Why is Residential Real Estate Eating Itself? Part I | Episode 127

I've talked about the old school versus new school models of real estate. Yeah. The old school model was very heavily franchise based. Sure. Okay. Yeah. The compass model and the real model are not. Right. But even compass and real, they they've structured their businesses a little bit different. Compass, as much as they're not a franchise model, they have gone the traditional route. Like open up office everywhere, like agents, agents, agents.

Also brand forward. I mean, it's it's it's we are a compass where I think real takes a different spin to be like, you're the agent, you're the brand. You're the brand. And that's from me being an outsider, not knowing the intricacies of each, but just seeing what I see online. That's how I think that they're positioned.

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Right here, guys. Reach out to John Sachs and his team at Property Management Redefine. We'll take good care of you. I'm Timmy G.

Hi everyone. I'm Sean Mooney from Glenside, Pennsylvania.

What's going on, Shawnee boy?

Um, you know, I've been getting, you know, all these emails and DMs I'm getting about my shoes, right?

About your 440s?

Yeah. But people were like, yo, you referenced these globes that you had, and you had Oh, the globes, not the New Balance. No, I get more emails or DMs on the globes because I had nine pairs of the same shoe. So what I decided to do today was to bring in the final pair. Oh, nice. I'm trading out my 440s. Although I did buy another pair of 440s just as a backup pair.

Okay.

Um by the way, folks, I've never bought a backup pair of shoes in my life. What about backup 10 pairs? Definitely not.

So this is officially the last pair ever made, probably. Because you can't buy them. They probably went out of style. Like a different thing.

And the best part is they're like skateboarding shoes. Yeah.

Oh I wear.

Let's say. Are they in mint condition? Oh wow, I got the paper I got. Got me the globe. You still got the little uh the paper that's stuffed inside to keep the form. I think I took them out because I had to try them once. Oh, gotcha. But oh damn. Look at those bad boys.

You know they have like new car smell.

These are like new shoes smell. Oh, I'll take your word for it.

Oh, dude. These, these are I don't I don't know what to do with them. Like, should I wear them because they're the I'll never have this pair again?

Or do I just No, I I think you keep those forever as a reminder of how great these shoes once were.

Like hand them over. Like this is your dowry for your wedding, son. You put them in your will. Pair of globes. You're like, all right, Brendan.

No money.

What? Globe. Get a pair of globes. This is my outreach to Globe. Globe, if you have any charcoal chase size 11s, like somewhere that you, you know, in a bin, in a closet somewhere that you need to get rid of or that you'd like to sell, please hit me up on the DMs.

Bring them back. Bring them back.

All right.

That's enough.

So every it answers the questions for everybody. It's DMing me about the globes. You see them, you see them here. Last pair ever. Got them. Sign them and sell them. All right. What are we getting into today? Today we're going to be talking about a lot of scuttle butt that's going around the real estate interwebs recently. Um a lot of activity in the last right now, it's happening. Yeah.

Real time. This is uh the end of April 2026. It's when we're recording.

So what we're we're gonna talk about today is the acquisitions, the consolidation of brokerages and the impact on the industry and kind of where we think it's gonna be going forward.

Yeah, really what we're gonna be talking about is we're gonna be talking about why the residential real estate industry is eating itself. It's kind of what's going on right now. Massive consolidation. There's big companies buying other big companies. And do you know what this reminds me of? This actually reminds me a little bit of when I was in the new construction home builder business. Uh-huh. So I started in 2004, market was very hot, 2004, 2005, great years uh to be selling real estate, residential, uh, new construction. And when we got to like 2006, you could see some cracks. There were some companies that like they weren't doing as well. Like their numbers weren't as good, you know, things were dropping off, too many land holdings, too many bad bets. So then what happened was some of the other the big companies, you know, maybe the top one or two were eating like eight and nine. Yeah. That kind of thing. And I remember Pulti had bought Centex, and Sentex was a huge, huge national builder. So there's a lot of consolidation. Usually when times are tough, people consolidate because maybe companies are exposed, like their numbers aren't as good, like their rents are too high, their staff's too high, their operation costs, their margins too low. So what I really wanted to go over today was really kind of like what's happening in residential real estate today. And what I want to start with are like the two monster acquisitions that have occurred basically within the last year, let's call it.

Yeah.

The first one that happened, the first one that hit the scene was really when Compass purchased anywhere. And people are like, I've never heard of anywhere. I don't see real estate signs. I don't see real estate signs on the street that say anywhere real estate. Like, who the heck is anywhere?

Yeah.

Well, anywhere was the largest residential real estate company in the world, I believe. Let's just call it the United States, but I believe it was the world. Um, they were an umbrella company that owned a lot of brands because anywhere saw a lot of value in owning different residential real estate brands, mostly for the residential real estate agents' uh brand preferences. Like the agent was like, I want to work for this brand. Yeah. So you had, you know, you had Caldwell Banker, you had Sancho21, you had Sotheby's, you had Better Homes and Garden. Like people have heard of these residential real estate brands. Why? They either see it online on Zillow or they see the signs on the street, or someone they know has got a business card with one of these companies on there. There were a lot of franchise brands.

Yeah.

So they were all under the anywhere umbrella, those brands I just mentioned, and a lot more. That was the biggest residential real estate company in the world. Crazy. Compass, not being the biggest residential real estate company in the world, came along and said, We're gonna gobble you up. We're gonna buy you. We're not really gonna merge. We're going to acquire you. We're gonna buy all these brands, we're gonna buy your people, we're gonna buy your numbers, your websites. But what they also bought is they bought their debt. So what was happening is anywhere their debt was running pretty high. And they were getting to a point where, like, look, we're either gonna drive this thing into the ground or maybe we should consider selling it to someone. So that's what happened. But the other big monster acquisition that just happened literally this week was real, which is hey, look, I'm biased here. I work for them.

Disclosure now, run it.

Tim works for real broker.

Got it.

Scrolling text. Real, just like Compass, bought a much larger real estate uh brand, brokerage, REMAX. I mean, Remax has been around for 50 years. Okay, Remax was enormous. Like it was like, I don't know, uh like almost 150,000 agents working for Remax, 120 countries around the world. So people own Remax franchises all over the world. It's not just a US or Canada uh brand, it's it's all over the place. Like they have Remax all over the place. Yeah, massive.

So wait, so okay, so to draw a comparison, I just want all of the listeners, all the watchers to know how many Remax agents globally did you say about 150,000. Globally, how many real agents are there?

Just over 30,000.

30? It's like one, it's like one fifth the size. I just I'm just trying to like illustrate the size differential from one to the next.

Yep. Okay. Yeah. So it's interesting. So it's like we said like the residential real estate industry is eating itself, and there's lots of reasons why. We'll we'll go into them. But what's happening is that there's almost like this, as I've put it before, new school wave of residential real estate. These these companies.

Wait a minute, before you go there, uh-huh. You uh first referenced in the first acquisition as Compass with anywhere debt. Can you also talk about Remax debt? I don't know the debt. I'll give it to you. Yeah, you give me that. It was over 300 million in debt because the the purchase was 880 minus the debt out. So it landed at like 550, I think. Yeah, yeah.

So 330 was the the actual number of debt, which actually isn't that bad comparatively speaking to where anywhere was. They were in the over a billion. Yeah. Well, I want to say it was like two billion or two and a half billion or something like that. I might be misquote. Maybe it was one and a half, but it's one to two billion.

Oh, uh Noah will fact check us and get us the real numbers there. But generally speaking, billions and hundreds of millions.

Now, again, like let's let's go back to Compass Anywhere. Compass had a lot of debt too. And the reason Compass had a lot of debt is because they were a VC venture capital backed brokerage. Like Compass grew as fast as it did because they took in venture capital and they started acquiring agents, teams, other brokerages. You know, they brought they bought uh, you know, at properties, they bought Christie's. So they had bought some other brands, but mostly they did it through local boots on the ground, agents and teams. They were just going to them. They're like, I know how much business you're writing, I know how successful you are, I know how influential you are. We want you to come here. Here's some money. Do you want to come to Compass? That's what happened. A lot of people don't talk about it that way, but I'm talking about it that way. And no bias to anyone. That is what happened. That's how Compass grew. When they grew anywhere, I think they also looked at it the same way. We're gonna grow through acquisition. Let's grow through acquisition. It's what we've been doing from the start. We've been acquiring these agencies, teams, these other brokerages. Why would we not acquire a monster uh you know, residential real estate company that they're they're combined companies now, Compass and anywhere, it's like 340,000 real estate agents across the world. Same thing, over a hundred countries. So that's how Compass grew. Real was a little bit different. Real grew with very low debt. What real did is they went public like fairly early on, you know, when they were still kind of small. Yeah. And and they were also really heavily investing in their tech, but they were they were self-investing. They weren't really going out to venture companies and like raising all this capital. Yeah. I don't know all the ins and outs of one versus the other, but they were kind of like two different models. Oh, yeah. And then when I joined Reel a couple years ago, a lot of what Real was doing is they were using their system of we have this tech, we have these successful agents, we have this training, we have this brand. All those together, with this financial package, the fact that Reel is what I would classify as a new school brokerage. They have uh a cap-based model where the cap is very reasonable based on production. You're a productive agent, you're gonna not pay a ton of money if you sell a lot of homes. Right. If you're not such a productive agent, the cap doesn't really matter to you. Because again, you might only sell like one, two, three homes in a year, and then you're like, this doesn't matter. But I still like it. Compass also had a very competitive structure financially for their agents, and as they were acquiring people, that also added to the pot. So let's call them. They're both basically new school companies. They've both only been around like less than 15 years, basically. Yeah. And now they're gobbling up these larger companies that have been around for like 50 years, 60 years, like way longer. So it's kind of like, why is this happening? Go the way of the dinosaur. So let's get into some of why it's happening. Before I get into like some of the reasons that I put down, why do you think it's happening that these smaller agent count, smaller revenue companies are able to acquire these bigger agent count, bigger revenue companies? Why do you think? Why are they able to? No, why is why is it happening? Like that sounds lopsided, doesn't it? Because you just made the example. You're like, how many agents was real and how many agents was REMAX? That sounds like the opposite of what should have happened.

Well, not only that, but um, I mean, there's so many questions that I have that that I don't think I'll ever really understand in terms of the numbers because like to me, it's like, why wouldn't anywhere acquire a compass? Yeah. So like that would be my thinking of like, all right, well, why wouldn't the okay, like wouldn't it make more sense from a logical standpoint for either of those situations to go the other way? Yeah, why wouldn't Remax like gobble up real? Right. I looked up um real's market cap based on their stock price. Yeah, the market cap was $564, $564 million, right? And they just made an acquisition of an of a net $550 million acquisition. Like I know like who who's the bank? Where's the funding to say? Like, I don't know. You I I'm not capable enough to figure out how that works. But who's the bank? Who's the financing? How are they getting the money to get approval to basically double their business? Right?

Yeah.

And then why? Why wouldn't REMAX, if they were in a pinch, be like, hey, I know how we can shore this up. Yeah, we buy real, we get their technology, we have all their agents, and we can then, you know, put this thing on a different path going forward.

All right. So here's something interesting. I've talked about the old school versus new school models of real estate. Yeah. The old school model was very heavily franchise-based. Sure. Okay. Yeah. The the compass model and the real model are not. Right. But even compass and real, they they've structured their businesses a little bit different. Compass, as much as they're not a franchise model, they have gone the traditional route. Like open up office everywhere, like agents, agents, agents.

Also brand forward. I mean, brand. We like the compass brand. Where I think real takes a different spin to be like, you're the agent, you're the brand. You're the brand. Exactly. And that's from me being an outsider, not knowing the intricacies of each, but just seeing what I see online, that's how I think that they're positioned.

Hey everyone, this is Tim, your favorite bricks and risk co-host. But don't tell Sean. I hope you're enjoying this episode, and I'll get right back to it in a moment. Our audience grows through word of mouth, so if you would please take a moment of your time and give us a review on the platform you're on, that would be fantastic. Please also help spread the BR word by sharing your favorite episode with a friend. We greatly appreciate your time and trust. Now, back to the show. This is my personal professional opinion. Compass to me has always seemed a little bit more old school minded. Open up offices everywhere. People go into the office. That's our culture, that's our identity. People want to work for Compass and lead with the Compass brand.

Yeah.

And a lot of people would probably agree with me. I probably Compass people were like, we love the Compass brand.

Yeah.

Real was different. Real was more of a cloud-based virtual brokerage where they said, we're not opening offices anywhere. And people are like, What? How are you even doing that? Well, obviously within the state limits in Pennsylvania, you have to have an office somewhere. Right. But it doesn't necessarily have to be an office that fits 100, 500, 10,000 people. You don't need that. You can just have the office.

Wait, where is the so is there one office for real in Pennsylvania? There's an office over in Fort Washington. I never go. Oh, so there has to be one. It doesn't have to be one designated as like this is our home office in Pennsylvania.

Yeah, and I don't know the Pennsylvania law, so don't let me say there only has to be one. I know there has to be at least one. Okay. You know, in order to start doing business in Pennsylvania. Yep. But then what has happened, Reals model is different. They put the office structure on the agent, on the team. They say if you want an office, go get one. Because you have your culture, you have your training, you have your marketing approach, you have your lead gen. You want branding on the street, you want to do client meetings there, closings there, trainings there, what client events, whatever.

Yeah.

They put that on the agents and the teams. Yeah, they don't want to be sat up with a debt of going out to like. But compass does not. Compass gets the offices, and when you work for compass, they're like, you can come on in to this office, that office, the other office.

So there's a there's a compass in Ambler. Um, so with that, does Compass um go to a couple teams? Like, how does it work when they say, hey, we're gonna open a Compass office in Ambler? Is it they get a couple teams together to say, hey, this is your home base? Compass's model or is it one person to say, we want you to be in this office?

I mean, I really saw them grow right when they came on the scene in Philadelphia. This is probably like less than 10 years ago. Yeah. It's hard to believe.

Yeah.

When they came on the scene, they had vent they had Venture Capital and they say, we're gonna open office like in Center City.

Yeah.

That office will attract a lot of center city agents because it's beautiful. It's a great location, it's modern. We have a front desk, we have training, we have good commission structure, we have good people. Good agents want to be around good agents. That was their model. Yeah. I think as they started picking people up, maybe like a team already had an office, like in a town, like Ambler. I don't know that for sure. Maybe they said, we'll just brand your office as compass. Maybe, you know, maybe there's a financial structure tied to that. Maybe we're buying you out, don't know exactly. Yeah. But they were very big on we want offices for our agents to go into so that they can live the compass culture and have the compass brand. Real did the opposite. Reel said, if you want an office, go get an office. We will support you. We will be your broker manager, your broker of record, whatever we have to be to support your office, we will do that. But you don't need an office if you don't want to, because our company has built a little bit more on the collaboration, on the Zooms, on Real Academy, on our website, on going to all these events, shaking hands, kissing babies, go network, go meet people. You want to go close somewhere, go close. In someone else's office. You don't have to close here. Yeah. So they allowed their agents to kind of like work with each other. And their culture was more like the people who have the offices are going to talk to the other people who need offices, and they'll just they'll figure it out. Pay me a little bit of money every month to come to my office, pay me nothing. Yeah. Whatever it is. So office is a huge part of your expenses as a brokerage. So that's number one. Yep. But really going back to that old school versus new school. Did we do an episode about that? We did.

Oh.

At the old school versus new school, the franchise motto was based on okay, here's your territory. You put an office in that territory. You have a market center. You market from that office. This is your territory, Tim. If Sean wants to open a franchise of our real estate brokerage, he has to do it over here because that's his territory. And then what happened, maybe like the two territories are here and they're like, well, let's join. Now we have a bigger territory. So that's the franchise models based on geographic territories. Whereas, like if you look at Compass, they don't have territories. They were just opening up offices. Come work at you can work at the office two states over if you want to, because you work at Compass.

Yeah.

And then real, same thing. Like lifetime. Real's the same thing. We don't, we don't have any offices. It doesn't, you know, you should have the office if you want it. If not, then just go network with agents in different parts of the country. Go work at their office for a day. Go work at their office for a week. Figure it out. You guys will figure it out. Yeah. So the new school ones that let's just call they both are. That's why they gobble up those older models with all these territories and these offices and these expenses. And also the number one thing I want to talk about why it's happening, the compressed margin of what a brokerage actually makes on an agent. Because I ran a brokerage for 10 years. And when I ran a brokerage, the margin is nothing. Like the margin that you make on an agent is very small, 10, 15, 20%. If that, if you're good, some of them are like five or 10. But where those real estate, whether you're independent or a franchise, you can make money off of different things. You can make money off of a mortgage situation, if it's legal. You can make money off of a title situation, if it's legal. If you're a franchise, you're selling marketing material, you're selling signs, maybe you have they have a desk, they have an office, whatever they have, that's their space. The agents are paying for that. And that's how the company is making their money. But when the new school ones came in, like a real, like an EXP, like an LPT, I think is the name of it. Uh, they're relatively new to me. When they came in as a cloud-based brokerage, they could offer the agent much more. They had a better financial package. So they knew that the margins were being compressed, but it was really being compressed, a lot of it, by these new companies coming in and just saying, we only need this. Because we don't have all these expenses.

Yeah.

We don't have what you have. So they found a way to compete based on a compressed margin. What questions do you have about that?

Uh a lot. Um I wonder, like, if I'm a VC or a PE that's behind this, I wonder if they look at it like, all right, Remax, we're just gonna go buy your agents and then we're going to well, I guess who owns the Remax office?

Here's here's what um real is purchasing from what I understand it. If they buy Remax, they're buying Remax's franchise franchisees. The people that have franchise agreements, because Remax is a franchise company. Right. So all the people that own franchises under Remax will technically be part of Reel if and when the deal closes. Right. Okay. So basically that's what they're buying. Franchise agreements.

Yeah.

Okay. And the brand. Remax is a brand, been around 50 years. They have a website, they have web traffic.

Who are they not buying? That's what they're buying. I mean, so what I want to know is the bricks. Who owns the bricks for the franchise?

I believe the franchisees, the people have the franchise agreement. If I buy, if I buy a Remax, the bricks are on me. Okay. So I'm assuming a lot of them rent. Yeah. Maybe some of them own.

And then just like I don't know if it was So it wouldn't be, uh it wouldn't be an issue where uh Remax owned those buildings and they would sell off and then be become a cloud based.

If I had a uh copy of their franchise agreement, I could tell you why I don't it doesn't it doesn't really matter who owns the bricks.

You just have to understand what's the what's it would if it would it would make a big if if remax owned the buildings, it would be a big component of this transaction. Yeah, which I don't think they do.

All right, so let's let's go to insurance. Yeah. If you buy, give me an example of a company where you can have a franchise agreement with. Allstate? Yeah. Okay, Allstate, you can buy a franchise agreement, and then you have you start your Allstate office. Yeah. Right? Yep. Okay. So they can own the Allstate office, probably, or they can probably rent the Allstate office. Right. And then they just have to brand it based on Allstate. Correct. I'm guessing Remax is about the same thing. They can own it, they can rent it, but you have brand it. You gotta brand it. They gotta brand it. Yeah. So then also if they have those franchise agreements, it's almost like if you have a property and you have a tenant in it and someone else buys the property. Well, what happens? You can't move into the property or do anything with the property until that lease is over. The lease is going to be in first place. Even if you buy that rental property, you have to honor the lease. You can't just kick them out unless the lease says something like that, which most of them don't. Yeah. So just like this, the people have the agreements with REMAX. It's just like with anywhere. If you got an agreement with Caldwell, if Callwell Bankers are a franchise and you're with anywhere and Compass buys anywhere, well, guess what? If you got two years left on your franchise agreement, you work for Compass now. Right. You keep your your brand.

Yeah.

And then maybe what's happening, again, I haven't heard much about this yet because the Compass deal only closed at the beginning of the year, and the real deal hasn't even closed yet. Is that they'll probably give them options and say, do you want to continue to be a Cobwell banker franchisee? Or would you like to be compass? Would you like to see what that looks like? Maybe we'll buy out your franchise. Maybe we'll offer you option B. Instead of being Cowboy banker, what if you were compass? What does that look like financially? Is that better for you? Mr. Agent, Mr. Team, Miss Agent, Miss Team. And that is kind of where I think this is going.

Well, if they were so aggressive in act acquiring agents out of the get-go. So you said 2017, 2018, when they kind of like came into Philly?

Yeah, that's probably when Compass came in. Real's only been here for a couple of years, probably about half the time, if that. Yeah.

So I would think, and again, this is me. Um, if they were so aggressive about acquiring agents, I would think that Compass would want to offer something to all those additional agents to rapidly turn them over. If I was running Compass, I'd want everyone to be a Compass agent tomorrow. Why? Because I have so much invested in this brand. The brand drives our business. And everyone up to this point was like, we are compass. Right. Right.

Like everybody's like drinking the Kool-Aid. First and foremost, no bias to anyone out there. We're just having a discussion about what's going on.

I'm just trying to give you the guy that's not real estate. No, I'm I'm a guy. I'm not involved with real estate in any way. What I'm saying is I think that people bought into I think I think Compass is a strong brand. I think it attracted people to that brand. That people drink the Kool-Aid and we are Compass and they love it. The same way Keller Williams is Keller Williams. We are Keller Williams. It's the same thing. So what I'm saying is if I was running Compass, I would want everyone to be a Compass agent tomorrow because that's more branding, that's more people, that's pushing the brand, that's uh creating more uh awareness and marketing, everything. So I would want that. So I would come up with a deal structure to to move everyone as quickly as possible. Right. You work for make it financially beneficial for that Coldwell banker, franchisee, franchisee to come in and be compass tomorrow. That's what I would do.

And uh if I was Robert Raffigan. And I uh the reason I think part of the reason, again, the the compressed margins, yeah, that was one of the reasons why this is happening, why the industry is kind of like eating itself. But also I think one of the biggest components is what you just talked about. I think it's the fact that there are these franchise agreements and it's not as good of a model as it used to be. Because geographically, when someone opened a franchise, if you opened a McDonald's like 30 years ago and you're like, I get the McDonald's in Flowertown, which is where I live, people are like, I want that location because you know, maybe like the average income is above average, and there isn't a McDonald's for 10 miles around. So I'm gonna attract all the people who want to eat a Big Mac.

They also had the playground outside. So if I was gonna like choose to go to a McDonald's, it'd probably be that one.

So back then, franchises and geography made sense because it was all storefront. It's like locked down. Now it's not like that anymore. You can go to your phone and you can order McDonald's on Uber Eats if you want. You can do that, or you can just say, Who wants McDonald's? I'm gonna get five guys, or I'm gonna get Smash Burger.

So then what you're saying is more, it's not that they're driving it. It's really the environment and the consumer that's driving it. Correct.

Right? The importance of that brokerage brand, which used to be at 123 Main Street, that everyone used to walk by, look at the listings, walk in, talk to the administrative assistant, say, may I please speak to a real estate agent about the listings in your window does not exist. It's not to say it doesn't ever happen. There are some small towns, mainstream towns, all over this country where people still do that, but that's not the business model anymore.

You know what's funny you say that? Because uh if I think back to when I was with Allstate, it was the same thing. So if you wanted uh an Allstate office, it would either be that you'd have to take one over because that was the Allstate agency for this area, or you'd have to find a place to move to where like they're like, oh, we don't have one within supply and demand.

Five miles. There's only so many all-states. We uh people already bought all those territories. You gotta you gotta go 50 miles away. Yeah.

So very similar with the way that that would have worked.

Yep. Um, another agent that I had, or another agent, another reason I have here, reason number two is agent financial structure.

Yeah.

So the compressed margin was one. So the margin was going down because of all the things I just mentioned. The agent financial structure were really the cloud-based brokerages coming on the scene. This all actually really started more with Keller Williams. When Keller Williams came in, this is probably like in the 80s, they offered what was called a cap system. The cap system means that once Keller Williams makes X amount of dollars off of you as an agent, and that's based off your split, they don't collect anymore. They, you know, they might have a franchise fee, they might have a perfile fee. There's some different things that they're gonna do.

What was it before Keller? Like how what was the structure?

It was all just 50-50 split. Oh, like for a hundred percent. Wherever for 100% of the deals. Wherever. Okay. Every deal you write, you pay us. Every deal you write, you pay us. So they know once you hit a level, you're barely paying us anything. Yeah. If anything. Yeah. Okay. So that was the introduction of the cap system. Okay. When the cloud virtual-based models came in, let's call it within the last like 10, 15 years, they came in and said, We're all cap system, but we're gonna be like way less than Keller Williams. Because we don't have franchises. Keller Williams is a franchise-based model. There's more margin to play with. More margin to play with. So what was happening is these cloud-based virtual models came in. They're offering the agent more. You keep more of your commission dollars. Do you know why? Because we want you to be the brand. We want you to invest in yourself, your own online marketing, your own website, your own social media channel, your own video, your own team, your own operations person, your own admin, your own marketing coordinator. They said, we want to let the agent keep the money. Go to Hawaii if you want, but they think the agent's gonna reinvest that money into their own business, into their own brand, and grow it that way. I don't need the brokerage brand to grow them anymore. I'm gonna do it myself, and here's how I'm gonna do it. And everyone does it differently. Some people do it on the phone, some people do it online, some people knock on doors, some people do videos on social media, some people have client events. Let the agent figure it out. So the agent financial structure came into play, which kind of messed with these franchises. Because the franchises were all based on the geography, the brand of the office, you know, the marketing materials they had. What if the agent came in to like Remax and said, I don't want any of your marketing material. I don't even what am I paying for? I don't even use it. Yeah. So so these cloud-based brokerages came in and said, We know that's where the market is headed. The agent brand matters more than the brokerage brand. Again, that's just my opinion. Well, it's gonna be more exacerbated, but that's just my opinion.

So the other two different models. Compass is saying, hey, you can come in and join us, and here's the brand. And we're compass is gonna grow by acquisition. Yep. They're gonna grow, they're gonna buy people to come over. That's how they did it. It sounds like to me that real was like we're not gonna grow by acquisition, although they just did, and it's a little different. But that's not how they've grown. Right. It's more like we're gonna grow organically. Correct. Because we can give our instead of spending the money to buy the agents, we're just gonna give the agents more money. More money back. And then we're gonna have the agents talk to other agents, share the, share what they're making and what the financials are. And we think that that's our model for growth.

Yeah, real has two things to give to the agents in full disclosure. They give revenue share. So if someone comes into the company through you, you can make a piece of the revenue that they bring in. Yeah. That's one. The second one is through stock. That if you're producing as an agent andor you reach a certain level of production, even after you cap, they give you stock for free. Just take it.

I like the other one better being the free deals. What is it? Buy three. Oh, the three free deals there.

I mean, it's like, see, see, they can afford to do this. They have margin to play with. They don't have the overhead. So instead of spending the overhead, the margin on all the stuff that people have been doing for 50, 75, 100 years, they said, no, no, no, no, no. Let's take that money, let's give it back to the agent. Let the agent invest it how they want. Again, they could go to Hawaii or they can put it into their business. We think they're going to put some of it, if not most of it, back into the business. Thank you for joining us on another episode of Bricks and Risk. Our goal is that you walk away with one or two valuable nuggets, and we greatly appreciate you sharing your time with us today. You can find all BR episodes on Spotify, Apple Music, YouTube, and anywhere else to get your podcast content. Until next time, keep learning and keep growing.