Shifting market conditions proved to be a nuisance for RE/MAX, as the real estate giant reported another loss in revenue during the third quarter.
In its latest earnings report, RE/MAX Holdings, the parent company of RE/MAX and Motto Mortgage, reeled in $88.9 million in the third quarter, marking a $2.1 million decrease (2.3%) from Q3 last year.
The company attributed the earnings dip to “negative organic revenue growth” and “adverse foreign-currency movements.”
According to the company’s financial filing released Thursday, the decline in organic growth was primarily due to lower broker fee revenue and an increase in recruiting incentives.
In a statement following the release of Q3 results, RE/MAX Holdings CEO Steve Joyce highlighted the “increasingly difficult housing market conditions” that the firm and other players in the industry have had to contend with. However, he also indicated that the adverse effects of the market were partially offset by RE/MAX’s growing mortgage business and revenue gained from the 2021 acquisition RE/MAX INTEGRA.
“We expect our strategic growth initiatives to provide similar benefits in the coming quarters. While not immune to the impact of shifting housing conditions, we believe our 50-year track record amply shows we are insulated far better and are more resilient than most. Simply put, our business is built to last,” Joyce said.
Despite the aforementioned boost, RE/MAX saw its organic revenue growth slip by 4.9%, according to its filing. The company attributed the dip to lower broker fee revenue—admittedly influenced by rising interest rates and the cooling market conditions—and an increase in recruiting incentives.
The dip was partially offset by the growth of Motto Mortgage, which saw a 19.9% increase in the total franchises opened in the third quarter. The lending operation had 217 offices opened as of October 31.
The total agent count at RE/MAX climbed by 2.4% to 144,300 in Q3.
Aside from seeing a decrease in earnings, the firm also reduced its quarterly expenses. RE/MAX reported that its total operating expenses decreased by 34.9% in the third quarter, dropping to $83.7 million from $128.6 million in Q3 2021.
Looking ahead to the final three months of the year, RE/MAX Holdings expects agent count to increase 1% to 2% YoY while anticipating between $80 million to $85 million in Q4 to cap off the year.
The company adjusted its full-year outlook and reduced its guidance to reflect current housing market conditions and other related macroeconomic trends. Among the shifts, RE/MAX decreased its outlook for agent count from 1% to 2%—down from 1% to 2.5%.
Revenue projections were also moved to between $352 million to $357 million—down from $354 million to $364 million.