Re/Max doubles profit but full-year outlook is less optimistic

Even as Re/Max Holdings continues to grow amid the housing market slowdown, the franchise brokerage slightly lowered its guidance for the year.

“We are witnessing a larger-than-expected slowdown in home sales this fall, as homebuyers and sellers adapt to a shifting market,” said Adam Contos, the company’s CEO. He spoke during the third-quarter earnings call on Friday. In a rebalancing market, the shift “back to equilibrium is not always smooth,” he said.

The company now expects full-year revenue in the range of $210 million to $213 million, down from $213 million to $216 million. And it sees agent count increasing 4.25 percent to 5.25 percent, versus 5 percent to 6 percent. In the third quarter, agent count climbed 5.4 percent year over year to 123,905 agents, according the Re/Max’s quarterly earnings report.

The more cautious outlook comes as the national housing market has slowed. New construction home sales saw the fourth straight decline in September, falling 13 percent year-over-year. Existing homes sales have declined, too. In a September report, the National Association of Realtors noted that the trend is a result of rising prices and dwindling inventory.

Still, Re/Max reported a massive boost in profit for the quarter — thanks in part to its acquisition of the master franchise rights for the Northern Illinois Region, which includes Chicago — and because of the money it makes from franchise fees. The Northern Illinois deal, from a year ago, added nearly 2,300 agents and over 100 offices. Net income was $8.1 million, more than doubling the $4.4 million a year earlier.

Revenue for the third quarter was $54.9 million, up 12 percent from $5.8 million in the third quarter last year. Franchise fees and annual dues accounted for 63 percent of revenue.