Why Real’s president says they don’t do ‘downlines’ 

Last week, The Real Brokerage announced a major change to its revenue sharing model that will help newer agents benefit from it sooner. The change, which goes into effect in November, lowers the threshold to the company's second level of its five-tier system. 

Essentially, the more people an agent recruits, the more opportunity they have to increase their revenue. 

But how does this latest change benefit Real and its investors? And what does it mean for existing teams? Real's president, Sharran Srivatsaa, spoke with Real Estate News about these themes and more. (Note: This interview has been edited for length and clarity.)

If Real's model isn't a downline, what is it?

We saw this silo effect happening in the traditional real estate model. And then there are a few companies with newer real estate models that have this revenue share component and the downline idea, but there's still a silo. For instance, if you join with one person as your sponsor, then you can't talk to another person because they are not economically connected to you since their downline is completely different from your downline.

But what we realized was that the power of the network isn't the size of the network. I don't even like to use the word downline, because when we talk about it internally, we talk about this idea of "one culture, one network, one Real." Even though you have a sponsor who is directly responsible to you, our culture allows us to avoid silos.

How do the recent changes to Real's rev share model empower small teams? 

The solo agent who's trying to sell houses on their own will often get stuck, because they might have two or three listings in their pipeline, but they don't have any more time to build a pipeline. They just go from deal to deal. That is a very sales-minded approach to selling real estate, but a business-minded approach to selling real estate is, "How can we run this as a team?"

The bigger teams already understand the power of teams. Solo agents are tired and resentful, and they know they need to get more help. So we see small and mighty teams as the future of real estate.

These small teams are really taking over with how well they serve the client, how fast they can put more revenue on the books, and how much happier they are in their day-to-day operations because they get to live within their zones of genius. 

So a big part of unlocking these tiers was allowing for the small and mighty teams to come on board and see the benefit of revenue share right away. 

Were there any external pressures that prompted this change?

No, for us it was more of a chance to continue to look at the model and ask what we can do to improve, and we saw this big opportunity if we went down a level to unlock opportunity for agents by giving them easier access to tier two.  

The number one consideration was, even in a market like this where transactions are down somewhere between 15-40% based on the market you're in, does this add a certain recurring revenue stream that can stabilize income for a lot of agents? And second, we wanted to make sure there's more of an internal business collaboration. 

We've been very fortunate over the last 12-24 months to have some strong growth, but we were trying to figure out how to look for other opportunities.

As a publicly traded company, how does this change affect Real's bottom line, growth and sustainability from an investor's perspective?

From a sustainability perspective, yes, we look at P&L and balance sheets, but we also look at agents staying with the firm longer. And we've seen very clearly that the agents who have more meaningful revenue share streams stay with the firm longer. 

So in a lot of ways, it's ensuring that not only do we do good by our agents by unlocking these tiers, but we also keep the revenue that we brought in the door with our relationships and our agents. The longer they are with us, the more revenue they make and the longer they will stay with us.