RE/MAX CEO Adam Contos (Credit: iStock)
RE/MAX earnings jumped 35 percent in the first quarter — but the franchise brokerage remains cautious about the slowdown in the housing market.
The company reported revenue of $71.2 million, compared with $52.6 million a year earlier, according to a statement. But RE/MAX noted the increase came “almost exclusively due to acquisitions” — namely driven by the ad and marketing platform Marketing Funds, which the brokerage acquired in January.
Recurring revenue streams, which mainly include franchise fees and annual dues, were essentially flat. Net income was $4.4 million, down from $4.83 million a year earlier.
RE/MAX’s mortgage business and international growth has helped “offset lower revenue in the first quarter stemming from challenging housing market conditions in the U.S. and Canada,” CEO Adam Contos said in a statement. “Looking ahead, we’re cautiously optimistic about the housing markets in the U.S. and Canada.”
Heading into the spring homebuying season, the brokerage noted that this year had the slowest start since 2014. Closed transactions in March slid 8.6 percent year over year, as the median sales price rose 3.4 percent to $246,000.
The results come as RE/MAX has been making a bigger tech push. Earlier this year, the company announced a partnership with discount brokerage Redfin. The deal gives RE/MAX agents exclusive access to Redfin’s agent referral program across 5,000 U.S. ZIP codes and Canada. Agents will get a discounted rate — and the initial partnership will last two years, with the two firms re-evaluating whether to continue beyond 2021.
If a RE/MAX agent closes a deal from a referral, Redfin gets 25 percent of the commission. That fee is otherwise 30 percent. Each referral is sent to one agent — who has an hour to accept it. To stay in the program, the report said the RE/MAX agent has to accept an undisclosed percentage of referrals.
Meanwhile, the brokerage also continued to increase its overall agent count, which fell slightly in the U.S. and Canada. The total count increased 3.9 percent to 125,532 agents, while the number of agents in the U.S. and Canada decreased 0.9 percent to 84,031 agents.