Today's hot news: The recent market shift is causing upheaval in the real estate brokerage world!

Hi everybody, Joe Hillner with Your Home Sold Guaranteed Realty, where we guarantee the sale of your home or I'll buy it! 

Ok, so every week, I share market data to keep you informed with the local real estate market.  

Here is this week’s Boca Market Watch.

First, Single Family Homes:

This past week, 55 new listings, so so, and ranging in price from $299K to $10.5M!  15 homes back on the market, while 61 homes listed took a price decrease, and 7sellers raised their asking price.  And like the the last couple of weeks, only 34 different properties under contract, and 15 going pending, terrible! 21 homes were unsuccessful in selling and were taken off the market or the listing expired outright.  And a horrible week for sales with only 35 homes sold, ranging from $444K to $3.4M!

Next up, Condos and Townhomes:

60 new listings, not great,  and ranging from $105 Grand to $6.7 Million.  20 units came back on the market, 50 properties with a price decrease, and 10 sellers with an increase.  And another light week with 35 different properties under contract, and just 32 going pending,  And 23 condos or townhomes were unsuccessful in selling and were taken off the market or the listing expired. Only 48 closed sales this week, a bad week, and ranging in price from $125K to $1.9M.

Here's what's making news right now.

Reali, a California based real estate brokerage, is closing its doors and laying off most of its workforce.As a reason, they're citing challenging real estate and financial market conditions and an unfavorable capital-raising environment.

Well that's really shocking because just about a year ago, Reali announced that it had raised $250 million in a new funding round, including $75 million in equity funding, $25 million in debt and $150 million in warehouse financing. So they managed to burn through at least $150 million in just a year, wow!

Reali launched as a flat-fee brokerage in 2016.  The concept is, they would list your home and put it in the MLS for a set fee, saving the seller a sizable portion of the listing side of the commission.  The seller still would be responsible for paying the buying agent's commission, and would get no additional help in the form of marketing, advertising, internet syndication or even broker support.  

In a heated market, these flat fee brokers are always somewhat popular.  However, the general public doesn't understand that the statistics indicate that the net in the seller's pocket is typically less than they would've realized by using a more traditional approach.

And it's really hard for regular brokerages to stay profitable these days, so you can imagine the pressure on a cut rate outfit.

Reali's response was to pivot in 2019 by acquiring Lenda, a startup mortgage lender, which it integrated into Reali Loans, a lending service, to create “a seamless end-to-end real estate experience while saving thousands of dollars in commission fees".  Well, it didn't really play out that way and they hard a hard time competing in the market.  Reali Loans does mortgage lending in 14 states and the company is trying to sell off that division to pay off debt.  However, with mortgage applications falling off a cliff, most lenders are downsizing and not looking to expand.

In the meantime, Reali is laying off virtually their entire workforce, which is very difficult.  It happened so fast, I'm sure that most of the staff never saw it coming.  Reali could be the canary in the coal mine.

There are many other flat fee brokerages out there, For Sale By Owner.com, for example.  As the market continues to cool and shift into a different phase, we can expect more of these players to exit the market.  It happens every time we have a market correction, and it seems possible we could be heading that way in the future.  We'll just have to keep watching to see if that shakeout comes into fruition.