Realogy announced late Wednesday that the affinity program between Cartus and the United States Automobile Association (USAA) is being discontinued, as USAA shifts its focus to its core mortgage, banking and insurance businesses.
Without USAA, Realogy plans to begin offering its own program through Cartus, the company’s relocation services arm, to offer a military rewards program that will give U.S. military personnel, veterans and their families residential real estate brokerage services.
“Increasing complexities in financial services drove USAA’s decision to shift focus toward its core banking, mortgage and insurance business at this time,” a spokesperson for Realogy said in a statement.
USAA’s Real Estate Rewards Network – which will remain open for enrollment through September 6 – connected military personnel, veterans and their families to brokerage services through Cartus. When the individual utilizing the program bought or sold their home, they received a cash-back reward, which averaged $1,278 per closed transaction, according to the USAA website.
After September 6, Cartus will make its new program available to qualified participants.
“Cartus recently announced a new military rewards program that will offer all U.S. military personnel, veterans and their families top-notch service and rewards when they purchase or sell a home in the U.S.,” a spokesperson for Realogy said. “Cartus is pleased to continue to serve the extended military community with this new program, which is expected to launch September 7, 2019.”
The Cartus broker network – which is highly concentrated with USAA leads making up “a significant portion of [its business],” according to a U.S. Securities and Exchange Commission filing – closed 80,000 transactions in 2018 and 36,000 transactions in the first six months of 2019.
Realogy, for reference, closed roughly 1.4 million transactions company-wide in 2018, according to the Swanepoel 1000. Still, the company expects the ending of this program will have a material impact on 2020.
“The discontinuation of the USAA program is not expected to have a material effect on the Company’s financial results for the year ending December 31, 2019,” the company’s disclosure document states. “The Company currently expects that in 2020, the USAA program discontinuation will likely have a material impact on earnings at Cartus and will result in a reduction in in-network home sale transactions for Realogy and its brands.”
News of the program’s ending – and the new program’s beginning – was not greeted kindly by equity markets on Thursday. Realogy’s stock dropped roughly 23 percent, trading down around $4.70 after it had enjoyed a nice bounceback following the company’s most recent earnings release.
At the same time, some of the damage may be mitigated by Realogy’s recent announcement of a lead generation partnership with Amazon. All of the leads generated through the TurnKey program will flow to the Cartus broker network.