Right At Home Realty has expanded outside of the Greater Toronto Area for the first time with its acquisition of Your Choice Realty.
The acquisition gives Right At Home two new markets – Ottawa and Barrie – and adds up to 450 salespeople and brokers to the company’s roster. Right At Home now has more than 4,500 Realtors.
“It will bring us close to the 5,000 mark, which is rather exciting,” says Right At Home president John Lusink.
Your Choice Realty, which was founded in 2010 by Jan Wrobel, has about 450 salespeople.
“It’s a great fit,” Lusink says of Your Choice Realty. Both companies allow real estate agents to take 100 per cent of the commission on the sale of a home in exchange for a transaction charge and monthly fee.
“It’s easier when models are very similar. The Realtors aren’t going to undergo major change in their compensation.”
Right At Home agents pay $350 per transaction and a $99 monthly fee.
Your Choice Realty has Ontario offices in the GTA, Ottawa, Barrie, Cornwall and Huntsville. Right At Home will take over three offices – two in Ottawa and one in Barrie. It will not acquire the offices in Cornwall and Huntsville.
“They’re small and really outside of what our model and our company targets are,” Lusink says. “Cornwall and Huntsville have a very small pool of agents and transactions so it’s not really a fit with our approach.”
Right At Home co-founder and chairman Ron Peddicord says the brokerage had been in discussions with Your Choice on and off for three years.
Peddicord especially likes Right At Home’s expansion into Ottawa because “there’s no real 100-per-cent commission play in that market, the volumes are very stable and they’ve got a great core of producing agents.”
Founded in 2004, Right At Home has been the No. 1 real estate brokerage in the GTA for six consecutive years in terms of volume, and three years in terms of number of agents, says Peddicord. The brokerage celebrates its 15th anniversary this year with a number of birthday-style events planned at various branches.
Peddicord says Right At Home is looking for additional acquisitions in Ontario, and notes there are five to 10 brokerages in the province with a similar model and that are large enough that it would make sense to acquire. “Brokerages that have a similar model are a clear targeted acquisition for us,” he says, “but brokerages with a large volume period are an acquisition target as well.”
Some brokerages it obtains will become Right At Home branches but in other cases “they may be what I call quiet acquisitions,” with the brokerage assuming back office functions and retaining its current branding.
Although the current focus is on Ontario expansion, plans call for growth outside the province in 2021, Peddicord says.
Right At Home is building a proprietary internal technology platform that it would like to implement before it seeks to expand outside Ontario, Peddicord says.
Because of its commission model and the fact its locations are corporate and not franchise owned, “most or all off-the-shelf technology is not particularly well-suited for us,” Peddicord says. The proprietary technology will increase efficiency in the brokerage, he says.
When Right At Home launched, the original business plan was to have 1,000 agents in five years. “I don’t think we ever envisioned that we would be looking at approaching 5,000 agents,” Peddicord says.
But “the initial adoption rate was explosive,” and Right At Home hit 600 agents in 18 months.
Peddicord says the company’s original business plan predicted that the availability of listings on the Internet would lead to lower commission rates and place pressure on the ability of traditional brokerages to take revenues from agents.
He says commission rates were in the five- or six-per-cent range when Right At Home debuted in 2004 and are now below four per cent.
Gross commission rates have fallen about a tenth of a point per year, which has made it possible for the brokerage to hire between 300 and 475 new agents every year for the last 15 years, he says.
“That downward pressure in commission rates forced agents to look for more efficient methods to do business and I think that really propelled our growth.”
Peddicord says the simplicity of Right At Home’s model “has probably been and continues to be our biggest selling point.” To try to make their models work, “so many brokerages have increased the complexity of their deal structure.”
Although costs have increased over the years, “the premise of the model from the day we started to where we are today is basically untouched.”
Peddicord says a few moves by Right At Home in particular have paid dividends. The brokerage has kept costs down by owning its own call centre with a staff of 25 to 30 people. In addition, it processes all deals out of one central location.
Last year, Right At Home Realty signed an agreement to send a direct listing feed to Zillow. The brokerage has also partnered with ListGlobally *, a move that exposes its listings to 62 countries.
“We believe exposure for a real estate agent is part of our responsibility as a brokerage. The more exposure that your listings have, the more likely it is that you will sell it,” Peddicord says. “If Zillow is willing, at no cost to us, no cost to an agent, to expose our listings to North America, fine.”
- This story has been corrected. Right At Home has partnered with ListGlobally. An incorrect name appeared in the original story.