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Virtual real estate brokerage Real is one step closer to its goal of providing end-to-end services to homebuyers, having completed an acquisition of LemonBrew Lending Corp., a New Jersey-based mortgage lender licensed in 19 states and Washington, D.C.
The Real Brokerage Inc., a publicly traded company that does business simply as Real, announced Friday that it paid $1.25 million in cash and stock for Lemonbrew Lending. Management and key employees of the Iselin, New Jersey-based lender are also eligible to earn up to $2.5 million in additional performance-based milestone payments, Real said.
Tamir Poleg
“LemonBrew Lending’s current mortgage capabilities and future lending potential, brings us one step closer to our strategy of providing consumers a frictionless home buying experience,” said Real CEO and Chairman Tamir Poleg, in a statement.
Real kicked off the year by acquiring Miami, Florida-based digital title and settlement company Expetitle for $8.232 million, which it now operates as Real Title.
The company’s growing real estate brokerage network of more than 7,000 agents serves 44 U.S. states and Washington, D.C., and three Canadian provinces. This year’s acquisitions of LemonBrew Lending and Expetitle pave the way for the company to provide end-to-end services to homebuyers in many of those markets.
Real announced the deal to acquire LendingBrew Lending, a division of LemonBrew Technologies, in September with 25 employees, including co-founder and CEO Samir Dedhia to join Real.
According to the Nationwide Multistate Licensing System, LemonBrew Lending sponsors 17 mortgage loan originators working out of three branch locations serving Washington, D.C., and 19 states: Alabama, Arizona, California, Colorado, Delaware, Florida, Georgia, Louisiana, Michigan, Minnesota, Mississippi, New Jersey, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Texas and Washington.
Samir Dedhia
“The LemonBrew Lending team is excited to take the mortgage lending platform we have developed to the next level, and couldn’t be happier that we get to do this in partnership with Real’s best-in-class technology,” Dedhia said in a statement.
Real Title expanding its coverage area
Real Title is operational in five states — Florida, Georgia, Texas, Massachusetts and Rhode Island — and is licensed in 18 additional states, with plans to go live in California and Utah in the first quarter of 2023.
The Real Brokerage’s growth strategy
Founded in 2014, Real has grown by offering agents generous commission splits and a portion of the commissions generated by new agents they bring to the company.
The company announced in October that it had surpassed 7,000 agents, doubling its agent count in less than a year and serving every U.S. state but Alabama, Delaware, Nebraska, South Dakota, Vermont and West Virginia.
Recent additions include The Dean Aguilar Group, a 115-agent team based in San Diego, which affiliated with Real in November and Redline Real Estate Group, a 90-agent brokerage serving the Canadian provinces of Alberta, Ontario and British Columbia that Real acquired last month.
In its most recent quarterly report to investors, Real said it racked up a $5.44 million third-quarter net loss, compared to a $1.06 million loss during the same quarter a year ago. While revenue increased 188 percent to $111.6 million, the cost of sales and operating expenses ballooned by 191 percent to $115.9 million.
Real typically pays agents 85 percent of the gross commission earned on every real estate transaction. Agents pay 15 percent of their commissions up to a $12,000 cap.
During the nine months ending Sept. 30, Real spent $15.6 million on marketing, up from $4 million during the same period last year. Most of Real’s marketing budget was in the form of revenue sharing, with $11 million paid to agents who recruited new agents. Agent-related stock-based compensation expenses totaled $2.9 million for the first nine months of the year.
Shares in Real — which trade on both Nasdaq and the Toronto Stock Exchange as REAX — have changed hands on the Nasdaq exchange for as much as $4.35 and as little as $1 over the last year. At Friday’s closing price of $1.25, Real’s market capitalization was about $223 million.
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