In a second quarter earnings report Aug. 12, Fathom Holdings, which includes flat-fee brokerage Fathom Realty, the tech-focused, full-service brokerage under its corporate umbrella, trumpeted a 12% agent count rise from a year ago, to 12,224, even with high mortgage rates and home prices lowering its transaction volume by 8%.
Fathom Holdings CEO Marco Fregenal also addressed ongoing discussions to settle commission lawsuits, with court documents previously hinting that those talks are advancing.
“We’re still in negotiations, and for that reason I can’t really disclose where we are,” he said. “We look forward to announcing a settlement as quickly as possible. We think we can reach a settlement with an amount where we can survive, especially given some of the recent settlements and the size of those companies. When you look at our company and our size, you’re able to kind of figure out what that number is.”
The lawsuit is on behalf of people who listed properties on an MLS in Texas using a broker or listing agent affiliated with one of the defendants. The lawsuit claims that the alleged violations began on Nov. 13, 2019, when the plaintiffs paid a buyer broker commission.
Total Q2 revenue decreased 11% to $89.2 million, compared to $100.1 million in the same quarter of 2023. The decrease in total revenue was due, Fathom said, to a 12% decrease in brokerage revenue resulting primarily from fewer transactions and an increase in lease transactions compared to sale transactions. Offsetting the decline in total revenue was an 11% increase in other service revenue, driven by improved performance from Fathom’s mortgage and title businesses, offset by the absence of the company’s insurance business, which was sold this past May.
Real estate transactions decreased to 10,137 during the quarter, down 8% from Q2 2023, the company said in reporting a $1.3 million net loss, down from $4.3 million a year ago.
“In the last few months, we have made significant progress toward achieving our goals for this year,” said Fregenal. “We recently launched what we believe to be the most innovative revenue share program in the industry. Our mission has always been to empower Fathom agents to earn and retain more of their hard-earned money.
“Our new revenue share plans are a natural extension of this commitment. By offering two revenue share options—either through a split or a flat-fee model—we provide agents with the flexibility to choose the best fit for their businesses. These additional income streams ensure our agents have the tools and opportunities to thrive in any market condition. Looking ahead, our focus remains on growth initiatives and exploring additional opportunities to attract high-quality agents, teams and brokerages. Supported by a compelling value proposition and a robust pipeline of opportunities, our goal is to return to 30% agent growth in the coming quarters.”
In a question following the formal presentation, Fregenal was asked how Fathom is advising agents about how to navigate the post-NAR settlement landscape.
“There are a lot of moving parts to this,” he replied. “I think there’s a lot of confusion, that MLSs are going to enforce this in a variety of different ways, and so, in a sense, not only do we have to build our own set of rules, but then we have to look at every MLS and see what they are going to enforce locally. We’ve already seen that different MLSs across the country are looking at things differently. Certainly we’re not going to be able to put the buyer-side commission on the websites of the MLSs. That’s a given. Fathom’s going to enforce that, and we’re already working with our agents to do that.
“We are in discussions about creating our own documents on buyers agreements. I think it’s a little early to speak specifically about the totality of all the things that we’re going to do. It’s going to take a little while to work itself out. I caution everyone about jumping to conclusions about how everything is going to change.”
Q2 2024 and recent highlights
- In August 2024, Fathom introduced two agent commission plans, Fathom Max and Fathom Share, complementing its existing plan and showcasing Fathom Realty’s reimagined revenue share program. The strategic initiative is designed to enhance agent recruitment and retention, drive accelerated and sustainable growth, and boost long-term profitability, while reinforcing Fathom’s commitment to providing flexible, attractive options for real estate professionals.
- In May 2024, Fathom strengthened its financial position by selling its wholly owned subsidiary, Dagley Insurance Agency, for approximately $15 million in cash, with $7.8 million received at closing, significantly bolstering its balance sheet.
- In April 2024, Fathom Realty launched Verus Title Elite, a strategic joint venture partnering with top-producing agents and teams across Texas. The initiative is expected to drive increased revenue and profitability for both Verus Title and Fathom Realty, further strengthening the company’s market position in the title services sector.
