Realogy Holdings Corp (RLGY) Q3 2021 Earnings Call Transcript

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Realogy Holdings Corp (HOUS -4.25%)
Q3 2021 Earnings Call
Oct 28, 2021, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the Realogy Holdings Corp. Third Quarter 2020 Earnings Conference Call via webcast. Todays call is being recorded, and a written transcript will be made available in the Investor Information section of the companys website tomorrow. A webcast replay will also be made available on the companys website. At this time, I would like to turn the conference over to Realogys Senior Vice President, Alicia Swift. Please go ahead, Alicia.

Alicia Swift -- Senior Vice President of Financial Planning & Analysis and Investor Relations

Thank you, Mary. Good morning, and welcome to Realogys Third Quarter 2021 Earnings Conference Call. On the call with me today are Realogys CEO and President, Ryan Schneider; and Chief Financial Officer, Charlotte Simonelli. As shown on slide three of the presentation, the company will be making statements about its future results and other forward-looking statements during this call. These statements are based on the current expectations and the current economic environment. Forward-looking statements and projections are inherently subject to significant economic, competitive and other uncertainties and contingencies, many of which are beyond the control of management, including among others, the ongoing COVA crisis, inventory levels and uncertainties related to the continued strength of the housing market. Actual results may differ materially from those expressed or implied in the forward-looking statements.

For those who listen to the rebroadcast of this presentation, we remind you that the remarks made herein are as of today, October 28, and have not been updated subsequent to the initial earnings call. Important assumptions and other important factors that cause actual results to differ materially from those in the forward-looking statements are specified in our earnings release issued today as well as in our annual and quarterly SEC filings. Also, certain non-GAAP financial measures will be discussed on this call and per SEC rules. Important information regarding these non-GAAP financial measures is included in our earnings press release. And our data referenced during todays call is based on NARs most recent public estimates, which are subject to review and revision. Factors that impact comparability of our home sales statistics to NAR are outlined in our annual and quarterly reports filed with the SEC. Last, the references made to October month to date in these remarks reflect data through October 22, 2021. For closed transaction volume, October 2021 will have one less business day than October 2020. However, our discussions on both open and closed volumes on a month-to-date basis have been adjusted to reflect like-for-like number of business days. Now I will turn the call over to our CEO and President, Ryan Schneider.

Ryan M. Schneider -- Chief Executive Officer, President & Director

Thank you, Alicia. Good morning, everyone. Realogy delivered excellent top and bottom line results this quarter as we innovate the future of real estate. We are driving outsized growth with Q3 our fifth consecutive quarter of market share gain. We are simplifying the home sale transaction for consumers, both in our existing business and with RealSure. We are strengthening our capital structure with debt reduction and a very strong cash position. and we entered into a title underwriting venture designed to unlock future growth upside and return capital to reinvest in our strategic priorities. So lets dive straight into our terrific financial results and strategic proof points demonstrated in Q3. Realogy delivered 12% transaction volume growth year-over-year. We outpaced NARs 9% volume growth again in Q3 and gained market share for the fifth quarter in a row. We saw even higher transaction volume growth in our owned brokerage business at plus 17% year-over-year, driven in part by an exciting comeback in the New York City market, one of our largest markets where we have the market-leading position with corporate and Sothebys International Realty and now Coldwell Banker.

Revenue grew $277 million to $2.2 billion with strong momentum across our brokerage, franchise and title businesses. We generated $273 million operating EBITDA in the quarter, and this is flat to last year after excluding $40 million of 2020 temporary cost savings, and is up $50 million, 5-0, versus Q3 of 2019. We produced significant free cash flow, $282 million. And finally, we made continued progress strengthening our capital structure. We ended the quarter with a 2.3 times net leverage ratio and $700 million of cash, even after repaying $435 million of debt in September. Now these accomplishments would not be possible without Realogys strong culture and talent. We are demonstrating incredible agility in how we operate our workforce, supporting hundreds of thousands of agents in the field, shifting to remote work and transitioning our corporate offices into collaboration and innovation hubs. We continue to be recognized for attracting and retaining great talent. Forbes just named Realogy to its list of Worlds Best Employers earlier this month, which follows LinkedIns Top 50 Company recognition earlier this year. And Realogy was just awarded Great Place to Work designation for the fourth consecutive year. Now let me update you on some of our exciting growth vectors.

First, we are enthusiastic about our RealSure progress. Remember, RealSure is our joint venture with Home Partners of America. Our current product is in 24 cities today. Its RealSure sell, and simply put, a homeowner can get a guaranteed 45-day offer with the option to also list their home on the open market with one of our [Indecipherable] agents. The consumer can accept the offer they prefer, giving them the best of both worlds and putting them in control of how they sell their house. Excitingly, 70%, 7-0 percent of customers who request a RealSure offer are actually listing their homes with one of our agents. Now we recently appointed Katie Finnegan as RealSures CEO. Named one of [Indecipherable] companys most creative people, Katie has a successful background launching and scaling consumer-centric companies, including companies that she founded. Katie also has experience incubating innovation and driving growth within much larger corporate enterprises, such as Walmart, and were incredibly excited to have Katie leading RealSure. We are launching our next RealSure product in five cities later this year. Its called RealSure Buy and it helps a buyer provide a cash offer when bidding on the home, something increasingly important in todays very competitive market.

And like our sell product, our buy offering has mortgage and title integration as a core component to the value proposition. Finally, our RealSure investment will step up meaningfully in Q4 as we continue to scale, launch this new product, expand our direct-to-consumer marketing and substantially build out the business and the team even more under Katies leadership. Shifting to another strategic growth vector. We continue to invest in and love the growth results were getting from our luxury leadership position. Sothebys International Realty volume is up over 50% this year, with its international business growing even more with royalties up over 80% year-to-date. Corcoran has doubled its volume from where it was a year ago, driven by strong growth in our owned business, especially as New York City rebounds and even more importantly, driven by the substantial growth in the franchise business we launched last year.

And finally, we recently made a luxury brokerage acquisition. We acquired the iconic Warburg Reality company in the important New York City market. Strategically, we are excited to operate this new part of our company under the Coldwell Banker global luxury brand. This strengthens our luxury network and enhances the Coldwell Banker brand with its New York City presence.

Now similarly, we remain incredibly focused investing in technology and product innovation. Our open architecture approach to technology is a competitive differentiator. And one proof point is how it enables our agility. Since we last spoke, weve taken a new product in our open ecosystem, MoxiWorks, and deployed it to hundreds of companies and tens of thousands of agents in just a few months. And clearly, our continued focus delivering great and new technology, marketing and data products to our agents and franchisees is helping drive our growth. Finally, as you know, we operate a national title settlement and escrow business, which works directly with customers and agents to close real estate transactions. This business is very strategic and is a core part of creating a more seamless consumer and agent experience as we innovate the real estate transaction, both in our existing business and with RealSure. Now separate though from our title settlement business, we also have a title underwriter that provides the actual title insurance behind customer-facing home transactions. We were very excited to announce a new underwriter venture this month. We found a great partner in Centerbridge, which is purchasing a 70% stake in our underwriter business, especially given Centerbridges track record driving growth. This lets us maintain a meaningful stake in this business to capitalize on future growth, while at the same time freeing up capital to invest in our strategic priorities.

Now let me close with what were seeing in the housing market. Housing demand remains very strong, driven by remote work, strong relocation, especially to attractive tax and weather geographies, low mortgage rates and positive demographic trends. Lack of supply is increasingly an issue given the strong demand. And you can see that in both the substantial price appreciation and the unit sales declines in our business and in the market. Now looking forward, our September open volume and October month-to-date open and closed volume data are all basically flat versus 2020. But its a little too early to extrapolate the whole quarter from those numbers. The Q4 2020 comparison was extremely strong. We were up 45% year-over-year in volume last year, substantially above the market. So -- given the supply and the unit pressures in the market -- that the market is seeing today, we would expect, like NAR is forecasting, that overall Q4 2021 volume is likely to be slightly down versus the extremely strong Q4 of 2020.

So as we near the end of 2021, look, lets just look back and remember, housing has been about a $5 million to $5.5 million resale unit transaction market for basically the last decade. 2020 had 5.6 million unit sales, but those were largely concentrated in the second half of the year. If youre in 2021, the market is trending to about six million units, which is great for Realogy given our market-leading position and our meaningful share gain during this time. And so while heading into Q4 unit sales as the market seem to be trending a little lower than the surge in the second half of 2020, both for Realogy and the market, units are still settling in at a higher and healthier number than the past decade, which we like a lot. So between the high demand and that fact, we remain very excited about the housing market and our growth potential. And so pulling up, it was a terrific quarter both financially and in strategic progress, and were very excited to drive further innovation and growth. With that, Im going to hand it over to Charlotte to discuss the financials.

Charlotte Simonelli -- Executive Vice President, Chief Financial Officer & Treasurer

Thank you, Ryan. Good morning. Realogy delivered strong financial performance in the third quarter with $273 million in operating EBITDA and $282 million in free cash flow. We delivered operating momentum in our core business and aggressively executed against our strategic priorities. In September, we proactively repaid $435 million of debt including all outstanding term loan B and the nonextended portion of the Term Loan A. We are focused on driving value creation and announced plans to form a strategic partnership and title underwriting which enables us to focus on our core business, while also unlocking capital and future growth upside. The team has done a remarkable job, and I feel great about our progress and where our business is positioned right now. With that, I will cover our Q3 results in more detail. Third quarter revenue was $2.2 billion, an increase of $277 million versus 2020. Year-to-date revenue was just above $6 billion, which showcases continued momentum across our business. Volume was up an impressive 12% year-over-year in the quarter and outpaced the market again in spite of lapping very substantial volume growth last year. Remember, we grew volume 28% in Q3 and 45% in Q4 last year, and we expect this year to have more normal seasonality. Third quarter operating EBITDA was $273 million, down $40 million versus prior year.

This would be flat to prior year after excluding the benefit of the $40 million in temporary cost savings taken last year. We also faced an additional $40 million headwind from outsized prior year mortgage JV earnings, which benefited from higher gain on sale margins and a sizable portfolio mark-to-market adjustments. All things considered, year-to-date operating EBITDA was an impressive $745 million, up $225 million versus last year. Additionally, I am pleased with our continued focus on managing expenses, especially in a business that is thriving and driving above-market growth. We are delivering on the $80 million in permanent cost savings we outlined for 2021 with $78 million of this target already actioned and $70 million realized year-to-date. We are also aggressively working on our savings programs for 2022, and I will share more detail on what you can expect next quarter. We continue to improve our capital structure, and I am thrilled with all of the progress we have made on our balance sheet. We ended the quarter with approximately $700 million of cash, even after deploying [four hundred [Indecipherable] five] million to retire secured debt last month.

Net leverage was 2.3 times and our senior secured leverage ratio was below zero times as of September 30, which are both historic lows, and we have had 0 borrowings on our revolver for a year now. We generated impressive free cash flow of $282 million in the quarter and $458 million year-to-date. And the underwriting venture we announced when closed will provide additional benefits by bringing capital back into the core business that we can deploy against our strategic priorities and toward delevering. Now I will talk about our business unit results in more detail. Realogy Brokerage Group revenue, $1.7 billion, up $226 million versus prior year. Transaction volume growth was up 17% year-over-year with sides flat and price up 17%, led by the power of our luxury position. RBG operating EBITDA was $51 million, a decrease of $10 million versus prior year, which was largely driven by the absence of temporary cost savings taken amid COVID last year. RBG generated substantial operating EBITDA of $162 million before the transfer of intercompany royalties and marketing fees paid to our franchise business. We grew our owned brokerage agent base 5% year-over-year, with Q3 or consecutive quarter of sequential agent growth and retention remains very strong. Commissioned split increases moderated sequentially in the third quarter, up 171 basis points year-over-year, in line with our expectations.

Continued increases in transaction volume, and ongoing investment in recruiting and retention drove splits up 143 basis points in the quarter. Business mix drove the remaining 29 basis points increase, which was lower than in Q2 as we begin to lap the sale of our property management business. We are happy with the agent success we are delivering and we are deliberate with the investments we are making. Realogy Franchise Group revenue, which includes leads and relocation, was $342 million, up $28 million versus prior year. The franchise business delivered transaction volume growth of 9% versus prior year with units down 6% year-over-year and price up 16% year-over-year. And net royalty per side of $401 was up $34 versus prior year. RFG operating EBITDA was $211 million, an increase of $11 million versus prior year due to growth in the core franchise business. We are also pleased to be hosting in-person conferences and meetings with all of our franchisees and agents, which energize our brands and drive growth and sales. These important gatherings have been on hold for the last 18 months, and we are catching up in Q3 and Q4 to ensure a strong start to 2022, which will be a bit of a cost headwind versus prior year. Realogy Title Group revenue was $250 million, up $37 million versus prior year, driven by growth in both the agency and underwriter businesses. Higher purchase unit fees and unit volume more than offset the decline in refinance units.

Title operating EBITDA was $54 million, a decrease of $41 million versus prior year primarily due to a decline of $40 million in mortgage JV earnings. Excluding the mortgage JV, operating EBITDA was flat versus last year as we continue to invest in the growth of this business. Mortgage joint venture earnings were $11 million in the quarter versus [Indecipherable]. Strong purchase volumes up approximately 20% year-over-year were more than offset by the impact of mark-to-market adjustments on the mortgage loan on the mortgage loan pipeline, lower gain on sale margins, and declines in refinance volumes, which will all be a headwind in Q4 as well. We continue to invest in this business for future growth and have almost doubled the number of loan officers recruited since the end of last year versus what we recruited in 2020 year-to-date. As I said earlier, we have unleashed a tremendous amount of flexibility in the balance sheet to drive growth in our business. Looking back since the end of 2019, we have reduced gross debt by approximately $430 million and reduced net debt by $875 million, repaid all outstanding Term Loan B and nonextended Term Loan A, and changed the debt mix with the majority now unsecured. We lengthened the maturity profile, and we only have approximately $400 million of debt due before 2025.

And looking forward, we will continue to be opportunistic in the capital markets to enhance our balance sheet and expect to be in an even healthier position by mid-2022. We have ample cash on hand, we will use to invest in the business and satisfy our near-term maturities, and we remain committed to debt reduction. Realogys third quarter results are a continuation of the strong momentum we have been delivering. We are competing effectively and gaining share and our strong execution has led to quality financial results, which are flowing through to the bottom line.

We are positioning our core business for growth longer term while pursuing value-accretive transactions and partnerships to drive shareholder value. I believe Realogy is in a great position because we have the right resources and unique capabilities to continue leading the market. We are positioned to enter 2022 with solid momentum and I look forward to what the future holds. Let me turn it back to Ryan for some closing comments.

Ryan M. Schneider -- Chief Executive Officer, President & Director

Thank you, Charlotte. Id like to wrap up with a personal story. Tomorrow, Ill actually be closing the sale of a family members home. Like many of you, Ive bought and sold a few homes over the years. But this time, the increased seamlessness of the transaction, combined with how our technology and products are making our great agents and myself as a customer, even more successful was striking. I watched my great Coldwell Banker agent utilize one of Realogys open ecosystem technology products and our real-time data to create a phenomenal listing presentation and powerful pricing analysis incredibly quickly. I watch the agent utilized our RealVitalize program that we offer in partnership with [Indecipherable] to do some much needed renovation on this, frankly, older home, including painting, many repairs, bathroom renovations, landscaping and staging. It was an amazing customer experience.

I didnt have to do a single thing. My agent deployed our Listing Concierge custom marketing program to do an incredible job marketing the property across multiple channels, generating a huge amount of interest as the property came to market. and utilized our virtual technology, including virtual tours to substantially increase the exposure of the home. And all of this came together and we were blessed to get 10 offers with them above this price. In living this experience in the past eight weeks has me especially excited about the progress Realogy is making to simplify and transform the home transaction experience, both for our customers and our agents. And beyond my anecdote, the proof of Realogys transformation success is showing up in our financial numbers and above market growth. Our momentum and strong results have me and all of Realogy even more committed to keep innovating both in our existing business and with new growth vectors like RealSure, all to drive change and lead into the future. With that, Charlotte and I will take your questions.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from the line of Ryan McKeveny from Zelman & Associates. Your line is open.

Ryan McKeveny -- Zelman & Associates -- Analyst

Hey. Good morning. Its a nice job on the quarter and thanks for taking my question. I wanted to start with RealSure. Obviously, you guys sound very excited about it. And something weve been focused on in our research are aspects of the model that can have more of a direct-to-consumer approach where theres tangible value to both the agents as well as the consumer, and it certainly seems the RealSure is checking those boxes. But I was hoping you can talk to the go-to-market strategy with that. Is this being or going to be pushed from a marketing perspective, more in that direct-to-consumer angle? Or is this agents bringing this to the listing presentation and saying, hey, we have this available? And I guess what Im kind of getting at is, is this product helping win the listing when that listing appointment is already in place? Or is this actually spurring more listing appointments to even have that initial discussion? Thank you.

Ryan M. Schneider -- Chief Executive Officer, President & Director

So Ryan, good to hear your voice. Thanks for the question. The beauty of it and part of the reason we think its a competitively advanced model, and were competitive advantaged with our agent distribution is both, right? So this is a product that were distributing through agents. Its at the listing for them to help win listings and its doing that. but its also a product where were increasingly doing direct-to-consumer marketing. And for consumers who are interested, part of the value proposition is the connection with the agent to list their house. And if they get a better offer in the market, they can take it and make even more money for themselves. And so its also going to generate more listings for Realogy and our agents on the direct-to-consumer side. So were really excited about both. And like I told you in the script, and this is new information, 70% of the people who actually request one of these offers, list with us. Now they dont all take the RealSure offer. But even if they dont take the offer, they typically list with us. And so were finding it powerful, both in the RealSure business and just generating additional listings that show up in our brokerage business. Were excited about it. Were stepping up our investment again here in Q4. We had a great CEO, we think, in Katie. And were launching a new product on the buy side to help buyers later this quarter. So were big fans. Were excited. We think its part of us innovating to where the future real estate is going. And we think Home Partners of Americas history and data, combined with our data and our agent distribution is a really powerful combination.

Ryan McKeveny -- Zelman & Associates -- Analyst

Thats great. It sounds exciting. Thank you for that Ryan. One on mortgage and title. So Charlotte, I believe your comment was that the mortgage JV saw purchase volume up about 20%. And that would be ahead of 12% overall volume growth, 17% brokerage volume growth. And even on the title side, it looks like the purchased closings growth was ahead of brokerage sides growth. So it would seem the math suggests the capture rate or the attach rate is picking up. And I guess my question is, as we look going forward, how much of that is geographic expansion, adding more LOs, adding more markets where this is available? And how much is just deeper integration with your agents to drive that attach rate higher on both the title and the mortgage side of things? Thank you.

Alicia Swift -- Senior Vice President of Financial Planning & Analysis and Investor Relations

Sure. So what I would say is -- youve picked up on a good point. We have been aggressively recruiting loan officers. And so the fact that weve almost doubled our recruiting this year versus last, its whats really driving the increase in volumes were seeing in the other parts of our business. Its a little bit of a combination of both geographic expansion as well as just beefing up certain markets. So its a little bit of both, and well continue to do a little bit of both going into next year as well. We dont disclose anything on attach rates. So theres not much more I can tell you there. But I think the majority of it anyway is really being driven by the geographic expansion as well as just overall loan officer increase, which is sizable. But thank you for your question.

Ryan McKeveny -- Zelman & Associates -- Analyst

Got it. Thanks very much.

Operator

Our next question comes from the line of Thomas McJoynt from KBW. Your line is open.

Thomas McJoynt -- KBW -- Analyst

Hey. Good morning guys, Thanks for taking my question. So the sale of the title underwriter JV, I want to ask about that. The unlocking of capital is clear, theres benefits there. Could you add some more details on what you think some of the strategic benefits of our partnering with Centerbridge. And then could you also comment on what led you to keep the agency and settlement business separate?

Ryan M. Schneider -- Chief Executive Officer, President & Director

Absolutely. So let me all start with your second one because its easier. Look, the agency and settlement business, Tommy, is incredibly critical to the transaction, right? Tomorrow, Ill be doing a house closing and its the agency and the settlement and escrow part. And owning and running that business is a critical thing as we seamlessly integrate that with the brokerage transaction integrate it with mortgage and make it much simpler for customers, capture more, grow our title and mortgage business like weve been doing. So that is just as strategically core as it gets. Weve got to keep it. Theres no scenario where that isnt and shouldnt be a huge part of our future. Thats true in our current business as were innovating for simplicity. Its also a big part of RealSure, as I talked about title and mortgage being part of the core value proposition and the economics. So that we got to keep. I think were the only player in real estate who owns their own title underwriter.

And Centerbridge as a company and their track record as an owner and investor in businesses speaks for itself. And its clearly a good track record of driving a lot of growth. And we like the partnership and the venture because we think it can unlock a lot of growth. Again, the underwriting side isnt core to the transaction the way the agency and settlement business is. And weve probably been paying a little bit of a penalty in terms of maybe some people who dont want to work with reality on the underwriting side because were more of a competitor to them, whereas this new venture kind of owned by Centerbridge will, I think, be able to unlock a lot of growth potential above and beyond the growth vision that they even had when they came into the business. So were really excited about it. And look forward to closing the transaction, hopefully, early in 2022.

Thomas McJoynt -- KBW -- Analyst

Thats great. That all makes sense. And just switching over real quick. Could you guys remind us of the availability and your appetite to take out some additional debt either in the fourth quarter or kind of as we look out into next year?

Charlotte Simonelli -- Executive Vice President, Chief Financial Officer & Treasurer

Absolutely. Its obviously something we continue to monitor, and rates in the market today are still really strong. So it is something we look at. We have some higher cost debt that were evaluating in the future to do something with. We have a bit of a lag here, though, because a lot of our higher cost debt is not actually callable until sort of like the end of the first quarter next year or the beginning of the second quarter. And so thats why I made reference to even healthier position before the first half of 2022. But its definitely something were looking at. And obviously, we have enough cash on the balance sheet to take out the 2023 notes at any point. Again, theyre not callable as well until the future year. But -- so were looking at all of it.

Thomas McJoynt -- KBW -- Analyst

Makes sense. Thanks Charlotte.

Operator

Our next question comes from the line of Matthew Bouley from Barclays. Your line is open.

Matthew Bouley -- Barclays -- Analyst

Morning everyone. Thank you for taking the question. Congrats on the results and Ryan, congrats on your upcoming closing tomorrow. So back on RealSure, it sounds like youre going to offer a buy product now so folks can buy with cash. I guess, just curious if you can expand a little bit on that part of the model. Is this like a buy before you sell type of product? Or what else differentiates that? How big can that be as part of the whole platform? Thank you.

Ryan M. Schneider -- Chief Executive Officer, President & Director

Well, you can see in the market today with the strong demand I talked about that, frankly, theres a lot of price appreciation, but theres also the phenomenon of sellers like cash offers a lot better than they like more complicated offers. And thats always been true. Its probably even more true right now. And we think theres a real opportunity to both help people who are trying to buy for the first time be cash buyers, but also do what you said, which is let people make a cash offer without having yet sold their previous house. And the power of what we and Home Partners are doing is if we help people make a cash offer, then for some reason, something falls through, we can step in and be the buyer of the house. and then either rented, lease it, do something else with it. Well let Katie tell you all of our strategic plans and that stuff. But theres a real market opportunity and the fact that weve got the sell side up and running in 24 markets is powerful, and were excited to keep growing that. Getting the buy side going in five markets feels like a good step for us. And then remember, both of these things get supported by our mortgage and title, right? So when we help people buy a house, its not just to help them do the house buying part and help our agents and things like that, its actually also to capture the mortgage with that buyer do the title with that buyer.

And you can see in our financials, thats increasingly important. And again, all of this is about integrating and creating a more seamless transaction, right? And I think thats something that is really critical for the future of real estate, and were doing that both in our existing business is frankly, kind of my anecdote hopefully, gave people a sense of some reality on that, but also with RealSure. And were really excited about that kind of innovation, and we think its a big part of the future, and we think were competitively advantaged in it because, again, we have some competitive advantages versus other iBuying models back to Ryans question on our distribution, both direct-to-consumer and the agent distribution. We also have some advantages on title and mortgage that many of our competitors dont have. So were excited about it, and thats the path were going to walk.

Matthew Bouley -- Barclays -- Analyst

No, thats great color. Thank you for that, Ryan. Second one on the market share. Obviously, the headline is that Realogy outperforms NAR. And certainly, you highlighted New York City the brokerage footprint was a big piece of that. Can you tell within the brokerage footprint or maybe even if you could tell within New York City because of how strong it was, just kind of how Realogys share is trending within your own footprint? Simply because New York was that strong and clearly was a big tailwind.

Ryan M. Schneider -- Chief Executive Officer, President & Director

We would have -- yes, great question, Matt. Ive looked at the numbers. We would have -- we outperformed NAR even without the New York City. So -- in our brokerage business. Our brokerage business is up 17%. Im not going to give you the numbers. But even without the New York City growth, our brokerage was still -- still outperformed NAR. So were excited about that. obviously, were excited about New York City being a little extra strong, and thats an important market for us. And frankly, its been kind of a drag on our results even though our results have been great. So we were excited about the share gains, especially in our owned business, and we had them again. New York City drove a chunk of those but we also outperformed NAR even without New York Citys numbers.

Matthew Bouley -- Barclays -- Analyst

Perfect. Thank you very much.

Ryan M. Schneider -- Chief Executive Officer, President & Director

Yeah. Thank you, Matt.

Operator

Our next question comes from the line of John Campbell from Stephens. Your line is open.

James Hawley -- Stephens -- Analyst

Hi. Good morning. This is James Hawley stepping in for John Campbell. Appreciate the time for taking the question. So -- You had a few moving pieces within the title segment around refi, gain on sale and upcoming swings in the title JV, you put up about $126 million last year. Thats coming down a bit. Broadly speaking, can you frame up your expectations around Title segment EBITDA in the quarters ahead, given all the moving parts?

Charlotte Simonelli -- Executive Vice President, Chief Financial Officer & Treasurer

You mean for Q4?

James Hawley -- Stephens -- Analyst

Yes. Sorry, Q4.

Charlotte Simonelli -- Executive Vice President, Chief Financial Officer & Treasurer

Yes. Yes. So what I can tell you is the drivers that impacted this quarter will remain an impact next quarter because of what were lapping. So its not really whats happening today. Its more what were lapping from last year. So relatively speaking, its somewhat similar, a gain on sale and the mark to market, those are the big drivers.

Ryan M. Schneider -- Chief Executive Officer, President & Director

And while were on this, theres one thing I kind of always wanted to do, which is lets talk on the mortgage side, just to be -- this is a business we love and were having a lot of success integrating it in the different transactions that I talked about. two years ago, we made about $15 million in our mortgage business. Last year, we made $126 million, if you kind of cite it, on the mortgage side. And this year, its going to clearly settle between those two things. And I think thats a good thing, and I think thats helpful to all of you from a more of a run rate kind of standpoint because I think early on, when we lost money in 18 and 19 when we made a few bucks we were investing a ton to grow this thing. And I think last year had some real tailwinds, as Charlotte talked about with margin and gain on sale. And so were excited to have kind of a pretty solid mortgage result this year, and then well continue to grow that title and mortgage as we keep investing at Charlotte talked about. And so the investment we made at the start, the extra kind of juice we got last year, the mortgage market and then kind of a more growing thing that we want to start building off of this year was just a little bit of context. Ive always had in the back of my mind to share if I ever got a question like yours.

James Hawley -- Stephens -- Analyst

And then just a second one here. Youve clearly made a ton of progress in the cost save initiatives, do you think youve captured most of the lowest hanging fruit there? And are there any areas you would continue to find more efficiencies in? And if so, like what areas do you think you would point to there?

Charlotte Simonelli -- Executive Vice President, Chief Financial Officer & Treasurer

Sure. Its interesting what you just determine is low-hanging fruit. Like, yesterdays low-hanging fruit, you still have to go back and get some additional. So youre bar may change on what is low hanging. My philosophy on this is well-run companies. Well always continue to look for cost savings in good times and in that. Its just whats necessary to drive both efficiency from a cost perspective but also simplification for how you work. So this business remains highly manual still, highly manual. And the teams are really looking into what were going to do next year. But rest assured, this is not something Im giving up on. I think we have a ton of head space here, and this is something that will continue to be on my agenda for years to come. So as far as like areas, I referred to the manual nature of this business. So just in operating expenses, G&A, things like that, well still continue to find savings there, which comes -- it can either come through people, through a footprint. And because it is manual, the more we can automate, thats just really going to help us.

James Hawley -- Stephens -- Analyst

Appreciate your time. Thanks, Ryan. Thanks, Charlotte.

Charlotte Simonelli -- Executive Vice President, Chief Financial Officer & Treasurer

Thank you.

Ryan M. Schneider -- Chief Executive Officer, President & Director

Thanks, James.

Operator

Our last question comes from the line of Justin Ages from Berenberg. Your line is open.

Justin Ages -- Berenberg -- Analyst

Hi. Thanks for taking the question guys. Im sorry if I missed it. Did you -- or could you expand on whats kind of driving the average broker commission rates ticking down in the franchise and the broker tops?

Charlotte Simonelli -- Executive Vice President, Chief Financial Officer & Treasurer

Yes. So this is something that tends to move around a couple of bps here or there. Sometimes its up, sometimes its down. Usually in times where -- in the prior year, we had tons of price appreciation, which helped drive it up. So while it is down a couple of basis points, its not something that Im super alarmed about because its pretty common, especially if you [lap] such a high period of price appreciation.

Justin Ages -- Berenberg -- Analyst

All right. That makes sense. And then one more, if I could. Just expanding on the market share question. Based on the global luxury report that you guys put out, it seems like youre doing well there and outperforming there. Has it been market share gains like across the board on kind of some of the lower tiers just below the luxury?

Ryan M. Schneider -- Chief Executive Officer, President & Director

I mean, if you mean just below the luxury like you on the line, Im not sure where youre drawing the line. But were both architected to do a little bit more kind of at the $500,000 and up, right, across multiple brands and geographies. And weve been gaining share there, obviously, from the numbers. The place where Id say weve been a little more with the market is clearly at the lower price points. Thats more on the franchise side. And you can see that a little bit in our numbers this quarter, where our franchise numbers were a little bit -- were a lot more like, frankly, kind of the overall market. And a chunk of that is just driven by the kind of bottom half of the market. And our kind of market comparable position there, but not a big advantage, whereas we, I think, have been getting more market share gain and growth in the luxury side which, again, were really excited about, and we do that purposely. Like, we make investments there, we overindex on it, we did an acquisition this quarter on that. And so were just excited about the overall share gains for now five quarters in a row. Were excited about the strength of the luxury business. We gave you some data on some individual brands that was pretty exciting that we hadnt really shared before. And we just think were very well positioned and a lot of where the world is going.

Justin Ages -- Berenberg -- Analyst

Understood. Thanks for taking the question.

Operator

[Operator Closing Remarks]

Duration: 43 minutes

Call participants:

Alicia Swift -- Senior Vice President of Financial Planning & Analysis and Investor Relations

Ryan M. Schneider -- Chief Executive Officer, President & Director

Charlotte Simonelli -- Executive Vice President, Chief Financial Officer & Treasurer

Ryan McKeveny -- Zelman & Associates -- Analyst

Thomas McJoynt -- KBW -- Analyst

Matthew Bouley -- Barclays -- Analyst

James Hawley -- Stephens -- Analyst

Justin Ages -- Berenberg -- Analyst

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