Above, from left to right: Tamir Poleg, Erik Carlson and John Featherston
When The Real Brokerage announced its acquisition of REMAX for $880M on April 27, another shockwave jolted the industry, triggering uncertainty for those brokers and agents affiliated with the two firms, as well as for the industry at large.
During an exclusive RISMedia Industry Briefing with RISMedia Founder & CEO John Featherston on Ma 28, Real CEO Tamir Poleg and RE/MAX Holdings CEO Erik Carlson sought to allay those concerns. While the leaders couldn’t share specific details in advance of the deal’s anticipated closing later this year, they elaborated on their intentions for the combined entity, expressing a desire to preserve what has made REMAX a success for 53 years.
“I’ve known the REMAX brand since I was a kid,” said Poleg. “I remember the colors, I remember the balloon. My first property that I ever bought was with a REMAX agent. Why would we ever want to change anything? We want to enhance the brand. We want to grow it. We want to take it into the future. This is for me an eternal brand, and I’m just humbled to be associated with it.”
Despite that sentiment, Poleg and Carlson acknowledged broker and agent uncertainty about what the future holds.
“We’re two public companies and we’ve announced a transaction and there are a lot of questions that Tamir and myself actually have some answers for, however, can’t really talk about them until post-close,” said Carlson. “And I know that from both the Real and the REMAX agent and brokerage side, there is some frustration with that uncertainty. Just know that Tamir and I are both committed to talking as transparently as we can during this regulatory process until we get the deal closed.”
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Why REMAX? Why now?
According to Poleg, the deal is more of a merger than an acquisition, a partnership aimed at improving the experience for brokers, agents and consumers. The time was ripe, he explained, to bring the engine that drove expansive growth for Real to the REMAX organization.
“Real has grown to more than 34,000 agents organically,” said Poleg. “And I think that what we demonstrated, especially to ourselves, is that our technology can make agents’ operations more efficient. And when we’re thinking about REMAX and the global footprint and the scale that they have, I think that from a timing perspective, we felt confident bringing what we built, mainly the technology and obviously the amazing community of agents, to REMAX.”
Poleg was attracted to REMAX for its iconic status and massive scope in real estate, but also its productivity.
“People always talk about agent count,” he said. “The combined company will have 180,000 agents. They’re missing the main point that REMAX has the most amazing agents in the world with the highest productivity; whereas everybody else is at around six transactions per year, REMAX is at 12. We are bringing together a lot of transactions, and those transactions can be monetized in multiple ways.”
According to Poleg, the Real platform will enable REMAX brokers and agents to build revenue beyond the transaction, in the form of mortgage, title, financial services and more.
“One of the great things about these two communities coming together is they’re focused on the same thing and that is being a productive full-time real estate professional and focusing on what buyers and sellers need,” said Carlson. “When you bring cultures like that together, you have a high degree of success.”
Two models, one roof
From the onset of the acquisition, Poleg has maintained that the two entities—the virtual Real network and the brick-and-mortar REMAX franchise—will operate separately, appealing to two different types of agents: those who are tech savvy and prefer to operate more independently, and those who seek a physical office location and the backing of a big brand.
“I think that the optimal way to go about it is to preserve what’s already in place,” Poleg said. “So we will continue to operate under two different brands with two different models and that’s the way it’s going to continue.”
That said, Poleg believes Real’s operating model will help REMAX brokers succeed.
“Real has one employee for every 85 agents—that’s our efficiency ratio,” said Poleg. “Although we never ran a franchise, we understand extremely well what the REMAX brokers are going through. We understand their operations, we understand their struggles, we understand all of their margins and we understand how to improve that.”
Carlson believes that Real’s “efficiency ratio” and expansive platform will pay dividends for REMAX professionals.
“I’ve never met a broker or an agent who just loves to do administrative back-office work,” he said. “If the Real REMAX Group can continue to help reduce non-value added tasks and give (brokers) more time to work with agents and to work with clients, that’s just a win-win in my book.”
Dealing with churn and poaching
Losing agents during a merger or acquisition is inevitable, as a certain percentage always jumps ship when confronted with change. Poleg, however, isn’t focused on reducing churn. He’s more interested in giving agents plenty of reasons to stay.
“We’re trying to continuously improve the value proposition for our agents out of the understanding that if we do so, then no other company will be able to give them anything more compelling,” he said. “The focus is on value rather than we have to reduce churn at all costs.”
The primary vehicle for maintaining a too-good-to-leave value proposition is technology. As Poleg grew Real, he explained, he focused not just on bringing a new business model to the market, but “true tech innovation.”
“Using technology, you will never run out of innovation,” he said, “because people need something new all the time. You need to constantly try and deliver more and more and more. And I think that’s kind of the philosophy that we have here at Real. We’re never stagnant. We’re never satisfied with what we’re offering. We’re always trying to do new things.”
When two large brands come together, fears about one company poaching agents from the other also abound. Poleg confronted the issue from the onset.
“One thing that I told our agents in the communications after the announcement is let’s respect everything that the REMAX brokers, franchisees have built because they work really, really hard to build their businesses and their offices and we don’t want to take anything away. We want to add,” he said.
“We also understand that some agents will want to move from the Real model to REMAX and from REMAX to Real,” he added. “But if somebody wants to move from REMAX to Real, there needs to be continuous benefit to the franchisee, even if they switch over to Real.”
But the goal, Poleg said, is to prevent such migration.
“We’re thinking about ways to prevent migration either way, making sure that the agents of the combined company understand that the potential is bringing people from the outside into this amazing community that we’re building together,” he said.
An AI-forward game plan
The introduction of its Leo CoPilot AI assistant more than two years ago put Real ahead of the curve in the AI arena, and the results thus far provide clear proof of concept. According to Poleg, last quarter, Leo was engaged in about 100,000 agent communications, answering and resolving about 50% of Real’s support tickets. Real will soon roll out its HeyLeo AI home-search assistant for consumers, and Poleg has no plans to slow the pace of AI innovation.
“We should acknowledge the benefits that AI could bring to our agents’ lives and buyers and sellers’ lives,” he said. “And as a company that wants to be at the forefront of innovation, as a company that has responsibility to the lives of 180,000 agents and to millions of clients around the world, we should make sure that we deliver what they need in order to succeed.”
Carlson explained that this AI-forward approach aligns with his and Poleg’s people-first philosophy.
“We both believe that this is really a people-driven business,” he said. “It comes down to focusing on people, focusing on understanding what wants and needs are, and then applying technology in a way that improves the overall productivity and experience of the journey.”
“I think that at the end of the day, if REMAX agents right now close 12 transactions a year, we can double or triple that using the right technology that is AI based,” Poleg added.
Cultural alignment wins the day
Ultimately, Poleg and Carlson believe the merger will succeed because of deeply embedded cultural values both firms share.
“When we announced the deal, everybody on the Real side was excited because they felt like we’re joining forces with people like them, even people who they aspire to be because of the production of the REMAX agent,” said Poleg. “So from a cultural perspective, I couldn’t imagine any better match.
“I think that we will see a lot of cultural alignment and a lot of knowledge sharing between the two communities. There will be trainings, there will be events where everybody will be invited. There will be lead exchange opportunities that the two communities will enjoy; but at the same time, we will continue to operate two separate brands.”
“I think when the cultures come together like that, integration becomes easier and there’s a higher degree of being able to be very successful in the future when you have that alignment upfront,” said Carlson.
Poleg gave the final nod to REMAX Co-Founder Dave Liniger.
“The fact that REMAX is as big as it is, as successful as it is, I think that this is a testament to Dave, who he is, how determined he is, how smart he is,” said Poleg. “And I’m incredibly honored that Dave has chosen us as the party that he wants to merge his company with.”
To watch the full replay of RISMedia’s Industry Briefing, click here.
