Anywhere Real Estate Reports Q3 Earnings

A depressed housing market continued to stifle growth for Anywhere in the third quarter, but CEO Ryan Schneider saw room for optimism in a strong start to the end of the year.

The real estate services company posted an adjusted net income of $6 million, an $11 million decrease from the same period last year. Its unadjusted net income of $129 million in the third quarter of last year was boosted by a $169 million gain from an early debt extinguishment.

The parent company of Corcoran, Coldwell Banker, Century 21 and Sotheby’s International Realty generated $1.5 billion in revenue, a 3 percent decrease from the same period last year.

Anywhere posted an operating EBITDA — earnings before interest, taxes, depreciation and amortization — of $94 million, down $13 million year-over-year.

Transaction volume was flat year-over-year, with second quarter units closed down 5 percent and prices up 6 percent.

On the earnings calls, Schneider weighed in on the ongoing debate around the National Association of Realtors’ Clear Cooperation Policy, stating that Anywhere does not support a repeal of the rule that requires agents to add a listing to the MLS within one day of marketing it.

Instead, Schneider called for relaxing the policy — reducing the scope of the listing requirement and extending the time agents can wait to list — but pointed out that Anywhere would likely benefit from such a repeal.

“Repealing it is going to advantage the larger brokers,” Schneider said. “The reality is we have more listings than anybody does and so if this thing got repealed, we could be the biggest beneficiary.”

Schneider also cited the depressed housing market as a culprit for his company’s relatively stagnant growth numbers, but shared Anywhere’s October numbers as a sign of turning tides.

The brokerage closed the month up 9 percent in closed transaction volume and was up 16 percent year-over-year including new contracts and future closings.

“We hope these strong results are the first step in an improving trend that the US housing market clearly needs,” Schneider said, later adding that he was “positively surprised” given the mortgage uptick towards the end of September.

Commission Watch

Anywhere’s commission splits held steady, up 15 basis points year-over-year to 80.4 percent.

The company had splits of 80.5 percent — up 40 basis points year-over-year — in the second quarter, which chief financial officer Charlotte Simonelli attributed to strong performance in the company’s luxury sector.

At the company’s luxury brands, Corcoran and Sotheby’s International Realty, transaction volume grew by 5 percent in the third quarter compared to the same period last year. Anywhere had over 250 closed transactions above $10 million and over 1,100 listings above $10 million last quarter.

Anywhere’s average commission rates fell slightly, to 2.41 percent from 2.45 percent for its franchise groups and to 2.36 from 2.41 for its owned brokerage groups.

The industry has been watching commission rates with baited breath since NAR’s rule changes requiring buyer agreements went into effect on Aug. 17.

Anywhere rolled out five different buyer agreements to agents; the agreements run the gamut from a single-house touring agreement to a six-month engagement, and the company reports that the most signed agreement “by far” has been the six-month contract.

“The fact that that agreement has been used more than the other four by a meaningful amount, makes me incredibly excited,” Schneider said. “I’m not sure I would have predicted that going in.”

Cost Cutting and Investing

Anywhere realized $30 million in cost savings in the third quarter and reiterated its expectation to save around $120 million over the full year.

The company generated $99 million in free cash flow, up from $95 million in the same period last year, and the Anywhere expects to produce $100 million in cash for the year, excluding $60 million in one-time payments, which include a $20 million payment in the second quarter from the company’s antitrust settlement and an expected $40 million payment related to a legacy tax matter.

Schneider also emphasized the company’s investment in integrating its brokerage and title businesses and how artificial intelligence is helping drive that process.

“The lower error rates, the better faster kind of experiences, you know, is something that is anchoring some of the underlying brokerage title integration that we’re trying to do,” Schneider said.

He also sees AI as a tool for agents — just not all of them.

“I think it’ll help great agents have more time to do what they do best, which is generate business and execute transactions out there,” Schneider said. “I do think it will be part of less agents in the industry, but I think that phenomenon is already going on, and I’ve commented publicly that I expect that there’s a lot of good in that.”