All right, let's get started. So, Fathom is a unique company in the sense that we are a real estate company, so we behave like a real estate company, similar to many other companies out there. But what makes us a little different is that there are several things. First of all, we own a full mortgage and title company, so we can provide full service to our agents. Second, we own our entire technology platform. So unlike most of our competitors who third party their technology, we've spent, you know, several years building our technology.
What makes our technology unique is that our technology is most like the best way to describe it, would be an ERP system for a brokerage, right? So it runs the, and it manages the entire life cycle of a transaction, all the way from an agent joining the company, all the way to closing a transaction, paying the agent, integration with title, mortgage, 1099s, accounting, so the entire life cycle of a real estate transaction. So one of the great benefits of that, it allows us to compete at a much lower cost. And so, and that's probably one of the key differentiators between us and other companies out there.
In a few minutes, I'll talk a little bit about pricing and how we differentiate pricing as well. This is our technology for partners called intelliAgent. Again, allows us to manage the entire life cycle of a transaction. We developed this for the last four or five years. And again, it manages also agent websites, MLS searches, so it has the full integration of that. We also have a couple other technology products, one called LiveBy, which LiveBy we segmented the entire country in about 120,000 neighborhoods. And so we can deliver to someone, you know, visiting our website, an entire report on neighborhood.
As you probably know, when people are looking for homes, they're looking at neighborhoods, right? Most likely, schools is one of the big key factors of what people are looking for, where they want to live. And so we are able to segment the entire country and provide a experience that is much more localized, okay, in terms of that. This is our coverage. We'll be in all 50 states sometime mid-next year.
Probably the biggest state that we're not in there is New York and Pennsylvania, but Pennsylvania actually is opened already, and then New York will probably be open within the next 60 days, and then after that, we'll cover the rest of the country. We'll probably expand into Canada sometime next year as well. In terms of Encompass, Encompass is our mortgage company. You can see we cover almost the entire country. And again, by the end of next year, we'll probably cover the whole country, with probably the exception of New York.
If you're from New York, I apologize, but mortgage in New York is a nightmare. And it's the complexity and the government, the burden in terms of doing a mortgage in New York is fairly complex and inexpensive. In terms of title, Verus is our title company, and we'll cover most of the country. Some states, the title business is regulated by the government, and so it's very difficult to get in there. There's about three or four states, but most likely we'll cover 45-46 states.
What makes our product unique and makes our company unique is that in the real estate industry, most competitors out there, they charge a percentage of the commission. So, for example, let's say you have a house that's $400,000, and the commission is going to be $10,000. Most companies out there charge a percentage of that, anywhere from 20%-30%. Some cases, 40%, 50%, depends where you are in the country. But Fathom is unique, is that we have two different models.
We have a flat fee model, which we charge a flat fee of $465, and then we have a traditional split model. And the reason we have both is because we also have we just implemented a revenue share program, and so we allow agents to either, you know, move back and forth between the two programs if they want to participate in the revenue share program, right? And so we're probably the only national company that actually has both programs. Has a revenue share program and has both a flat fee program and a traditional split.
What I mean by revenue share is that is if I recruit an agent, if I bring somebody else into Fathom, I will make a percentage of the income that Fathom will receive from that agent's transactions in the future, right? In a sense, we share part of their future income from that agent, okay? And so again, what makes us unique is that we both have a traditional split model and we also have a flat fee model, okay? Again, this is an example of the savings. So as I mentioned earlier, a lot of our competitors are charging 30%, and we charge anywhere from $465 flat fee or at 12%.
So agents save a great deal of money. We have agents that have saved anywhere from $50,000 to $100,000 a year in commissions, right? Especially when you have agents in small cities where there are very little competition. And so in those markets, I was just talking to an agent the other day in the Midwest, and he was working from one of our largest competitors, and he was paying about $200,000 a year in commissions. He saved about $140,000 by coming to Fathom. So this is an example of the competitive advantage that we have, especially when we go into small markets.
One of the things that makes us unique as well is that going to a small market for us is very easy and fairly inexpensive, okay? In order for us to get into a small market, all we have to do is hire a local manager and then join the MLS. So it is a fairly inexpensive platform in terms of expanding into other markets. Part of it is because we own our technology, right? We don't have to pay someone else for technology when we get into new markets. The other thing that makes us unique is low cost of acquisition. We can acquire an agent basically on the first transaction they join us, right?
The fees that we collect is our cost for an acquisition. So it's costing right now roughly around $1,000 to acquire an agent through our whole marketing campaigns. And so basically, when they close the first transaction, we are, we're breakeven already on, on that. Another thing that makes Fathom unique is that our turnover is fairly low. So as most of you know, the real estate industry, with a couple exceptions, all agents are 1099s, right? And so the turnover in this industry is fairly high, roughly around 3% a month.
What makes Fathom unique is we are about 1.7% a month. But more importantly, is that the majority of those agents that leave us every month don't really close any business, right? And so in a sense is, we are exchanging new agents that join us, right, for agents that are leaving and closing little business, right? And so that's very typical in this industry, high turnover, 3%. I've seen companies as high as 4% a month, and again, for Fathom, 1.7% is our norm. We've been growing a lot for the last few years, but certainly, you know, the last couple of years have been tough, right?
As we all know, the interest is, you know, as a real estate company, we are, highly affected by interest rates, right, and mortgage rates. And so the last couple of years have been very difficult for this industry, right? Transactions have been down about 40%, and for a variety of reasons, right? Not only interest rates, but also the supply, right? Supply of houses in the market for the last two years have been really, really low. But, so prior to that, Fathom continued to grow. Even though the number of transactions has decreased, we still continue to increase agents, right?
So historically, we have grown our agent count by about 30%-35%. This year, we're growing about 12%. If you follow some of my earnings calls, I, we are now, after we implemented revenue share, we anticipate getting back to 30% agent growth, by sometime early next year, right? As the market begins to rebound, as you all know, the Fed is talking about lower interest rates. The expectation is that rates will start coming down, and we believe that rates will be probably by the end of next year in the mid-fives for mortgage, right? And so that is a you know, most companies want a market that's in equilibrium, right?
And we think around the 5% mortgage rate, that is actually a market that's in equilibrium, and all real estate companies will do well because of that, okay? In terms of transaction, we should finish the year in the mid-thirty thousands. Certainly, is a decrease from the peak of a couple of years ago, but we're already beginning to see an increase in the supply of houses. Across the country, the number of houses ready for sale is up about 25%.
Now, it is comparing against the low of last year, but it's beginning to come back already. So we anticipate that the market, in terms of transactions, will get back to about 5.5 million transactions next year. We'll see not only Fathom, but we'll see other real estate companies growing in terms of transactions for next year. In terms of adjusted EBITDA and revenue, you can see our revenue this year will probably end up at $320 million. It certainly is down from last year, but again, the whole market continues to decrease.
I would say the second half of this year is going to stabilize, and then we're going to see an increase the next year. In terms of Adjusted EBITDA, we made significant changes in how we operate the business. If you look at Q4 of last year, we had EBITDA losses of, you know, $2.5 million or so, and this Q2, this past quarter, we are Adjusted EBITDA positive, right?
And so we believe that we'll continue to, as the market changes and continues to improve, as we continue to add more agents, that we add more transactions, and more importantly, as we continue to increase our mortgage and title business. In a few slides, I'll talk about that, the impact in EBITDA, and revenue, from our ancillary businesses. So looking at gross profit, which is really what drives our business, you can see that from previous quarters, we'll continue to grow. One of the things about this industry is there is a seasonality effect of this industry, right?
So typically, in the summer months, you have higher number of transactions. And the reason for that is because a lot of people move during the summer months because of school year, right? And so the real estate market, almost across the whole country, there are exceptions, it is a seasonal business, right? In a sense that in the summer months, you have higher transactions. But you can see that when you compare, year over year in terms of EBITDA, we continue to improve our numbers, and we're currently running around 9.5% gross profit.
More importantly, when you look at the gross profit by segment, which is you look at ELG is our mortgage business and Verus is our title business, you can see when we're comparing Q2 of 2024 versus Q2 of 2023, mortgage and title are beginning to have a bigger effect on our EBITDA, right? Now, why is that a good thing? Because the gross profit on mortgage and title is much higher than the gross profit on real estate, okay? And so in a sense, if you're looking at gross profit percentage in real estate, you're looking at 7%-8%. If you're looking at gross profit in mortgage and title, you're close to 60%.
And so the reality, you can see that when you look at our gross profit of Q2 of 2023 versus Q2 of 2024, mortgage and title are now over 30%, right, of our gross profit, and we anticipate that continuing to grow. So what does this all mean? It means that over time, we're going to see our overall gross profit from 9.5% to 10% all the way to the mid-teens which is going to make this company incredibly more profitable because the profit comes from those other segments, right?
And so that's the overall theme in our business, is that as we continue to have a high number of mortgage and title transactions, which that's the reason why I decided to buy a mortgage company and a title company, we're going to see a significant impact in our Adjusted EBITDA and gross profit. The other positive thing for this is that we offer not only our agents, but the consumer, a much better transaction, much better experience, right? Because now we can, in one company, we can do not only the real estate, but we can do the title, we can do the mortgage, right?
More and more consumers are looking for sort of a complete experience, right? So I don't have to deal with many different kinds of vendors by dealing with one company. So we're finding that more and more the consumer wants that kind of experience, especially younger, the younger consumer, right, as they're coming into, into the market. When you start looking at gross profit, again, as well from looking at year to date, and then you compare year over year for the quarter year to date, you can see that we continue to improve gross profit margins, right?
And so not only we're, you know, going back to increasing revenue next year as interest rates come down, number of transactions increase, agents increase, revenue start increasing again, but at the same time, we have a higher, gross profit margin as well. And so the combination of higher revenues, right, and a combination of higher gross profit margins, is going to drive a significant number of this increasing revenue to our EBITDA. As a matter of fact, we estimate that once we pass the break-even point, 60% of the increase in gross profit will follow to the bottom line, okay?
And that's because of our technology, because the operational leverage of the business in terms of driving that additional gross profit dollars to the bottom line. This is just a historical of the company. You can see that the company grew, you know, significantly from 2019 all the way to 2022. And then, of course, interest rates, you know, significantly increased, and then, you know, it had an impact into the business. And as I mentioned earlier, we'll probably end up the year around $320 million in revenue. And then as the transactions begin to increase, we should see the market increase.
And many of the real estate companies have talked about that. In terms of the market, we feel that we hit the bottom of the market. The anticipation is the Fed is going to begin lowering rates as inflation has come down to about 2.5%. So this will have a positive effect. The other interesting thing that's happened in the market, we were discussing this earlier, is that low inventory, right? And so it's very hard. A lot of people are not selling their house because they feel like they cannot find a house where they can buy. And so what has happened recently is the inventory is beginning to increase.
So as inventory begins to increase, interest rates begin to decrease, you're going to have more people that got, you know, bought a house, and they have a three and a half, 4% mortgage rate begin to move, right? And so that will start increasing the number of transactions. As I said earlier, we anticipate the number of transactions will increase to about 5.5 million next year, from about 4.2 million this year. You know, over time, we built a significant leadership team. We just brought in Jon Gwin to run our mortgage and title. He ran a very large mortgage and title business, actually, out of California.
He's been in the business for about 20 years or so, and so he's going to oversee our mortgage and title business. As you saw earlier, it's an incredibly profitable business for us, and so it will continue to make a significant impact. And then we're also very, you know, very lucky to have a great board. I'll highlight you, Scott Flanders ran several public companies and has a great deal of experience in terms of running a public company. He was CEO, so he understands the challenges. And then Steve Murray. Steve Murray is probably one of the most well-known individuals in the real estate industry.
He ran one of the largest M&A companies in the industry. He probably has done over 400-500 M&A deals in this industry, both in mortgage, real estate, and title. When he retired from his own company, he decided to join us, and he had the opportunity to basically join any company out there. But he felt that our model is going to be one of the key models of the future, and so he wanted to be partner of the company. So we feel very blessed to have a great board that not only understand the public markets and running a public company, but also understand the real estate industry.
And I mean, Steve has contacts with everyone in this industry. He can, you know, call anybody in this industry, and they'll pick up the phone, and so we have the access to that. So with that, I'll take your questions.
Maybe I'll kick it off. So Marco, with the recent changes in the real estate industry due to the NAR settlement, how is Fathom positioning itself to adapt and potentially gain market share as the landscape evolves?
So, you know, for those of you who don't know what the NAR settlement, the NAR settlement was a class action lawsuit that took place where sellers, well, in the real estate, let me take a step back. In the real estate industry, the way this whole industry runs, in the mid-1980s, there was no such thing as buyer's agents, right? Sellers will sell a house for, you know, 6%-7%, and buyers will be on their own.
And so what happened in the mid to late eighties is that NAR, National Association of Realtors, and the largest brokers said, "This system doesn't really work well because buyers are not represented, you know." So they came up with the concept of buyer's agent, right? And so what would happen is that the listing agent will still, you know, which, by the way, they were still charging 6-7%, they would split that 6-7% with the buyer's agent, okay? So then buyers will be represented, and it will be a better transaction, right? Everybody felt like there will be representation, and there'll be a better transaction.
So what happened a few years ago is a law firm who, you know, focuses on class action lawsuits felt that it doesn't make any sense. Why would a seller pay for the buyer's agent, right? That doesn't make sense. They didn't think it made any sense, but the reality, that happened before, right? Remember, the seller always pays 6%-7%.
So it's not like all of a sudden they're being overcharged, and so the lawsuit basically says that the seller is no longer obligated to pay the buyer's agent, well, the seller really never obligated to do that, but that's a different discussion, so what's going to happen now is that when a real estate agent is representing a buyer, they basically have to have a contract with the buyer that says, "Mr. and Mrs. Buyer, you're going to pay me whatever fee that you and I will agree, right? 2%, 3%, a flat fee. If I'm able to get that from the seller, you don't owe me anything, but if I'm not able to do that, then you're going to pay me that."
So really, that's the only change that's going to happen. What some believe is that the buyer's commission is going to decrease, right? I think it'll happen short term, but I think long term, it will not. And the reason we're not, because it's not no longer a transparent system. In a sense, is if you're selling your house, you no longer know what other people are offering, right, for a similar house in your neighborhood, right? And so I think the lack of transparency eventually may drive prices and commissions back up.
For us, in a sense, is that we believe that if commissions go down, our value becomes even greater, right? Because agents will pay less money to join our company. So if that happens, we'll benefit from that, and if it doesn't happen, that's perfectly fine as well. You know, we have our own technology, so we can help agents deal with all the new regulatory issues, and so we'll be able to continue to help our agents do that. So regardless of what happens, I think Fathom will be perfectly fine. I think time will tell, right, in terms of what happens.
I would not be shocked if three years from now, somebody says, "Why don't we have a system where people actually put down how much they're willing to pay the buyer's agent?" And somebody's gonna say, "Well, we did have that. It was called the MLS, and you know, I would not be surprised that years from now, something happens, and we come back to the system we currently had. But unfortunately, you know, the legal system found a way to change that, so.
Marco, the agents, you know, your new model, the Fathom Share, the 70/30 model. I think you had said that more productive agents are gonna come over to the 70/30 model. Why would they come over by the commission model from 70/30?
Our model is 88/12. So we have two models, right? We have a flat fee model, which is a $465 transaction fee, and then we have an 88/12. An 88/12 means that the agent pays us 12%, and they keep 88%. So the traditional models out there range from 80/20 to 70/30, 60/40, right? And by the way, the first number is always what the agent keeps, right? So I say 60/40, the agent keeps 60%, the broker takes 40%. So why would an agent paying 70/30 join the company if they want to go on the 88/12? Two reasons. One, that they can join the 88/12 plan, but at any given time, they can switch to the other plan.
So we offer both, and we offer them the ability to once a year change back and forth. Second, that even the 88/12 plan offers them savings, plus offers them the ability to do revenue share. And so when they, the typical agent that's joining our 88/12 plan is an agent that's going to recruit a lot of agents. And so if you're gonna recruit a lot of agents, then you gain from the revenue share you're going to get, and so that sort of compensates for the 12%.
So we believe that going forward, the majority of our agents are gonna join the Max Plan, not the Share Plan. Who's gonna join the Share Plans are going to be teams and small brokerages who decide to join. So we're seeing. We believe there's going to be significant market consolidation in the next few years. Significant market consolidation. We're already seeing that. A lot of small brokerages, because of decreasing transactions, and they have fixed costs, are not going to be able to continue to operate, and we're already seeing that. We're not the only ones.
Other companies are seeing the same thing, and so there's gonna be significant consolidation. Those companies, when they join, they'll create a team within Fathom, and so they'll probably go in the eighty-eight, twelve. But that's the difference is, single agents, for the most part, will go on the Max Plan. Teams and small brokerages will go on the Share Plan.
One more follow on. You said that the new split model is gonna help you grow the business really agents 25-30%. Can you talk about why that would happen?
Sure. For a couple.
Would you have to pay up?
Yeah, for a couple of reasons. It depends on the size, right? You know, teams with 40, 50 agents, you know, they'll just join. I actually got off the phone with the team for 50, 55 agents this morning. And so those will just join the company. Teams that are above that, then it depends. Every deal will be different, and there is gonna be consolidation. There will be some M&A activity as well. But we anticipate that kind of growth because of that, right? Because of that, the stars are lining up.
The consolidation in the industry, the fact that a lot of small brokerages are having difficulty because if they have fixed expenses, you know, they don't have their own technology, they have to pay money for their technology. We also do a lot of offshoring in terms of operational efficiency, so we can operate at a much, much lower cost, right, than our competitors.
And so we're gonna be able to attract a lot of, a lot of companies, not only small brokerages, but also very large brokerages. I mean, there are a lot of companies out there, even in the 2-3 thousand agents, that are having some significant challenges in terms of running their business, right? And so, you know, we anticipate that we'll go back to, you know, 30% agent growth, by sometime early next year.
That's all the time we have today. Marco, thank you so much.
Yeah. Thank you. Thank you, everybody.