Most resi jobs can be automated: Real Brokerage CEO
"If you're working at a brokerage, you should make sure that you're actually bringing value."
His company doesn’t have offices and it doesn’t operate in any big markets, but Tamir Poleg has quietly built one of the fastest growing residential brokerages in the country.
The Real Brokerage has grown from 1,000 brokers in 2020 to 9,000 in January and saw revenues increase 186 percent year-over-year through the third quarter to $285.6 million from $71.2 million — though it posted a net loss of $12.7 million.
Poleg attributes the growth to what he calls a tech-first approach to the industry: His firm has a back-end platform that automates transactions and allows brokers to run their business digitally, which allows him to keep overhead low. The company added about 100 employees over the past two years.
Poleg recently sat down with The Real Deal to discuss his brokerage and the state of the industry. This interview has been edited and condensed for clarity.
Q: Can you talk about your platform and your broker to employee ratio, and how those two things work together?
We are a technology company, this is how we see ourselves. We measure efficiency very closely, because at the end of the day, we are in a low margin business. So you have to remain very efficient, meaning that you have to keep the headcount very, very low. We have one employee for every 100 agents, roughly.
And the reason why we can do that is because we invested millions and millions of dollars in building software that will support our back office operations. So all of the tasks that are typically handled by humans in the office of a brokerage are automated at Real. We have a transaction team of nine people. They typically close between 10,000 to 15,000 transactions a quarter. Typically, you would need to have a team of dozens of people to manage that kind of volume. Leveraging technology allows us to be very lean and efficient.
Q: I was wondering if maybe you could get into what the typical agent might pay and whether or not the fact that you give out equity factors into where you guys decided to put that split?
The typical agent when it comes to commission splits would be an 85-15 split, so we keep 15 percent, we pay the agents 85 percent. But on top of that, there’s a cap. Once agents pay us $12,000 a year in commission splits, they get to keep 100 percent of their commissions, and they only pay a transaction fee of $285.
If they cap, meaning they paid us $12,000 a year, they get an RSU grant, or if they attracted a friend to the company and that friend closes their first deal, they get a small RSU grant as well. Aside from that, agents can use a percentage of their commission revenue to actually purchase company shares. And if they stay with us for 12 months after that closing, they get a bonus in the form of shares.
Q: Given the trajectory of Compass stock, why should brokers be excited to get equity in The Real Brokerage? Shouldn’t they be skeptical of this kind of a deal?
I think that the equity incentives that Real offers are different from ones that other companies have offered in the past. From my understanding the way Compass grew was by leveraging equity to actually acquire other brokerages or incentivize large teams to actually come to Compass and that was kind of the payout for them to actually come. We do not offer agents or teams or other brokerages any incentives in order to join us.
If you think about the ways agents earn equity in the company, they actually buy equity, and then they get a bonus on top of that. So that bonus is somewhat of a hedge against any decline in stock price. So I think that those are just very, two very different models.
Q: You automated a lot of jobs. Do you think that’s the future of the industry? If I’m an assistant, or if I’m someone who works in the back office at a major brokerage, should I be worried?
I don’t think you should be worried.So I think that there are a lot of tasks that are just mundane and boring. And just, you know, they can be handled by technology. Even more than that, humans are not enjoying doing them. So I’ll give you an example. We believe that we can actually train ChatGPT to answer probably 80 percent of the support tickets that we get just because those support tickets are repetitive, we know exactly what the answer would be. And that frees up our support team to deal with the things that are more meaningful, more interesting, maybe require more of a human interaction or a human component to it.
So I think that if you’re working at a brokerage, you should make sure that you’re actually bringing value and you’re just not doing things that are very simple to do. But I think that yes, the future of the industry is in technology. One hundred percent.