Not everyone sees Real’s $880 million acquisition of REMAX as a threat. This is an opportunity for boutique brokers. Here’s how the industry reacted:
The real estate industry has been abuzz since The Real Brokerage announced its acquisition of REMAX. Industry participants argue that the deal signals both ongoing consolidation pressures weighing on intermediaries and a fundamental change in the way intermediaries do business. But not everyone sees mergers as a threat. For some, it’s the beginning.
Boutique companies don’t realize that
The Real Brokerage Co. has agreed to acquire REMAX Holdings Inc. in an $880 million transaction expected to close in the second half of this year, it was announced Monday. The merger would make Real one of the top three real estate companies by size, behind Compass International Holdings and Keller Williams.
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The deal will combine Real’s 33,000 agent base with REMAX’s franchise network of approximately 145,000 agents. This will bring together more than 180,000 agents in 120 countries and territories, with more than 100,000 agents in the United States and Canada. Together, the companies announced that they will support approximately 1.8 million trading sides worldwide by 2025.
Lisa Simonsen, a luxury goods broker with Brown Harris Stevens licensed in New York, Florida and California, says the deal has little to do with her world. In fact, it might send more clients to her. “In luxury real estate, bigger is not always better,” Simonsen told Inman. “A merger like this is not for the high end, but rather for the masses.”
Mr. Simonsen also pushed back against the technology talk that often accompanies mega-mergers in the real estate industry. While technology has become a key recruiting tool for major brokerages, she argues that it primarily attracts new agents rather than the seasoned professionals who drive luxury deals.
“Really strong brokers don’t necessarily need all the high-tech stuff,” she says.
For Simonsen, a more attractive differentiator is the ownership structure. Brown Harris Stevens is a privately held company, and she thinks that’s a meaningful distinction. “We answer to our customers, but these big brokerages have to answer to their shareholders,” she said.
She also questioned whether full scale would lead to better outcomes for sellers. “For sellers, the issue isn’t how big the brokerage is,” she says. “The type of marketing we do is completely different than what these giant companies can do.”
Simonsen gave a personal analogy, but it needed some modification. She recalled growing up near the West Edmonton Mall in Canada. The mall once boasted the title of the world’s largest shopping mall, but has since been overtaken by developments in Asia and the Middle East.
“I didn’t spend much time there,” she said. “This type of large merger and brokerage are similar. They may be huge, but that doesn’t necessarily mean they’re right for everyone.”
Her conclusion is that the deal is a net positive for the boutique company. “I think this merger will change the landscape of a competitive industry, which is a positive for us,” she said. “More and more people will seek out specialized companies like ours.”
“It’s an incredibly good decision for both companies.”
Briggs Elwell, co-founder and CEO of RLTYco, had a different view. He said he was not surprised by the agreement and thinks it makes a lot of sense for both parties.
“Real has become a prime candidate for agents to do their own business,” Elwell told Inman. “The merger made a lot of sense because REMAX has a franchise business model. This was a very good decision for both companies.”
Elwell noted that the partnership fills gaps that each company had on their own. REMAX recently completed an intensive rebranding, while Real introduced a complete back-end technology platform, something previously lacking in the franchise model. “There has been a lot of M&A activity, and what’s good for securities companies is also good for consumers,” he said.
He also pointed to market conditions as a factor. With trading volumes at rock bottom, profit margins may become tighter and agents may have fewer tools available to them. These conditions make integration both logical and necessary, Elwell said.
“What’s happening with this industry consolidation is efficiency,” Elwell said. “Previously, one brand drove all deals in a given market, but things have changed. There is a lot of fragmentation, leading to inefficiencies. Consolidation is not a bad thing. After all, the main goal is to draw more attention to homes and increase home sales.”
“It’s not all doom and gloom”
As for why Real became a particular acquirer, Elwell sees a philosophical consensus that goes beyond financials.
“I always thought of REMAX as the top real estate brand in America,” he said. “Working at REMAX is more like starting your own company.Real acts as a vessel for agents to run their own businesses, so it makes sense that Real made this acquisition.”
Perhaps most notably, Elwell said the reaction he’s heard to the deal has been almost uniformly positive, which is unusual for a headline-grabbing industry change.
“Large deals and mergers like this can be exciting and show the energy in the industry,” he said. “Big headlines like this are uplifting. It shows that not everything is doom and gloom. What feedback have we gotten so far? I haven’t heard anything negative.”
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