When a new real estate brokerage explodes on the scene, like eXp Realty with its virtual model, Redfin with its employee model and Compass, which doled out big cash to high-producing teams and agents, you hear about it. In fact, you can’t help but pay attention. Pundits weigh in, clickbait headlines are splashed across pages — everyone wants to talk about the success or failure of the brand.
That didn’t happen with The Real Brokerage Inc. (Real), a real estate brokerage that brands itself as a “national, technology-powered real estate brokerage,” and quietly went public in June 2020. Flying under the radar, says Tamir Poleg, CEO of Real, is all by design.
“Another brokerage described us as the ‘silent lion in the corner of the room,’ and I like that analogy. I think that we’ve been trying to keep our heads down and focus on creating an amazing client experience. I think we’re getting to a point where a lot of agents are hearing about us.”
Hearing some buzz
We at RealTrends agree. The buzz is getting stronger. We’ve recently been asked by many brokers about The Real Brokerage’s business model. And we’ve talked to a few agents who recently moved to the brokerage.
Founded in 2014 by Chief Executive Officer Tamir Poleg and Chief Technology Officer Gal Weiss, Real decided early on to brand itself as a technology-forward company. And several agents we spoke with mentioned a great mobile app. “We are very focused on technology, specifically mobile technology,” says Poleg.
However, their value proposition trends toward their splits, rev share and equity plans. According to Poleg, “We talk to our agents constantly, and many of them are attracted to the financial opportunities.” Real offers agents an 85/15 split, with a cap of $12,000. “Once you reach your cap, you pay $225 per transaction,” says Poleg. While there aren’t any monthly fees, there is an annual fee of $500, that’s “taken out of the first two closing for each agent each year.” They also offer a rev share.
“We try to build an opportunity for agents that rewards them a lot for the first years, because we understand that most agents are likely to refer one to five agents to the company, and we want to be generous. At the same time, we wanted to create a rev share that’s understandable. So, the rev share is five tiers: 5% on the first tier, 4% on the second, on down. So, if you attracted me to Real, you’ll be making 5% of my gross commission income (GCI) until I cap. It’s pretty straightforward,” he says.
In terms of equity, which Real also offers, Poleg says, “When an agent caps, they receive 2,000 shares. When they attract another agent to the company, they receive 1,000 shares once that agent closes their first deal. Those numbers will change as the agent count grows.” That’s certainly what enticed Michele Belisari to move to Real. “I had a great run at RE/MAX [she’s been with them since 2012], but I’m also really techie. I was looking to lower fees, like a lot of people are, and I was also looking for an opportunity to grow a team of agents across the country.”
The truth is she can do that at a multitude of brokerage firms, including eXp. “The model itself, of being in the cloud and having ownership in a company, is very appealing to me. Especially at this stage of my life, where I’m a mid-lifer, so I’m looking for passive income, as well.” In fact, she seriously looked into eXp, but says she decided against it for one reason: “I wanted to be with a company that was, and this is just for me, a little younger. I felt like I wanted to be a bigger fish in a small pond, versus the other way around.”
You’re asking yourself what’s different about Real, right?
The truth is, nothing, really. To give some perspective, we asked Steve Murray, senior advisor to RealTrends. “From our own research looking at the top brokerage companies in the country, it’s clear from the past 10 years of data that for leading brokerage companies, it’s still fundamentally about the ability to recruit and retain agents. Real is offering low cost, and revenue sharing, and publicly traded equities as incentives to recruit agents,” says Murray. “Most leading brokerages have a variety of incentive programs of differing kinds to do the same thing. In that regard there’s not a lot that I see that’s that different from what else is out there right now. But we will watch to see how they proceed.” The Real Brokerages didn’t submit for the RealTrends 500 or Nation’s Best brokerage rankings this year.
Real recently announced its preliminary, unaudited financial results. It expects Q1 revenue growth of 217% to $9.3 million and 82% agent growth to 1,895 agents. The company currently trades on the TSX Venture Exchange.
“I can tell you from a financial stock perspective, we see ourselves as a company that should be traded on a major U.S. exchange. We think the NASDAQ would be the right venue for us, so that’s on our radar,” says Poleg. A couple days after I spoke with Poleg, the company applied to list on NASDAQ. Real is currently in 27 states and the District of Columbia. Their biggest footprints are in Texas, California, New York, Florida, New Jersey and Georgia, in that order.
At this point, scaling growth without jeopardizing the agent community is vital to the company. That’s a problem most brokerages have. “We could have grown much faster by jeopardizing the long-term health of this community of agents and the DNA we’re trying to build. We decided not to do that, and just say no to people that we think are not the right fit. Our agents are very involved in the day-to-day decision making. We collaborate closely with them,” says Poleg.
What is that DNA? Poleg defines it as, “Working hard and being kind. Kindness is a huge thing within the company.” I could go into some commentary on wokeness, but Poleg is authentic in his focus to find agents who “propagate that message [of kindness] in social media and real life.” I mean, kindness leads to professionalism and ethical practices. In a crazy market like today’s, a little bit of that goes a long way.
We’ll certainly be watching to see how Real progresses going forward.
