Welcome, everyone. Thank you so much for joining us today. My name is Bernie McTernan. I'm the internet analyst here at Needham & Company. My pleasure to introduce the team at Real Brokerage. We have CEO, Tamir Poleg. Tamir, thank you so much for joining us again.
Thanks for having us. Thank you for being here.
I don't need to sit in the little chair like I did last time, so this is great. Maybe, Tamir, can you start, you know, I think you walk through a few slides or introduce, introduce people to Real or investors to Real, and then, I'll come back with some, with some questions.
Sure. So very quickly about the company, Real is a real estate tech platform. We're on a mission to simplify life's most complex transaction, that is the purchase or sale of a home for real estate agents and their clients. Quite a unique growth story right now in the industry. In Q1, we grew revenue by 86% year-over-year. If you, if we compare it to two years ago, we're talking about hundreds of percents. We're constantly growing agent count, so agent count grew by north of 75% in the Q1. What's interesting is also our ability to actually grow profitability. As all of you know, the real estate market has been suffering for the past two years, but we actually went into Adjusted EBITDA profitability during that time.
A very, very unique story that's happening here. We founded the company back in 2014. What we saw back then is that there are 1.5 million agents in the country. We currently have 18,000 out of them both in the U.S. and Canada. We operate in 50 U.S. states and in four Canadian provinces. But going back to 2014, what we saw is that the market is dominated by traditional players, folks like Century 21, Keller Williams, Coldwell Banker. All of those folks operate in the same way. They rely heavily on office space for distribution of service. All of them are very heavy on manual labor instead of automating their processes.
At that point in time, we looked at what they actually offer agents, and we thought that they offer agents, low value at a high cost. At that point, we decided that there's an opportunity to create a brokerage that provides better service at a lower cost, and at the same time, also creates an operating model for a brokerage that is more efficient, more sustainable, does not rely on offices, and just applies a lot of software instead of, human labor. So in 2020, we decided to take the company public, which was a very unusual decision. We were making about $10 million in annual revenue back then, but we believe that our agents are partners in building this business, and we wanted to create an equity incentive plan, for our agents.
We went public initially on the TSXV in Canada. A year later, we listed on Nasdaq. Right now, we're only listed on Nasdaq. But going back to 2021, almost overnight, we started growing like crazy. And when I'm saying like crazy, if you compare our Q1 2024 numbers to our Q1 2021 numbers, we 20x'd the company in those three years. And just to remind everybody, transaction volume in the real estate space has gone down by about 30% at that same period of time.
So the question is, why are agents joining Real? Why are we enjoying all of that growth? Well, whereas all of our competitors are losing agents or declining in revenue, multiple reasons. One is the freedom and flexibility. When an agent join Real, joins Real, they can do whatever they want within the boundaries of regulation.
So it's their branding, it's their way of, of doing business, it's how they want to talk to clients versus at a traditional brokerage, there's a broker, there's an owner, there's a manager who tells them what to do, when to come to the office, how to market themselves. They actually work towards building somebody else's brand, whereas at Real, they build their own brand. Second is very compelling economics. The average agent at Real will end up paying half compared to what they're paying at a traditional brokerage. We charge them an 85/15 split, whereas a traditional brokerage would charge them a 70/30 split. There are no monthly fees at Real. There's an annual brokerage fee of $750.
There is a small transaction fee, but at the end of the day, for high producers, this is extremely compelling, especially due to the cap. Once an agent pays us $12,000 a year in commission splits, they get to keep 100% of the commission and only pay a transaction fee of $315. So think about an agent closing 30 transactions a year, maybe making $300,000-$400,000. They only pay us $12,000 a year in commission splits, and that's a huge saving for them. Another reason is the technology. We looked at everything that agent do in their daily work, everything that has to do with marketing, with contacting and communicating with their clients, with transaction management, everything they need, we build a tech platform for them.
So today, 100% of our agents use our technology, and that's compared to about 10%-20% adoption rate with other brokerages. Our technology focuses on their productivity, saving them time, allowing them to make more money, allowing them to market themselves. It has a community aspect to it. We do not have offices for agents to use. This is a huge cost saving within the company, but agents do need to be in interaction with each other, ask questions, celebrate success, all of those things. So there's a community feature on our app. By the way, we are mobile-focused because we believe that agents should be out there, nurturing relationships and helping clients, so they need something in the palm of their hands. The last piece of technology is brokerage operations.
As I mentioned at the beginning, most of the tasks that are being handled in the office, the brokerage office, by humans are automated at Real. This is a huge cost saving for us. Another reason why a lot of agents are joining us is the culture, and maybe it doesn't say a lot to, to all of you today, but agents want to be surrounded by people that can help them get to the next step in their career. People that can support them, that can teach them, people who do not compete with them.
Typically, when you sit in an office at a brokerage, you compete with all of the agents in that office, whereas at Real, you're joining a network of 18,000 agents who are determined to help you succeed because the agents are shareholders in the company, and if you succeed, everybody else succeeds as well. Another word about the technology or, or what it allows us, we measure efficiency within the company. Typically, at a brokerage, you would have one employee for every 20 agents.
Our ratio as of last quarter is one employee for every 143 agents, and that ratio actually improves over time. This is because of the fact that we built a technology that can process transactions almost without human involvement in the back office, and this is a huge competitive advantage that all of our peers do not have.
In addition to that, our operating expense as a percentage of revenue continue to decline over time and will probably continue to decline over time, and that will improve the profitability of the company overall. In the last couple of years, we made two acquisitions. We acquired a title company and a mortgage company. On the brokerage side, we have gross margins of 9%-10%, low margins, but on title, we have over 80% gross margins. On mortgage, we have about 50% gross margins. Those are high-margin services, and we are now in the process of scaling those two businesses that we built.
So at the end of the day, when we think about our future and our ability to actually attract more agents and more transactions, we also think about our ability to monetize transactions in a better way and attach high-margin services. So if we attach mortgage and title to the same transaction, we can make six to eight times more dollars on a single transaction compared to just offering brokerage services. So that's a huge opportunity that we are now scaling. Two more things about technology. We believe that the home buying journey or process or experience is broken right now. I don't know how many of you went through that process recently, but it's not fun, it's not convenient.
You as a buyer, you don't have a lot of control, and we think that technology can actually change that experience while leaving the agents in the center of the transaction. We are now building a consumer-facing app that will take home buyers from looking at homes until closing in one single place, and that includes applying for a mortgage, receiving a mortgage, going to look at homes, purchasing the home insurance, everything you need in one single place. This is a huge undertaking. Nobody has managed to build something like that before, and in order to be able to do that, you have to integrate the three main building blocks of a real estate transaction: brokerage services, everything that you're doing with your agent, mortgage services, and title services, and this is exactly what we're doing.
And we think that in about two quarters, the app will be out there, helping clients. So, by the way, this, for us, is a huge opportunity to actually monetize through mortgage and title as well. Another very exciting product that we are launching in the next two months is the Real Wallet. The vast majority of the revenue that most all brokerages make is pass-through. An agent closes a transaction, the brokerage collects the commission, they pay the agents their portion of the commission. They do not monetize that portion. When we looked at that, we realized that there are a couple of ways to monetize that. With the Real Wallet, every agent will have a digital wallet on their app.
Once they close a transaction, the money will actually go to the digital wallet, and then they have the choice to either withdraw the money to their own bank accounts or use a debit card that we will be issuing them in order to spend that money. If they swipe the debit card, we earn the interchange fee, and the agent accumulates points that will help them offset some brokerage fees that they pay us every year. On top of that, because we have so much visibility into our agent operation, production, finances, they own equity in the company, they own revenue share by referring their friends to the company, they close transactions, we can actually underwrite our agents and give them... provide them with a credit line for each and every agent.
The wallet will have a credit card component that will help them spend the credit line that we will be offering them. And if they swipe the credit card, we earn the APR, we earn the interchange fee on top of that. So what I'm basically saying here is that there are a lot of ways to monetize real estate agent businesses and real estate transactions, and we're just now scratching the surface in terms of potential and margins as well. So just to recap all of that, looking into the future, we believe that there is a lot of growth.
2024 is going to be a huge growth year for us. We've been adding about 1,000 agents net to the platform steadily over the past four or five months. We will continue to add agents, and we'll continue to grow agent count, transaction volume, and add additional services to the platform. That's it.
That's a great overview. Maybe, you know, you mentioned, you know, why agents come to Real. What kind of feedback do you get on when they come over? Trying to think about things like, are they, you know, making more money now, if they're more productive, you know, they're probably getting technology that they weren't getting before. Would love to, you know, hear some of those anecdotes.
So all of the above. We typically hear agents saying, "I wish I joined earlier," or, "This is the best career decision of my life." So when they join Real—first of all, they feel supported. They feel surrounded by other agents, either in their local market or in the country, that really root for them and try to make them better. So that's number one. Number two, we do end up saving them a lot of time through the technology, and that time helps them to either spend more time with their families or serve more customers. So that results in better per-agent productivity. And by the way, in the Q1, we improved the per-agent productivity by about 7%, which is in contrast to what happened in the marketplace.
and then it's a huge cost saving for both producing agents and teams. We have agents who moved over from other brokerages, where they paid more than $200,000 a year. So think about paying $200,000 a year and then switching to a model where you pay $12,000 or $15,000. This is a huge cost saving for a lot of agents. And then the last thing is the opportunity. Because they earn equity in the company, because they can earn revenue share by referring their friends to the company, they can build different revenue streams that were not available to them before. And for them, this, this is substantial because they're able to monetize their connections and their business in multiple ways versus just closing deals and earning commission.
Yep. Understood. Tamir, obviously, there's a lot of momentum in the business. You just said 2024 is gonna be a huge growth year. On your earnings call, you said transaction pipeline at an all-time high. You know, why, I guess, is that just agent growth? It's, you know... kind of what's doing this to drive these kind of share gains?
It starts with agents, agent growth, and at the end of the day, as a company, we focus on transactions because this is how we make money. We don't make money by just having agents on the platform. We make money by having agents that are productive. So we are successful in attracting productive agents, and we are successful in improving the per-agent productivity over time. So, as I said, we do have a huge transaction backlog, which is more than 75% higher than same point last year, which is significant. At the end of the day, everything starts with the agents attracting their clients and having their transactions closing on our platform.
But on top of that, I also think that the fact that we're adding mortgage and title and other services will probably have a positive impact on gross margins starting the H2 of the year and going into 2025. But yeah, I mean, attracting agents is the basis for all of this.
Yeah, and so I wanted to touch on that. So the scaling mortgage and title, so that's, you know, H2 of the year, that's in 2 quarters, when you start rolling out the one-
One Real app, yeah
-facing out. What's, what's gonna drive that higher attach rate with the, with the app?
A few things. First of all, our mortgage business grew north of 400% in the Q1. So it's already scaling. Title is somewhat behind it, even though it's scaling rapidly. In both businesses, we're looking at the short term and longer term. Longer term is obviously embedding all of those services into the consumer-facing app and then offering just a better experience for buyers if they use the app and use our mortgage and title services. The short term and maybe medium term is trying to incentivize our agents to actually use our mortgage company and our title company. On the title side, what we're doing is we're now approaching our largest teams around the country and offering them to become partners in a title JV.
And if they become partners, they actually benefit financially from the transactions that they funnel into the title JV. So that's a great way to improve attach rates, and we're actually starting to see signs of that happening. On the mortgage side, multiple things. One, we're adding more loan officers that have existing book of business, and that also creates a local presence, because very often agents want to work with a local loan officer. So we're giving them that ability to actually meet that person and maybe have somebody local. But on top of that, because of the changes with the NAR settlement, which I'm sure we're gonna touch on, starting in August, every buyer has to sign a buyer-broker agreement, which is something that was not done before.
And on the buyer-broker agreement, there needs to be a commission or a compensation specified of how much the buyer is actually going to pay their agent. We're embedding the services of One Real Mortgage and One Real Title into that digital form for the buyer. So if I'm a buyer, and I'm working with a Real agent, and I'm getting that digital form, I will have an offer from One Real Mortgage and One Real Title that will result in me getting some sort of a rebate at closing if I use those services. So there's a financial incentive for agents' clients to use those two companies.
When you talked about, I believe it was... I think the slide said 65% gross margin on mortgage, 80% on the title, is that... So there's obviously a lot of wiggle room there to offer that sort of rebate-
Yeah.
still have it be a profitable service.
Cor- correct.
- revenue.
Correct.
Got it. So private label that launched in January, you guys said that in two, or in one Q, you added over 200 agents. Expect that to double. Just maybe talk about what the private label product is and how, you know, adding 1,000 agents per month, how should it be contributing to the overall mix of agent mix?
Sure. Private Label and ProTeams are two programs that we launched a few weeks ago. Both of them were born out of conversations with large teams and independent brokerages that we talk to. In terms of Private Label, so let's assume you're running an independent brokerage, Bernie Realty, you have 100 agents. You're thinking about switching over to Real, but that means that you will be giving up your brand to some extent, and probably result in an investment in marketing materials, because all of a sudden, you need to change all of the business cards, yard signs, brochures, ads that you have out there, because you have to include the Real brand in all of your marketing materials. That's a substantial cost.
Private Label is a program that allows independent brokerages to join Real and not change anything in their branding. You do not give up anything. You don't have to invest in, in marketing or changing your marketing materials. It just makes the switch a little bit more frictionless. So that's Private Label. ProTeams is on top of that. Let's say you're running a 100-person, 100-agent team or brokerage, and every team on your—every agent on your team has different economics with you. Some may be on a 50/50 split, some of them might be on a 70/30, some may pay a $100 monthly fee. If you add our 85/15 on top of that, and the $750 annual fee and the $30 transaction fee, it becomes somewhat of a, an accounting nightmare for you.
So, ProTeams is essentially a dashboard that team leaders are using to input all of the different arrangements that they have with their agents, and then once the agents close the deal, all of the reconciling is done in the background automatically by us, so it does not add any burden to them. And there's a lot of flexibility in determining, you know, different kind of plans for different kind of agents. Again, this makes the transition for large teams almost seamless.
Understood. So the economics to Real is that different than if you add an agent?
It's the same economics. We have a solid pipeline of, you know, private label independent brokerages that are looking to join. So I think that in the Q2, the number will more than double compared to Q1.
Are you doing a lot of marketing behind it, or how are folks finding out about this?
It's funny because as a company, we actually don't do any marketing. All of this huge growth is just happening because of two reasons. About 85% of it is agent referrals, so our existing agent base refer their friends to the company, and about 15% is inbound inquiries. We do not really market private label or Pro Teams. They just hear about it, and they come to us, and then we engage in conversations. Typically, it takes a medium to large-size team, and when I say medium, it's 50 agents and upwards. It takes them anywhere between 6 weeks to 6 months to actually make the switch. So the ones that we're now talking to are going to convert in either coming weeks or month.
Understood. And so you mentioned, the NAR lawsuit before. Sharran, on the, on the call mentioned, teams could be looking to be part of a larger brokerage that already has a settlement in place. Like, how, how nice of a tailwind is that? Like, is that something that's happening on the margin, or, or you really see-- or is that driving part of that doubling in the expectation for private label in, Q2?
Yeah, it's a good question. I mean, we've been enjoying tremendous growth before the NAR settlement and after the NAR settlement, and I think that the growth will continue. But, what we did notice is post-NAR settlement, which was announced on March 15, a lot of independent brokerages reached out to us and kind of with the same narrative, saying that we understand that there might be changes in the industry. We operate on very thin margins. We don't operate efficiently. We want to explore the opportunity to join Real and enjoy the technology and maybe the benefits for the agents. So, I think that those folks will start converting. They actually started converting soon.
I do not know if the changes are going to be that substantial, when it comes to commissions or potential commission compression, but I do think that, if you're an independent brokerage, you have a problem because you don't have the resources to build the technology that can automate your business. And there's a lot of competition out there over agents. So companies like us offer very generous terms to agents, actually applies a lot of pressure on independent brokerages. So they can decide whether they want to compete or maybe join forces, and I think that the smart ones are starting to join forces with us.
Where do you think buy-side brokerage commissions are going? The million-dollar question.
Well, it's, it's multiple billions, actually. But, well, a few things. First of all, I've been in real estate for about 20 years, and I can tell you that any change that happens in, in real estate happens very slowly. So things are not gonna happen overnight. That's number one. Number two, if you look at historic data on commission paid by consumers on a real estate transaction, it went from 6% about 25 years ago to about 5.1% on the national average today. So there's already a slow decline baked into to the industry, and I think that that decline would continue. I think that a year ago or more, I told you that I expect the overall commission on a transaction, to balance around 4.5%, which I still think, is reasonable.
If we really dive into the potential changes because of the NAR settlement, I think that the market will pretty much operate the same way. So I don't think that there will be any immediate compression on commissions. I think that we will continue to see that kind of slow decline toward the 4.5%, and maybe those 4.5% will be split 50/50 between buy side and sell side. Maybe it'll be 2.5% to the sell side and 2% to the buy side, but I do not expect any major shock.
... Interesting. And so maybe taking a step back just within that, with embedded in the question is that, well, what service is the buy-side broker really serving their client? Like, what in your view is that service?
I'm seeing a lot of stories and posts by our agents just, you know, specifying the, I don't know, 100 different tasks that agents do in a buy-side transaction. Let's start with the fact that this is the largest financial decision in our lives, so we want a trusted advisor. Same way that if we need medical advice, we go to a doctor, and a legal advice, we go to an attorney. Agents play the role of the trusted advisor as that human that actually holds your hand, understand the emotional complexity that you're going through during those six months, understands the information that, you know, you're expecting to receive. So trusted advisor is one thing.
Negotiation skills, making the deal happen, connecting you with the lender, explaining to you about the process, education, all of those things, it's just, you know, north of 100 different tasks that you have to do, and I'm not even talking about, you know, being available and attentive and spending weekends and just dedicating a portion of your life to that process that somebody else is going through, that's going to change their lives. So I think that as long as it's humans that are buying homes, they will be assisted by other humans.
At the same time, I also think that technology can dramatically improve the process, and a large portion of those mundane tasks that agents do can be aided or replaced by technology. So we're looking to actually provide our agents with that technology that can help their clients. It doesn't mean that the agent will become less significant. It just says that agents can offer a better service using some tools, tech tools.
Right. So buyer's agreements going in place in August, is that gonna be... Are you gonna have the technology or the feature rolled out where they can sign it in the Real-
On the app?
- consumer app?
Yeah.
That's a home run 'cause that makes the product.
Yeah.
So-
That's in the works.
Yeah.
We're actually looking to roll this out at some time, at the beginning of July. So...
Okay. Understood. Got it. Okay, and maybe just touching on the financials, so positive EBITDA in 2023, I believe it's, what, $3.75 end of the year, $4.75 end of the year?
Yeah.
A positive EBITDA, expected to grow it in 2024. But how do you... You know, given the explosive growth that we're seeing, just how do you think about the trade-off between growth and profitability?
I think that we did a good job, especially in recent years, kind of growing extremely rapidly while always keeping profitability in mind. So we were never one of those companies that raised $hundreds of millions and just, you know, spend it on anything. We raised a total of $64 million. We're Adjusted EBITDA positive, cash flow positive, as well. I think that everything we do is kind of looked at through the lenses of ROI. We wanna make sure that the things that we're doing have a positive ROI, that agents are actually going to use it. And we're trying to prioritize. So obviously, when we open up new markets, we don't need office space, we don't have huge fixed costs. Our fixed costs are growing at a relatively slow pace.
So let's say our gross profit grew by north of 90%, our fixed costs grew by much less than that, and that'll probably continue. But at the end of the day, a big portion of our spend goes towards building technology, and that technology will actually help us monetize transactions better. So we constantly try to balance and make sure that the noise that we're getting from the market on, "You should build this, you should do that, you should go to that province, you should do this conference," we make sure that we understand exactly what the ROI on each one of those tasks.
Got it. And so in thinking about long-term margins, you know, where do you think they should shake out? And maybe the way to get you to answer the question would be, you know, you show just the operating expense of the company, like how many employees per revenue, and all those metrics are great. As you continue to take share, are there other... You know, are you gonna have to increase your OpEx base as well, too, or do you think you can get significant leverage and flow through it?
I think that there is tremendous leverage in our model and in our operation as well. I think that what will contribute mainly to gross margins is obviously those high-margin services, mortgage, title, insurance, embedded finance, you know, the Real Wallet. So if I'm thinking about long-term margins within, you know, a few years from now, we're talking about gross margins about mid-teens. And then bottom line, we're talking about, you know, mid to high single digit within a few years.
Talking GAAP net income?
Yeah.
Yeah. That'd be great.
Yeah.
What about the conversion of EBITDA to free cash flow? How should investors think about it, just you know, working capital needs or anything else?
Almost all of it flows through, so, converts to free cash flow.
Great. So, so again, I mean, that gives you the nice decision to make in terms of what to do with all that cash. You had a, I believe, bought back $5 million of stock in the quarter, $35 million of cash on the balance sheet. How should we expect, you know, either way, you know, return of capital, return of capital to shareholders or, you know, M&A? Like, what's on the list of the priorities?
So yeah, we do have a buyback in place, and by the way, that buyback fulfills some of the demand from our agents. We have an equity program in place that allows agents to use a portion of their commission income to actually purchase company shares, so we use the buyback to facilitate that. But yes, I mean, the cash position increases if we set aside the NAR litigation, the settlement fee that we need to pay. But we've been very active at looking at M&A opportunities on the tech front, anything that can help either our agents, so bringing tools for agents or maybe some innovative technology on the mortgage or title front.
We also think that because of the changes in the industry, a lot of traditional brokerages will probably look to get acquired. We never made an acquisition of any brokerage. We grew organically, but we do think that there might be some opportunities that can become interesting for us. So we're open to that as well.
Interesting. And before turn it to the audience to see if there's any questions, just on M&A, if we think about, you know, mortgage, you know, physical footprint, like are you in all the states that you need to be in order to offer a mortgage and title, or do you have to add more assets there as well?
So both mortgage and title are licensed in about 20 states. We are not looking to expand to additional states at this point in time just because we think that there is so much potential within the states that we currently operate in. But I mean, we demonstrated that we know how to open up new markets, and that shouldn't be a problem. It's just a matter of focus right now, focus and execution.
Okay. I wanna see if there's any questions in the audience at this time. But if not, I can certainly keep going. Macro... Oh, sorry, one in the back.
There are other brokerages out there that are like, what are you thinking about?
It's a good question, and yes, we are seeing some, you know, newer companies trying to challenge the traditional brokerage model. I think that in our case, we have such a huge competitive advantage because we started building the technology 10 years ago, that it will be very difficult for folks to catch up. I think that our decision to focus on transaction automation and back office automation is now proving to be the right decision, just because it allows us to grow more profitably and, you know, add that huge number of agents almost seamlessly. I mean, adding 1,000 agents per month is a huge task. I don't know a lot of brokerages that can actually do that. I'll tell you a story.
I met with some executives at a traditional brokerage about a year ago, and I asked them: What would it take for you to onboard 1000 agents per month? And back then, we were onboarding, I don't know, 400 per month. And they told me that typically they have about 20-25 agents in an office, so they would need 40 new office locations. They would need to negotiate the leases. They would need to make those offices ready. They have one to two people per office, so hire, you know, 100 new people. It'll take them a few years, and then they ask me, like: What do you need in order to onboard 1000 agents per month? And I said, "We don't even need to add a server." Like, we can do it.
We can, we can onboard, you know, hundreds of agents in a single day. And I think that, that's a huge competitive advantage. And even if you're a new entrant to the market, and you're trying to do something that's more compelling on the agent economics, it does not mean that you have the infrastructure to actually make it happen for the agents. And now, and right now, the technology is beneficial on different fronts for the agents, from education to marketing to accounting to transaction processing to transaction management, and it takes a long time to build all of that. And, you know, we're not standing still. We're, we're building on top of that additional services. So I think that people are starting to understand the huge competitive advantage that our technology has.
Once the Real Wallet and the One Real app will be fully rolled out, people will understand that we did not really build a brokerage. We built a financial ecosystem around agent businesses and around the purchase or sale of a home.
Anything else from the audience? Tamir, one thing you mentioned, transaction automation, and so I remember speaking with your CTO, and he was just maniacal about how everything needs to be automated. Maybe just... If you can just pull us behind the curtain in terms of maybe how that, you know, the processes of actually buying and selling a home, how that compares to maybe your competitors and maybe how it's more manually intensive.
Yeah. It's funny, sometimes you build great things not because you were super smart, just because you didn't have a choice. So, you know, we didn't have the money to actually invest in hiring more people. But a couple of points on that. Compass, which you're very familiar with, closes about twice the number of transactions compared to us. They last year said they have 400 people on their transaction processing team. We have nine. So you can see the difference there. And by the way, those nine people, that same number is the number we had two years ago, while our transaction count grew by 20x or three years ago. So that's a testament of the technology.
In terms of how does it benefit consumers or agents, for consumers, it doesn't really change much because consumers just want to own or, or sell their home, buy or sell, sell their home. So they're not into the nitty-gritty of what's happening in the background. For agents, it is substantial because it saves them a lot of time and above everything else, it helps them get paid faster. If you're an agent and you close four transactions a year, you're desperate to get your money once you close a transaction, because that transaction was delayed and you have some commitments, and you want that money.
Then very often, at a traditional brokerage, you have to wait a few days for your broker to deposit the check, and then they kind of play back and forth with you, and then they give you your check maybe a day or two later. In our case, when you close a deal, you can actually scan the check from the app on your phone, and the money gets deposited into your bank account instantaneously. Other brokerages do not have that. So this is all, I mean, all of those small features add up to an amazing experience that our agents enjoy. And again, it results in them being happier, us saving them time, and them being able to make more money.
That's great. Wanted to make sure we hit on the macro. What's your thought? You know, what are we, are we gonna grow this year? Not, you know, what does 25 look like?
We as we or we as an industry?
No, as the industry. Yeah, I know you're-
Yeah. Yeah, I think I gave you some bold prediction at the end of last year, was it?
Yeah.
Um-
It was the most optimistic you've been.
Yeah, I-
And then...
Yeah, I'm typically not that optimistic about macro environment. But yeah, I mean, 2023 was kind of at the bottom in terms of transactions in the market. We think that we will see growth this year. We think the transaction count will probably grow by 5%-8%. I think that's in line with what I told you recently.
To 8, but yeah.
Yeah.
Yeah.
I'll go with eight.
Midpoint lower, but-
By the way, we're seeing a lot of demand out there. So even though mortgage rates are around, are at around 7%, I think that buyers are now adjusted to this new rate environment, and they're willing to go and take the burden of 7% mortgage rates out of an understanding that a year from now, they will be able to refinance. So we were just talking to an investor who's looking for a home in Jersey, and Ravi told him that, you know, sometimes we're seeing 15 offers on a single home. So there is still lack of supply in many markets. Demand is robust, and I think that transaction count will actually increase this year.
Just on the supply point, so do you think pricing is kind of flat to up?
I mean, price appreciation has kind of...
Leveled off.
Yeah, leveled off just in the last few weeks, I think. But yeah, I think that prices will be flat to maybe just very, very small appreciation.
Right. And then maybe lastly, do you think we ever get back to, you know, the low fives again? Just 'cause given, like, where pricing is, like, it just implies that, like, total transaction volume is significantly larger. But I know it's all monopoly money, and if you're... you know, inflation happens, it benefits everyone if you have that asset.
Well, I'm old enough to know that markets are cyclical, and you should never say never. So I do believe that in the future, there is a chance that we will see rates at 5 or lower. I mean, 5 is obviously very realistic, but I think that people, a lot of people were expecting rates to go down to the 3% again, or maybe below that. Maybe at some point in my life, I'll see that again, but I think that at 5%, people, homebuyers will be extremely happy.
Okay. So it's still watch mortgage rates, that's the unlock, and... but you still think we see growth?
Sure. I mean, right now, mortgage rates are constraining supply just because people are not willing to sell their home while they're sitting at a 3% mortgage or a 4% mortgage. But I think that at 5%, they will say, "Okay, we wanna move to a new home. We need to move to a new home," and maybe it's not the pain is not that substantial, going from 3% or 4% mortgage to a 5%.