Real estate brokerage company Realogy (HOUS 0.91%) recently announced a new partnership with Sotheby's (BID) to help build out its business at the higher end of the real estate market. In this Fool Live video clip, recorded on Nov. 19, Fool.com contributors Matt Frankel and Jason Hall, along with editor Deidre Woollard, discuss the news and what it could mean for the company.
10 stocks we like better than Realogy Holdings Corp.
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and Realogy Holdings Corp. wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of November 10, 2021
Matt Frankel: Deidre sent me this news earlier. It's Realogy is partnering with Sotheby's. When I see Realogy is partnering with somebody, I always think back to remember when they partnered with Amazon (AMZN 1.30%) a few years ago and that ended up going nowhere?
Deidre Woollard: Yeah, that didn't work out very well.
Frankel: Yes. That was, no offense to Sotheby's, but Amazon is the bigger deal out of the two. Everybody was really excited about that and it ended up going nowhere. I know "this time is different," is the worst thing you can hear in investing. But it definitely seems like that might be the case. Deidre, why don't you tell us a little bit about what this means?
Woollard: Well, I love Realogy. Certainly, the stock has taken it on the chin in recent years. I remember The Real Deal writing that you could get a share of stock for a cup of coffee at one point. It's better now, it's around $16, but it's not back when it used to be close to $50, like in the beginning of the decade. This deal, Realogy already has an arrangement with Sotheby's anyway, because they have, Sotheby's International Realty is a Realogy brand.
But they're partnering on a deal with buying Concierge or 80% of Concierge Auction. What Concierge Auctions is, it's luxury estate auctions. It was born out of the great financial crisis and certainly out of all of the properties that were up for sale in Florida and other areas. It's grown steadily over time. Full disclosure, I used to be part of their PR team for awhile, so it's a company I've known for awhile and I am a fan of.
Last year, they did around $3.5 billion in competitive bids. Their average home sold for like $3.5 million, but they've sold for far more than that. Then they sell internationally. They've ran into some controversy over the years about some of the pricing and things like that.
But overall, I think this is an interesting thing because we don't talk a lot about auctions in real estate, but it absolutely is a thing that happens, not just at the courthouse steps thing. Concierge has grown over time. I think this is a pretty smart deal.
It also shows me that Realogy is really thinking about just carving out the luxury end of the market. Most of their earnings are really coming from there lately. They're also doubling down on their Corcoran brand. They're really trying to expand that luxury end of the market, and I think that's why their earnings have been pretty strong the last couple of quarters. Does it worry me because luxury gets hit when things shift? A little bit, but I still like this deal.
Frankel: Yeah. I would agree. There's such kind of a negative connotation when you hear the word auction in real estate. It sounds like they're almost trying to become the eBay (EBAY 0.61%) of real estate in terms of having an auction style business model, which in a market like we're seeing today, makes total sense. I promise if some of these homes that you are seeing fly off the market in a day or two were put up for auction, the seller would make a lot more money. It makes sense.
I hope they don't just do it at the high-end of the market. I think that would be a mistake, I think that would be a very cyclical business. The auction model definitely makes sense, especially if you can cut out some of the middlemen involved in real estate transactions. I like this deal. I think that it's great brand recognition in terms of the auction space. It brings that high-end mentality to something that generally has a low-end mentality, like you mentioned the courthouse steps auctions.
It's something that a lot of investors or even pretty sophisticated real estate investors don't understand. I consider myself pretty well-versed real estate investor. I wouldn't want to show up at the courthouse steps for a property auction and pretend I know what I was doing.
Hall: Heck, no.
Frankel: It could really bring the concept of real estate auctions to the masses, and I think that can be a very valuable thing.
Woollard: It's interesting, because a lot of what Concierge does is, they have a really solid database of luxury buyers around the world, so they get repeat buyers and things like that. I don't know how easy it would be to take their model to the middle level, but it does make sense. It would be like just expanding what they do now because you're absolutely right. The amount of people that are buying houses in one or two days has increased dramatically. The amount of people that buy sight unseen keeps going up, and so there's really a lot of potential there.