A challenging housing market halved Anywhere’s third-quarter profits compared to last year, and company executives said on an earnings call they think the market will get slower yet.
That could mean more layoffs and lower commission splits for some brokers, an area that executives pointed to as a potential cost-saver.
The real estate conglomerate formerly known as Realogy, whose flagship brands include Corcoran, Sotheby’s International Realty and Coldwell Banker, reported $55 million in quarterly income, down from $114 million in the same period last year.
Transaction volume was down 17 percent, and Anywhere CEO Ryan Schneider warned it could worsen to 25 percent through the end of the year.
“The biggest challenge today is the rapid deterioration of the housing market,” Schneider said. It’s not that home prices are plummeting, but that much less buying and selling is happening than a year ago.
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Realogy boss on cost-cutting, the competitive landscape and what to look for in 2020
Sales were constrained by rising interest rates and a shortage of inventory, which contributed to a nearly $380 million drop in Anywhere’s revenues compared with the third quarter of 2021. The market downturn has triggered aggressive cost-cutting by the company, including a major round of layoffs last quarter.
The firm is “beginning to identify more structural savings” that were outlined earlier this year, said Anywhere CFO Charlotte Simonelli, who said on the call that the company is on track to trim roughly $150 million from its budget by the end of the year.
Brokers may see lower commission splits as the company looks to save money, a move Anywhere feels comfortable making because other brokerages are offering less competitive packages, according to Schneider.
“I think the reality is we’re seeing a better competitive environment for us because as you go into a downturn it kind of exposes different people’s strengths and weaknesses, and you see a lot of competitors pulling back,” Schneider said. “You see a return or flight to quality, given our financial performance.”
One such competitor is Compass, which for the past decade has disrupted established firms by offering equity and high commission splits to poach top-performing agents. But Compass has stopped offering equity and is paring back the splits it gives to brokers as it seeks to turn a profit for the first time.