2024-02-24 01:50:13 ET
Summary
- The Real Brokerage is experiencing strong growth on the back of incentives that drive viral agent growth.
- The company's revenue primarily comes from commissions on real estate transactions, but the company is targeting increased revenue from title fees and brokering mortgages.
- Real's costs are largely variable, and without success in ancillary services, it is not clear the company can create shareholder value.
The Real Brokerage (REAX) is leveraging a range of incentives to drive viral agent growth, with great success. While this is helping Real expand rapidly, the economics aren't that compelling at the moment. Real's costs are largely variable, meaning margins are unlikely to improve significantly with scale. This could change if Real can attach higher margin services to real estate transactions, but there are a number of large companies targeting ancillary services, which could make this difficult.
Market
The rise in home prices in recent years, along with the rapid increase in mortgage rates over the past 2 years, has crushed the housing market. Sellers are unwilling to accept lower prices and buyers are unable to afford current prices, causing the market to dry up. Existing home sales are sitting at the lowest level for over a decade and are down around 40% from their peak in early 2022....
Read the full article on Seeking Alpha
For further details see:
The Real Brokerage: Viral Marketing Driving Growth