The coronavirus-caused downturn in the economy has already hit the real estate industry, as the nation’s fastest-growing brokerage, Compass, announced this week that it laid off approximately 15% of its 2,500 employees.
But Compass is far from the only big real estate company that is making cutbacks right now. Realogy, the nation’s largest real estate brokerage, revealed Wednesday that it is reducing the salaries of a “majority” of its approximately 10,000 employees.
Realogy is the owner of the Realogy Brokerage Group, the nation’s largest brokerage measured by two key metrics: the total dollar volume of transactions and the number of real estate agents. Realogy’s brands include Better Homes and Gardens Real Estate, Century 21, Coldwell Banker, Corcoran, ERA, Sotheby’s International Realty.
The company’s most recent 10-K filing with the Securities and Exchange Commission states that the company had approximately 10,150 employees as of Dec. 31, 2019. And according to a new SEC filing, the company is reducing both the salaries and work weeks of a majority of those employees.
The company made the disclosure as part of multi-pronged response to the growing COVID-19 pandemic. In the filing, the company said that it borrowed an additional $400 million to fund its operations as the pandemic spreads.
The company is also taking a series of actions designed to ease the financial burden on its franchisees, including:
- Accelerated franchisee rebates scheduled for payment on April 15, 2020 to April 1, 2020
- Agreed to retain franchisee rebate tiers at 2019 levels for the duration of 2020
- Waived all domestic U.S. Brand Marketing Fund fees, including any monthly minimums, for all home sale transactions closing in the second quarter of 2020
- Waived applicable domestic U.S. monthly minimum royalty fees due in the second quarter of 2020
But the most drastic measures include salary and other reductions among the company’s staff and other cutbacks. “The Company also has implemented a series of cost-savings actions to preserve capital, including temporary salary and work-week reductions for a majority of our employees, marketing expense pullbacks, and delaying investments in certain strategic initiatives,” the company said in its SEC filing.
Beyond that, the company’s CEO and president, Ryan Schneider, is cutting his salary by 90% and all the senior executives that report directly to Schneider are reducing their salaries by 50%.
But the company cautions that these steps may not be enough. “These measures will be assessed on an ongoing basis and may be extended and/or expanded to include, for example, temporary employment furloughs and/or workforce reductions,” the company said.
In a statement, the company said that it is working to minimize the impact on both its and its agents’ business. “The health and safety of our employees, affiliated agents, owners and customers is always our number one priority,” the company said in a statement. “As the coronavirus crisis continues to rapidly evolve, we have moved fast to continue serving our affiliated agents and franchisees through an agile, tech-enabled virtual workforce,” the company continued.
The company also said that it is working with legislators at both the state and federal level to make it easier for the real estate industry to function under the current conditions. “Over this time, we have also been actively working with federal, state and local governments to ensure affiliated agents, owners and the industry are well-represented as leaders and policymakers around the country work to slow the spread of coronavirus and create new relief measures to ease the impacts of the virus on our economy and our industry.”