The Real Brokerage: Coiled Spring? (Ticker: REAX)

A frozen housing market may turn headwinds into tailwinds.

After doing my initial analysis on The Real Brokerage, many of you shared concerns about the company’s aggressive revenue-sharing model with its real estate agent partners.

With an 85/15 revenue split on residential real estate transactions, capped at $12,000 annually, it is easy to see why The Real Brokerage can convince agents to switch to its cloud brokerage platform: they keep tens of thousands in sales that used to go to their old broker. Evidenced by Mr. Market’s continued pessimism (the stock is down 50% in the last six months alone), there are growing concerns about whether this model works for The Real Brokerage.

Management believes this pessimism is unwarranted, that its core brokerage business could be GAAP profitable today if they chose to be, and that gross margins will improve once its new business lines, like mortgage underwriting and title insurance, gain scale:

“It’s important to understand that for a company with our growth profile and capital efficiency, profitability is largely a strategic choice. Many of our peers are currently posting much steeper losses, as you’ve seen, despite having significantly larger agent bases, which we believe validates the superior efficiency of our model. To give some context, our largest segment, North American Brokerage, was nearly break-even in the full- year of 2025. The significant majority of our consolidated loss currently reflects our ancillary businesses, where we are deliberately choosing to invest today because we believe the long-term returns will be substantial.” - Founder Tamir Poleg, Q4 2025 Conference Call

If you agree with Poleg, then The Real Brokerage stock may be especially cheap right now.

In this quarterly update, paying subscribers for Emerging Moats will receive my latest analysis on The Real Brokerage, covering:

• Growth in a dead housing market

• What about ancillary services?

• Management uncertainties

• Is there still an emerging moat?

• My investment decision

Growing in a dead housing market

Let’s take a look at the macro picture for home sales in the United States: