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The Real Brokerage is the latest firm to turn to agents to raise revenue.
In its quest to become a profitable company, Real is raising fees on new and existing agents that work for Real, according to details the company shared last week while releasing its fourth quarter financial performance.
Real cranked up the fee for incoming agents to $249 (up from $149), and is raising its annual brokerage fee from $500 to $750, among other changes to its model of sharing revenue with agents. The details were first reported by The Real Deal.
In the past, Toronto-based Real aggressively marketed its value proposition to agents — generous commission splits coupled with tech tools — by offering them a portion of the commissions of new agents they bring to the company.
The fee changes were laid out by Michelle Ressler, Real’s Chief Financial Officer, during the fourth quarter earnings call.
Real will start charging those who participate in revenue sharing a $175 annual fee and 1.2 percent of revenue share payments. It will also increase the transaction fee agents pay after reaching their commission cap by $60, to $285 per transaction.
The financial changes come after a year when Real saw its revenue — and its losses — grow in 2022. Company losses grew to $20.6 million, up from $11.7 million in 2021.
Andrew Robinson, an elite agent with Real in Ohio, confirmed the details of the fee increases with Inman and applauded the company for making the changes.
“As an agent at the company and as a shareholder I actually support all of the changes they made,” Robinson said.
“They developed the model prior to having 9,000 agents. As we grew they kind of got a better idea of what the profitability would look like per agent,” he added. “We’ve attracted so many high-end agents to do a lot of business that those very, very large teams, after they went through their cap, didn’t really contribute much to the profitability of the company. Yet they represented a significant portion of the management overhead to service those teams.”
The changes for agents who were with Real before Jan. 31 will take effect on April 1. They make Real just the latest firm to change its financial agreements with its agents.
The Real Deal also reported in February that Side, a firm that provides tools that allow agents to open their own boutique brokerages, was changing some of its financial agreements with agent teams.
A representative for Side told Inman at the time she couldn’t comment on specific changes.
“As our partners run businesses with varying, highly individualized financial structures, it wouldn’t be appropriate to discuss blanket details of their finances with the press,” the spokeswoman, Katherine Mechling, said.
“What I can say is that our pricing structure is extremely competitive, especially given that we are the only brokerage platform on which top agents can build their own companies,” Mechling said. “Side is always innovating around how things work, and our primary goal in all things is to help the top-producing agents in our community grow their companies.”