Tech-driven The Real Brokerage to acquire Re/Max in $880 million deal

The Real Brokerage plans to acquire Re/Max in a deal valued at $880 million, combining two of the country’s largest real estate companies, which each has a presence on Long Island.

The deal is the latest example of consolidation affecting Long Island real estate brokerages following several major alliances announced last year, but sellers still have thousands of agents to choose from when they list their homes. 

The new company, Real Remax Group. would marry the tech-driven Real, which has grown rapidly as a virtual brokerage since its founding in 2014, with Re/Max’s well-known global brand and network of franchise offices. 

That combination will create more value for the company's agents, clients and shareholders than either company can create alone, Tamir Poleg, chairman and CEO of Real, said Monday morning on a conference call with stock analysts.

Poleg would lead the new company and Real shareholders would own 59% of the combined brand if the deal closes. 

Re/Max has 14 offices on Long Island and about 130 licensed agents and brokers who are registered in Nassau and Suffolk. Real mostly operates as a cloud-based virtual brokerage, but its agents can set up physical branches, and records show about 170 agents and brokers with local business addresses, according to the New York Department of State’s database of license holders.

The combined company would have a much larger global presence that would include 8,500 franchisees and more than 180,000 agents, including about 100,000 based in the U.S. and Canada, the companies said. 

Re/Max and Real ranked fourth and seventh, respectively in U.S. sales volume last year, according to an industry ranking published by consulting firm T3 Sixty. Re/Max also operates the mortgage franchise business Motto Mortgage.

Re/Max shareholders will have the option to receive 5.15 shares of the new company or $13.80 per share in cash. The enterprise value of the deal, including debt, is $880 million, the companies said.

The new company would be headquartered in Miami and would trade on Nasdaq under the ticker REAX. The companies expect the deal to close in the second half of this year, pending approval by regulators and shareholders.

Re/Max shares rose 24.4% Monday to $9.94  compared to Friday's closing price, while shares of Real dropped 24.6% to $2.02.

LI brokers react

Lisa Camarda, broker and owner of Re/Max Reliance in Wantagh, said she’s unclear how the deal will affect her franchise agreement when it expires in three and half years. But she said she appreciated the company’s alliance with a virtual brokerage like Real given changes in how agents do business.

“I think the traditional brick-and-mortar offices are going to disappear,” Camarda said. “People don’t come into the office. They’re working from home. They’re taking their kids to school, doing errands, and they’re out showing houses.”

She hopes she may be able to save the thousands of dollars in rent she pays for a 2,500-square-foot office that she keeps as part of her franchise agreement.

However, Camarda said the value in Real’s tech tools will be realized only if Re/Max agents adopt them and some prefer to focus on building relationships to drive new business. 

Cynthia McKenna, who leads a team of seven at Real in Suffolk County,  said the company’s AI tools and mobile app have allowed her to work faster for Long Island home buyers and sellers. She thought the deal could help the brokerage better attract and retain agents.

“It’s the best of both worlds,” she said. “We end up getting tons of agents at one time to be able to compete with some of the other brokerages that have merged." 

The announcement follows consolidation among some of the real estate industry’s biggest players. Compass acquired Anywhere Real Estate for $1.6 billion, bringing the Coldwell Banker, Century 21 and Sotheby’s brands under one company in a deal that closed in January. Rocket, the country’s largest retail mortgage lender, bought brokerage Redfin for $1.75 billion last July.

The wave of consolidation has come as more brokerages, including Compass, expand their use of private listings in which a home for sale is at least temporarily kept off the local multiple listing service while agents test the market through their company’s website.

“With private listings, it’s all about the size of your network,” said Rob Hahn, a Las Vegas-based real estate industry consultant. “It will continue to drive more consolidation as a result.” 

By Jonathan LaMantia

jonathan.lamantia@newsday.com@jonlamantia

Jonathan LaMantia covers residential real estate and other business news on Long Island. He previously covered the business of health care for Crain's New York Business.