Fathom Realty to raise agent fees in 2024 to boost earnings

Key Takeaways:

– Fathom Realty plans to increase agent fees in 2024 to generate over $3 million in additional revenue.
– The fee structure changes include a $100 increase in the annual fee charged on an agent’s first transaction and a new $200 fee on property sales over $600,000.
– Fathom CEO Marco Fregenal believes the fee increase will have minimal impact on agents while benefiting the company.
– The new fee structure is expected to result in $3.1 million in earnings before interest, taxes, deductions, and amortization (EBITDA) in 2024.
– Fathom has already raised agent transaction fees by 10% in the third quarter of 2022.
– Fathom Holdings raised $3.45 million through a public share offering, with the intention of using the proceeds for general corporate purposes and accelerating agent growth.
– Former CEO Joshua Harley stepped down, and Marco Fregenal took over as CEO.

HousingWire:

Flat-fee real estate brokerage Fathom Realty will hike its agent fees in 2024 to bolster the company’s revenue by more than $3 million next year.

The brokerage will implement two main changes to its fee structure, effective on Jan. 1. First, there will be an increase of $100, from $600 to 700, in agents’ annual fee, which is charged on an agent’s first transaction every year.

Additionally, the company will charge a new $200 fee on each property sale over $600,000, dubbed the “high-value property fee.” This is on top of the existing agent’s transaction fee of $550. An additional $250 will be charged for each $500,000 over a $1 million sales price. 

“We believe that this small increase to agent fees will have a minimal impact on our agents while helping Fathom achieve our objectives and provide our agents with an ever-improving agent offering,” Fathom CEO Marco Fregenal said in a statement.

Fregenal further expects that the new fee structure will add an estimated $3.1 million in earnings before interest, taxes, deductions and amortization (EBITDA) in 2024.

Fathom already started raising its agent transaction fees by 10% in the third quarter of 2022, reaching a cost of $550 for the first 15 completed transactions, according to the company’s earnings report. After the first 15 transactions, agents currently pay $150, up from $99 before the increase.

Parent company Fathom Holdings raised about $3.45 million through a public share offering

On Dec. 1, Fathom Holdings announced an underwritten public offering of 3 million shares of common stock, inclusive of 1 million secondary shares coming from company former CEO Joshua Harley, for $2.00 per share. In addition, the company granted Roth Capital Partners LLC, the deal underwriter, a 45-day option to buy another 450,000 shares at the same price. 

Fathom Holdings said in a statement that it intends to use the proceeds of the offering for “general corporate purposes to include accelerating agent growth.”

Josh Harley stepped down from the CEO role last month, making way for Marco Fregenal to take the helm.

Source link

Property Chomp’s Take:

In the world of real estate, Fathom Realty is making headlines with its decision to increase agent fees in 2024. The flat-fee brokerage aims to bolster its revenue by more than $3 million next year through two main changes to its fee structure.

Starting January 1, 2024, Fathom Realty will raise its agents’ annual fee by $100, from $600 to $700. This fee is charged on an agent’s first transaction each year. Additionally, the company will introduce a new “high-value property fee” of $200 on each property sale over $600,000. This fee is in addition to the existing agent’s transaction fee of $550. Furthermore, an extra $250 will be charged for every $500,000 above a $1 million sales price.

Fathom Realty’s CEO, Marco Fregenal, believes that this small increase in agent fees will have a minimal impact on the company’s agents while helping Fathom achieve its objectives and provide an improved agent offering. Fregenal expects the new fee structure to contribute approximately $3.1 million in earnings before interest, taxes, deductions, and amortization (EBITDA) in 2024.

This move follows Fathom Realty’s previous decision to raise agent transaction fees by 10% in the third quarter of 2022. The cost for the first 15 completed transactions increased to $550, while subsequent transactions now incur a fee of $150, up from $99 prior to the increase.

In related news, Fathom Realty’s parent company, Fathom Holdings, recently raised approximately $3.45 million through a public share offering. This offering involved the sale of 3 million shares of common stock, including 1 million secondary shares from the company’s former CEO, Joshua Harley. The offering also granted Roth Capital Partners LLC, the deal underwriter, a 45-day option to purchase an additional 450,000 shares at the same price. The proceeds from the offering will be used for general corporate purposes, including accelerating agent growth.

Harley stepped down from the CEO role last month, paving the way for Marco Fregenal to assume the position. Fathom Realty and its parent company are making strategic moves to strengthen their financial standing and support future growth in the real estate market.

Overall, while the fee increases may have a slight impact on Fathom Realty’s agents, the company believes it will ultimately benefit both the agents and the company’s bottom line. As the real estate industry continues to evolve, such adjustments are necessary to navigate changing market dynamics and maintain a competitive edge.

Leave a Reply

Your email address will not be published. Required fields are marked *