There Are 19 Responses So Far. »

1. 

   Comment by Michael Sussilleaux on 9 February 2009:

   It would not be a good thing if Realogy were to fold. In my market, New York City, we are seeing a slight upturn in activity now that Sellers realize that the worm has turned. Hopefully there will be positive trends across all markets as prices become more attractive to qualified buyers.
2. 

   Comment by Tony Sena on 9 February 2009:

   It will be interesting to see the effect it would have on the real estate industry if Realogy were to fold.
3. 

   Comment by Sean Wallace on 9 February 2009:

   Isn’t it true you are a disgruntled former employee of a Realogy company?
4. 

   Comment by Tom Royce on 9 February 2009:

   Gage,

   Nope, never worked for Realogy or any subsidiary of the company. Actually a fan overall, but it is important to report what is happening. Imagine if they shut down and the franchisees had now forewarning? Yikes.

   Tom
5. 

   Comment by Larry G. on 9 February 2009:

   Century 21 issued an interesting press release in early January touting how leading edge they were in transitioning from TV advertising to online advertising. Reading between the lines, they are saving money by eliminating television. There is no hint at how much they will do online, just some mumbo jumbo about search engine optimization, display advertising and the like. It may not mean much, or it might be the earliest signal of the death rattle. In any case, here’s the link to the release if anyone is interested. http://www.realogy.com/media/pr/show_release.cfm?id=657
6. 

   Comment by John on 10 February 2009:

   I’m a real estate broker in Florida and affiliated with a Realogy brand…actually a Realogy-owned office.
   It is no surprise that someone paid to speculate about who might be the next big company to crash and burn would decide that the largest real estate brokerage company on Earth would be vulnerable. After all, we are in the midst of a massive real estate bubble burst…and facing “the worst economic crisis since the Great Depression.”
   But Realogy has considerable intrinsic value. And as financial institutions (and perhaps our government) sober up and find themselves with huge quantities of real estate to dispose of, they will realize that need expertise. Realogy has that in spades.
7. 

   Comment by Tom Royce on 10 February 2009:

   It does have value, John, but what scares me is that when the company was bought out at the peak of the market it got buried in debt. Now if Realogy gets a bailout then it may survive, but the weight of the debt is a cancer to the company. You are absolutely correct that the names have value, tons of value, but if corporate can not support the names that tough times happen.
8. 

   Comment by Arnie Smith on 10 February 2009:

   This article could not be more unfounded and had the author interviewed anyone at Realogy the facts of this writing would be completely different. Simply proves the point “you can’t believe everything you hear” or, in this case, read.
9. 

   Comment by Mark Panus on 10 February 2009:

   We disagree completely with the inclusion of Realogy on such a ridiculous and subjective list that originated as a blog post but is now masquerading as a “news report” elsewhere on the Internet. As of January, there were 88 other companies with the identical Moody’s Speculative-Grade Liquidity rating as Realogy. Our company has the best brand networks and the most successful brokers and agents along with the most seasoned management team and the best employees in the industry.

   Although Realogy is currently in a quiet period pending the release of our fourth quarter 2008 earnings results in March, I would like to address a number of fundamental truths about Realogy that were clearly not taken into consideration in this flawed analysis:

   · During the past several years Realogy has moved aggressively to mitigate the impact of the economy on our company. We have successfully reduced our overhead by more than $350 million and continue to focus on maximizing the effectiveness of our cost structure.

   · As we have focused on costs we have been equally focused on growth. In spite of the woes of the housing market we have made great progress in advancing our company. From new franchise sales to the retention of the top-tier brokers and sales associates to signing new clients across all of our business units, we continue to be forward thinking and highly focused on the future of our company and the industry.

   · In 2009, we expect to benefit from considerably lower interest rates since a significant portion of our bank debt is tied to LIBOR;

   · None of our corporate debt is due until at least 2013; and

   · Unlike many companies in today’s economy, we have the support and commitment of one of the best financed private equity firms in the country, Apollo Management. Private equity funds managed by Apollo Management and co-investors originally invested $2 billion in Realogy so clearly Apollo has a substantial ongoing interest in the success of Realogy. If there is any question as to Apollo’s overall financial strength, one need only look to Apollo’s success in raising approximately $15 billion in capital last month for its newest investment fund.

   In summary, your readers who take the time to do their own due diligence should recognize that Realogy is one company that will survive in 2009.

   Mark Panus
   Senior Vice President of Corporate Communications
   Realogy Corporation
10. 

    Comment by Mike on 11 February 2009:

    The company is a dinosaur. The only national brokerage that is stable is privately held Keller Williams Realty based out of Austin Texas. They have not closed any office and plan to open a few more in 09′. They have an innovative business model and while there business is down like all others, this recessions is turning out to be a friend of this company as they are attracting more and more productive talent from struggling competitors that did not seem to adapt.
11. 

    Comment by William Gates on 19 February 2009:

    LOL…Hey Arnie Smith, you wouldn’t happen to really be Richard Smith (NRT’s CEO), would you?
12. 

    Comment by LOU on 22 February 2009:

    The problem with Realogy is dishonesty. They blamed the media for being so negative about the housing problem and said that it was a facade there is no housing bubble. They got caught with there pants down. I attribute this to Richard smith. I sat through many international business conferences for all brands and heard the same speech from Richard Smith and Alex Perriello that the market is doing great and the media is blowing it at of proportion. Many big broker owners are switching to wiechert and Keller Williams because the are sick of the lack of support and shady good old boy deals that are going on behind the scenes. The only way they will ride it out is if Henry Silvermen the new coo of appollo, What a coincidence? convinces his bro Leon to keep injecting capitol in a sinking ship. Richard smith should be fired for lack of competence.He had the warning signs well before the market tanked and choose not to believe it. So what makes us believe Marc panus is being truthful.

13. Pingback by Realogy Gets 150 Million Dollar Commitment From Apollo To Stay In Business : The Real Estate Bloggers on 16 March 2009:

    [...] may want to subscribe to my RSS feed. Thanks for visiting!A month ago I asked the question, “Is It True Realogy Might Not Survive 2009?” that caused some controversy. We now know the answer, Realogy will make it through 2009 as [...]
14. 

    Comment by S. Smith on 21 April 2009:

    Having spent over 10 years with Coldwell Banker since the late 90’s when things were booming, it is amazing to me that Realogy/NRT still doesn’t realize that the only asset they have ever had is the production and skill of the tens of thousands of agents in its various affiliates. My question to those agents is why are you in Real Estate? I understand that Reaology now has a 40% referral fee and then 50/50 split on whats left! The company has always made its corporate relo business (Cartus), Builder developer services, as well as their incessant pressure on agents to place previously profitable mortgage placement as their main priority. Resales have never been their main focus. The reason—-they can’t charge fees back to agents and clients ( except for the ridiculous $195 admin fee which the agents “sell”). Excessive , grandiose spending on Brand related events do little for the agents who are being hit up with every fee imaginable to be affiliated with this company. I predict this company will not survive with a reoganization or outright sale. Think not—see what Carl Icahn thinks!
15. 

    Comment by Chris O. on 22 April 2009:

    Interesting blog. At the very least, Reology is an example of a company engaging the public through social media.

    best,

    Chris O.
    Referral Key
    “Your Trusted Referral Network”
16. 

    Comment by SATI on 4 May 2009:

    Just the force of denial out there suggests that Realogy is en route to folding. Where there’s smoke…
17. 

    Comment by Ann Thornton on 19 May 2009:

    I have been a real estate agent in Jacksonville, Florida for over 20 years. I am called “old school” when I comment that the real estate industry lost the direct communication with its buyers and sellers when , like most comppanies today, decided to not answer their phone when the customer called. My “unique selling proposition” to my buyers and sellers is that I answer my cell phone, I do not email, ( I choose to take the customers who want personal attention and leave the rest of them to go back and forth with the email and voice mail group.) It is working famously for me and it truly makes me “unique”. I do not “multi task” (too many mistakes made and reduces the one on one attention that my clients seem to crave.) I will change my way of doing business if and when my business slows down..Ann
18. 

    Comment by Tanis on 22 May 2009:

    Check out the link http://www.cnbc.com/id/29640663

    CNBC Slideshow – Companies at Greatest Risk of Default

    Not everyoe is a disgruntled former employee.

    The facts are that over 75% of the Accounts Receivables are over 90 days old. how much is that….a Billion Dollars. In accounting, that is considered Collection or Uncollectable. The facts are that the Franchisees are not paying the Franchise Fees. Realogy is simply rewriting these debts into new debt instruments and contracts and placing them as Assets on the Balance Sheet. These instruments are as reliable as the mortgages in the Derivatives Contract on Wall Street that have lost all value in the last two years.

    Remember, Market Share continues to slide for Realogy Brands and at Century 21 rates below 5% and in a market where you would expect a Strong Brand to recapture lost share, Century 21 continues to slide. Coldwell Banker is the Company Brand for Realogy and has closed over 1,100 offices and represents almost 80% of the Brand Sales. Coldwell Banker Franchisees are too small a Market but these are teh Strongest Franchisees in the Realogy System. The Better Homes and Garden Brand in languishing amoung leadership that has been in the Real Estate Industry too long that it is entrenched in the Old Ways of doing business and cannot develop any inovation or change to spark sales, interest, a Mantra or call to action.

    The NRT Brand is the only Money winner for Realogy but is a loss leader for the Franchsiee. In the past that was fine but in todays environement, no one needs, wants or has a loss leader. There is simply no revenue for the Broker here and NRT Agents, while experienced are very Lazy Prospectors and simply sit and wait for a referral.
19. 

    Comment by Doug on 27 May 2009:

    This is an older Blog, but Realogy’s Q1 results came out this month and I’ll add some observations.

    1.) A reflection of investor confidence is that Realogy’s notes (fixed rate senior, senior toggle, and senior subordinated) are valued at a fraction of their carrying amount (28%, 18%, and 17% respectively per the latest 10-Q, pg. 12).

    2.) The first quarter 2009 commission volume (for Realogy’s franchise companies & owned brokerages combined) was down some 30% vs. Q1 2008 (pg. 40).

    3.) On 3/31/09 Realogy had negative net worth of $997mx (vs. a neg. $740mx on 12/31/08.) When I was in business school (back in the dark ages when a company’s Balance Sheet received no less attention than its Income Statement) we called this “insolvency”. I’m not sure what descriptive term is used in today’s more sophisticated world… perhaps it’s called “forward thinking”.

    4.) At the end of Q1 2009, Realogy reported a Current Ratio of 54%: Current Assets of $1.338 billion and Current Liabilities of $2.484 billion.

    5.) Mr. Panus points out that Realogy has reduced overhead and is focusing on its cost structure. This is fine as far as it goes, but it may be noted that Realogy reports a first quarter Total Expenses reduction of 24.5%, vs. 2008, but a Net Revenues reduction of 33.7% vs. Q1 2008.

    5.) Mr. Panus’s statement that none of their corporate debt “is due until at least 2013” is correct regarding the debt’s Principal. However the fact remains that their debt service payments must be made each and every quarter.

    6.) Now in one sense, none of the above weaknesses would critical, IF Realogy’s near term cash flow situation was favorable. However it’s difficult to find satisfactory signs on this. Their available cash balance appears to have only been possible because of their $600mx revolving credit facility, which source has now been maxed out. And while Apollo announced in March that they would if necessary step in with an additional $150mx, this amount only represents a single quarter of debt service ($144mx in Q1).

    7.) Given the last two years’ trends in Realogy’s financials, unless: a.) a substantial & adequate debt restructuring is accomplished, or b.) Apollo is willing to kick in truly adequate additional capital, or c.) a major shift occurs immediately in the company’s underlying business, then it’s probable that Realogy will experience “an event of default” sooner rather than later. The company clearly acknowledges this risk in its 10-Q (remarks on pp. 1 & 2.)

    8.) This does not mean that Realogy’s real estate brands or all their related brokerage companies would disappear – they would not. But it’d be a major hiccup, and would likely draw more attention to the question of how much support the brokerages receive from corporate on their core business.

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