The Real Deal New York

Realogy shrugs off competition from a “small startup” called Redfin

Company generated $1.8B in Q2 revenue, up 8%
By E.B. Solomont | August 04, 2017 08:30AM

From left: Pam Liebman, Richard Smith, Glenn Kelman and Spencer Rascoff

Shares of Redfin have nearly doubled since the online brokerage’s IPO last week — and it’s made no bones about gunning for traditional brokerages. But guess who’s not sweating it: Realogy.

CEO Richard Smith dismissed the online brokerage — which has a market cap of $2.16 billion, compared to Realogy’s $4.7 billion — as a “small startup” during a second-quarter earnings call on Thursday.

“Certainly, there’s no pressure. We’ve been in the business a long time,” Smith said. “There’s a wealth of opportunity for new and innovative ideas. We can all argue about whether they’re sustainable or not.”

Smith said Realogy’s focus on agent productivity and technology — not to mention an aggressive recruitment drive — puts it in a position to “capitalize on the market in ways small startups just can’t capitalize.”

Smith — who vowed to turn Realogy into a “recruiting machine” earlier this year to better compete with rivals — said the company would continue throwing its weight around on the recruitment front, as well.

“We’re not slowing down at all,” he said Thursday. “We’re using our size and scale, which nobody else in our business has, to substantially capitalize on that opportunity.”

Realogy stock closed at $34 per share on Thursday, compared to Redfin’s $27.20-per-share price — a jump from just $15 per share on July 28.

Smith didn’t just take on Redfin, which is now worth twice as much as Blue Apron but faces outstanding questions as to whether it really is a tech company. The Realogy head also weighed in on a dispute between StreetEasy and residential firms in New York, including Corcoran Group and Citi Habitats, over who controls sales and rental listings. Corcoran and Citi Habitats said they stopped feeding rental listings to the Zillow-owned portal after it started charging agents $3 per day to advertise on its site.

“Zillow is an important media channel for us and I don’t expect that to change,” Smith said. “At the end of the day, it’s an agent expense.”

During the second quarter, Realogy generated $1.8 billion during the second quarter, an 8 percent jump from the prior year. Net income rose 18 percent to $109 million during the same time.

At NRT — which owns Corcoran, Citi Habitats and Sotheby’s International Realty — revenue jumped 10 percent to $1.4 billion during the quarter. Sales were up 12 percent thanks to growth in the high-end market and Realogy’s target agent recruitment and retention program.

On the high end of the market, sales above $2.5 million rose 29 percent during the quarter, Realogy said.

In New York, some recent hires include Vickey Barron, who joined Corcoran from Douglas Elliman last month. Jay Glazer, a top-producing broker who’s represented Gwyneth Paltrow and Chris Martin, joined Corcoran after he was fired from Compass last month.