Realogy profits nosedive in 2018

Corcoran parent invests in new recruiting models

Feb.February 26, 2019 10:15 AM

Ryan Schneider (Credit: iStock)

With no boost from changes to the U.S. corporate tax rate and a “tough” national housing market, Realogy Holdings’ profits dropped 68 percent to $137 million in 2018.

The final quarter of 2018 was particularly difficult, with the New Jersey-based conglomerate losing $22 million compared to net income of $255 million during 2017’s fourth quarter. (Realogy benefited hugely in 2017 from changes to the U.S. corporate tax rate, which provided it a $216 million windfall.)

For the full year, Realogy generated $6.1 billion in 2018 revenue — a drop of $35 million compared to 2017. Fourth-quarter revenue was $1.4 billion, down $90 million from the prior year, thanks to fewer transactions at NRT, the division that operates the Corcoran Group, Sotheby’s International Realty and others.

“Most of the challenge in the 2018 market showed up in the last half of the year,” CEO Ryan Schneider said during an earnings call Tuesday, in which he acknowledged it had been a “pretty tough” four or five months for the national housing market. Realogy’s transaction volume dropped 5 percent during the fourth quarter; sales volume was down 10 percent in December alone.

Overall, Realogy reported 1.4 million transactions valued at $512 billion in 2018, up 1 percent from 2017. Although NRT’s average sales price rose 2 percent year-over-year, transaction volume dropped 2 percent.

“New York remained pretty weak in Q4. California was incredibly weak, and we’re over-weighted in both of those related to the National Association of Realtors and our competitors,” Schneider said.

To counter the market forces and competition from well-funded rivals, Realogy has piloted new commission models in select markets. Company officials said those programs resulted in 5 percent growth in agent headcount.

“If we can scale these things across our footprint, we can drive [sales] volume,” Schneider said.

The company has also invested in new marketing, technology and lead generation tools to improve its value proposition for agents. “If we can drive recruiting growth, it will pay off on an EBITDA basis,” he said. “You can hold your own.”

Realogy said Tuesday that it is also looking to save $70 million in corporate expenses in 2019, including a reduction in facilities and back-office operating costs.

Schneider was optimistic about 2019 — particularly during the second half of the year. “We believe consumer demand is very strong,” he said. “The fundamentals that held consumers back are easing.”

This fall, Realogy launched an iBuying service through Coldwell Banker. Schneider said the effort was still nascent, but will definitely expand. “Most of the time, people say no to the offer, but we keep the listing,” he said. “So we really like the value proposition here.”

Related Articles


Real estate stocks push up this week as U.S.-China trade tensions ease

416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)

Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case

49 East 10th Street and Barbara Corcoran (Credit: Google Maps and Getty Images)

Corcoran to shut down office in building partly owned by Barbara Corcoran

From left: RealPlus' Eric Gordon, Corcoran's Pam Liebman, Halstead's Diane Ramirez, Douglas Elliman's Howard Lorber and Brown Harris Stevens' Bess Freedman (Credit: Eric Gordon by Emily Assiran, Getty Images, Halstead, BHS, iStock)

Terra sells part of RealPlus stake to Corcoran and Elliman

Joel Schreiber (Credit: Shir Stein and Wikipedia)

WeWork’s first investor used his stock as collateral. Now his lenders are suing him

Pam Liebman (Illustration by Chari Tsevis)

The Daily Dirt: Inside the Corcoran “hack”

(Illustration by Charis Tsevis)

Revealed: Corcoran’s “hacked” files

Cammeby's International Group founder Rubin Schron and, from top: 194-05 67th Avenue, 189-15 73rd Avenue and 64-05 186th Lane (Credit: Google Maps)

Ruby Schron lands $500M refi for sprawling Queens apartment portfolio