Real Estate

Fees, Acquisitions And Motto: 3 Takeaways From RE/MAX’s Earnings

During the company’s Friday morning earnings call, the company revealed more granular detail on the company’s strategies for 2021.

RE/MAX revealed Thursday during its earnings release that the company’s deep investment in its own business — through a combination of acquisitions and strategic recruiting initiatives — keep the company’s revenue numbers closely in line with 2019 even as the housing market blazed, propelling many competitors to new heights.

Karri Callahan | Photo credit: RE/MAX

During the company’s Friday morning earnings call that preceded the opening of the U.S. stock market, the company revealed more granular detail on those investments and how they’re starting to pay off, as well as other company strategies for 2021.

Here are three of the most interesting details company executives revealed on the call.

Motto Mortgage sets new heights

The company’s Motto Mortgage brand boasted a record-setting year, closing nearly $2.5 billion in loan volume, helping more than 10,000 families, nearly doubling its total from 2019.

At the end of the year, there were 141 Motto Mortgage franchises open across the country in nearly 40 states, an increase of 27 percent over the same period last year. The company sold more than 70 Motto Mortgage franchises during 2020, which was 35 percent higher than in 2019.

Ward Morrison | Photo credit: Motto Mortgage

“Closing nearly $2.5 billion in loan volume as a network is a remarkable feat in any year, but especially in a challenging one like 2020 – only our fourth full year of operations,” Motto Mortgage President Ward Morrison said in a statement. “That was only one of many achievements for our brand last year.

“2020 was a record-breaking year for Motto franchise sales, and the fourth quarter was our best quarter yet in company history,” Morrison added. “Our momentum is real.”

A main focus of the Motto business in 2021 will be the successful integration of wemlo, a startup that provides third-party mortgage loan processing services, that RE/MAX acquired in 2020.

RE/MAX to raise franchise fees

Starting April 1 — and July 1 in New York — RE/MAX will raise its monthly franchise fee by $5 in U.S. company-owned regions, Nick Bailey, RE/MAX’s chief customer officer, revealed on the company’s earnings call with investors.

nick bailey

Nick Bailey | Photo credit: RE/MAX

It’s a move that follows years of strategic acquisitions and investments in the company’s business, including the deferral of some fees for new agents as a recruiting tool in 2020.

“To ensure that we’re delivering the tools, resources and competitive advantages that help RE/MAX agents continue to outpace their competitors, we’ve looked at our fee structure and decided to make a small adjustment,” Bailey said.

The average franchise fee for RE/MAX agents in U.S. company-owned regions is, on average, $128 per month, Karri Callahan, RE/MAX’s chief financial officer revealed on the call. The company expects the increase will generate roughly $2 million in revenue in 2021.

“This investment will help ensure continued expansion of the systems and services that help RE/MAX affiliates stand out in the market,” Bailey said.

RE/MAX is still on the lookout for acquisitions

RE/MAX made a number of major acquisitions in 2020 to support both its real estate brokerage and mortgage franchise business and the company continues to look for opportunities, RE/MAX CEO Adam Contos revealed on the call.

Adam Contos

Adam Contos | Photo credit: RE/MAX

“We continue to explore intriguing complementary opportunities in and around our core business of franchising mortgage and real estate which we believe would have the potential to expand our market opportunity significantly.”

RE/MAX, in 2020, closed its acquisition of First, an AI-powered lead nurturing tool and also acquiring mortgage software startup wemlo and a location intelligence firm Gadberry Group. The company believes all three acquisitions will flip from net investments into positively impacting earnings in 2021.

Bailey touted the impact the First acquisition had and continues to have on RE/MAX agents as the housing market becomes increasingly competitive.

“The First App is the best tool I’ve seen when it comes to identifying listing contacts who are most likely to sell a home soon,” Bailey said. “Right now with such a narrow pool of homes for sale, I think the First App is an absolutely essential tool.”

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