that no one competitor is really our focus. We’re really trying to stay laser-focused not on competitors but on our plan, which candidly, even though the competitive makeup of different markets looks different, our execution succeeds similarly across those markets and even facing different competitors.
One of the other trends we saw in 2019 is more brokerages moving to offer agents healthcare. What makes Realogy’s healthcare plan appealing to agents and why is it important to offer agents healthcare?
We have at this point over 17,000 agents who have taken advantage of healthcare options that we’ve made available to them as part of a much larger portfolio of insurance and wealth-building products.
In terms of why offering healthcare is so important, I think it’s important to everyone. I think it’s extremely important to all Americans. And independent contractors, especially in a commission-based field have an especially difficult time procuring some forms of insurance and other financial products.
So for us, to be able to work with third-parties to craft solutions that work best for independent contractors knowing the lifestyle they live and the income they have allows us to do a lot of the work for them. So that when they show up to avail themselves of the products that they make available, they know that they’re well-tailored for their needs.
We are going to be raising our game on a lot of what we offer in 2019 and beyond. So we appreciate the industry’s focus on it. That will hopefully drive some further innovation for the benefit of our agents.
NRT has been named the top brokerage in sales volume and size for years by organizations like Real Trends. What is the recipe for success and how do you plan to maintain or grow in 2019?
Well, we’re certainly honored to be number 1 for more than two decades, but truly our focus is not solely on being the biggest, but the best. We’re defining that ourselves because we’re so far ahead of so many in the industry that we really have to chart our own course. So we’re listening closely to our agents, we’re executing more quickly than we ever have in our history and we’re going to be delivering more products and better services to ensure we’re helping our agents live exceptional lives in 2019, which will further increase our lead in the industry.
But, really, the overall focus is on our agents and ensuring they’re increasing their success year-after-year.