Less than 24 hours after announcing Nick Bailey’s departure from the firm, RE/MAX executives found themselves on a call with investors and analysts to discuss the company’s fourth-quarter and full year 2023 earnings.
In his opening remarks, Erik Carlson, who was named CEO of RE/MAX Holdings in November, mentioned the promotions of Amy Lessinger, who is replacing Bailey as RE/MAX president, Abby Lee and Susie Winders, but he made no mention of Bailey other than to note his departure. Additionally, no analysts asked questions about the changes the firm made to its C-suite.
“These are well-deserved positive changes that I believe will help us navigate the road ahead and realize our full potential,” Carlson said.
In their new roles, the firm’s new leaders find themselves tasked with getting RE/MAX back on a profitable track. Despite losing $10.9 million in Q4 2023 and a total of $69 million for the full year, RE/MAX’s revenue of $76.6 million in Q4 was down only 5.7% year over year, while the $325.7 million in yearly revenue was down 7.8%.
These results came as the number of existing home sales dropped 18.7% year over year in 2023 to a near 30-year low of 4.09 million. RE/MAX’s U.S. agent count, meanwhile, fell from 58,719 at end of 2022 to 55,131 at end of 2023.
The company’s global agent count is up 0.6% annually to 144,835, due to slight growth in its Canadian agent count and a strong uptick in its international agent count, the latter of which rose from 60,175 at the end of 2022 to 64,536 at the end of 2023.
With this in mind, Carlson said two of the firm’s main priorities are to stabilize and grow its U.S. agent count and to expand its mortgage business. He said leaders are confident that these areas can “grow into a meaningful revenue business.”
“Posting gains in those two areas would build market share, increased revenue and earnings, and will create momentum for additional growth,” Carlson said.
As RE/MAX has attempted to overcome the challenges posed by housing market conditions, executives said they have reevaluated some of the programs the company offers in an effort to pinpoint which initiatives are worth further investment. One such program, Carlson said, is its teams initiative, which is launched in mid-2022 and expanded again in 2023.
“As a result of the program impact and our lessons learned, we are expanding the modified version of the program to encourage team recruitment and growth across much of the U.S.,” Carlson said. “From our perspective this is prudent, proven investment that will help franchises grow their offices, help team leaders build larger teams and, simultaneously, it sends a message across the industry that teams have yet another reason to affiliate with RE/MAX.”
Under the modified teams program, in order to unlock the program’s financial incentives (which include reduced recurring fees and a broker fee cap), a brokerage in an eligible state must first add any combination of six team leaders or members from outside the RE/MAX network.
RE/MAX executives also addressed the commission lawsuits and the firm’s settlement agreement related to the Sitzer/Burnett, Moehrl and Nosalek suits, which was confirmed as a nationwide settlement.
“While the settlement came at a significant financial cost, we believe it was the right decision for all our stakeholders, affiliates, employees, shareholders and debt holders alike,” Carlson said. “We view it as an investment in the brands, the networks, the franchisees and, most importantly, the agents.”
Executives noted they were “cautiously optimistic” about the settlement gaining final approval in May, an outcome that would see copycat litigation also go away. They also noted that RE/MAX is viewing this as an opportunity to further double down on agent education.
“In RE/MAX University, we offer something called the Accredited Buyer Representation Designation, which gives our agents education on exactly how to articulate their value proposition, so we anticipate that there will be more demand for that as we move forward,” Lessinger said.
As RE/MAX heads further into 2024, executives said they expect to continue seeing a purge of nonproductive agents across the industry, as well as more transactions in 2024 than in 2023, which they believe will serve their highly productive agents well.
