USAA is discontinuing its Real Estate Rewards Network, a referral relationship with Realogy—managed by Cartus (a wholly-owned subsidiary)—that provided the real estate giant with military buyer and seller leads.
Realogy announced the news in a recent regulatory filing, stating USAA ended the program due to “increasing complexities in financial services” that drove USAA to instead “shift focus toward its core banking, mortgage and insurance business.” In the same statement, Realogy announced Cartus would be launching its own military rewards program this September.
A USAA spokesperson issued a similar statement, saying, “We made the decision to discontinue the program so that we can focus on delivering highly-competitive mortgage and banking products to our members.”
The loss was foreshadowed in the previous year. Last September, MPA (Mortgage Professional America) magazine reported USAA would be eliminating around 265 roles from the bank’s real estate mortgage business and the Real Estate Rewards Network program, signaling the effort has been struggling for some time due to challenges in the mortgage market.
RISMedia asked if they have plans to restore the program or provide an alternative in the future, and USAA replied “For now, our focus is to support members currently enrolled in the program. USAA always is looking for new and better ways to support our members through innovative products.”
While the USAA program made up “a significant portion” of Cartus’ affinity business and the “in-network homesale transactions for Realogy and its brand,” according to the filing, the company does not believe the loss will have a “material effect” on its financial results by year-end.
In terms of 2020 business, Realogy stated the program’s discontinuation would likely impact earnings at Cartus and could reduce “in-network homesale transactions” at Realogy and related brands.
When asked how many transactions and buyer/seller leads the program encompassed, Realogy would not provide comment. Similarly, the USAA spokesperson said the company could not provide that information as it is “competitively sensitive.”
However, Realogy did state that in addition to “high-quality referrals from affinity partner programs,” Cartus also provides “high-quality corporate relocation referrals to affiliated brokers,” confirming the discontinued program only eliminated a portion of Cartus’ referral business.
The Realogy filing stated the Cartus Broker Network closed 80,000 “in-network” transactions for Realogy and its related brands in 2018, with 36,000 of those closings happening in the six months leading up to June 30, 2019. NewsTimes reports USAA estimated the value of its services to be between $500 to $24,000, depending on the profile of the homeowner.”
According to Realogy’s second quarter financial results for 2019, the parent company saw a 6 percent increase from Cartus-related referrals (from 24,141 to 25,562). However, it is unclear how much of that came from the USAA-affiliated program and how much from Cartus’ corporate relocation business.
As a replacement, Cartus this week launched Realogy Military Rewards, a program with “benefits similar to those offered under the USAA Real Estate Rewards Network,” the filing stated. A representative at Realogy told RISMedia that the new rewards program will provide U.S. military personnel, veterans and their family members with “top-notch services and rewards when they purchase or sell a home in the U.S.”
“Cartus is pleased to continue to serve the extended military community with this new program,” the Realogy source told RISMedia.
The new initiative will provide qualifying consumers with $350 to $7,500 in cash back or rewards—the benefits will depend on the home’s sale or purchase price. It uses Military Rewards Advocates to match consumers with an affiliated agent from the Cartus Broker Network, which is made up primarily of Realogy-affiliated brokers and agents.
“Realogy has a long history of supporting our servicemen and servicewomen during one of life’s most special and critical milestones: buying or selling a home,” said Ryan Schneider, Realogy’s president and chief executive officer, in a statement. “The new Realogy Military Rewards program extends our support to the entire U.S. military community and their families by providing a real estate agent experienced with military moves, an advocate to offer support along the way and substantial cash back upon closing.”
While USAA cannot comment specifically on Realogy’s Military Rewards program, their spokesperson said they’re “always happy to see programs that benefit the military community.”
The USAA program remained open for enrollment until September 6. Members closing on or before Dec. 31, 2019, may still be eligible to receive the program benefits if the state allows it, according to a statement on the USAA website. However, those closing after January 1 will simply be provided with alternative options outside the Real Estate Rewards Network.
Following the news, Realogy shares were down 23 percent on the New York Stock Exchange despite announcing a replacement program. The company’s stock has been struggling in recent months. While recent collaborations with iconic brands such as Amazon (TurnKey and Agent X) increased Realogy shares by as much as 31 percent, it remains to be seen if long-term investor activity will reflect apprehension toward the brand or if these new partnerships and programs will revive interest.
Realogy also made news this past week over a dispute with rival Compass, which claimed Realogy CEO Ryan Schneider had floated the prospect of a sale to Compass. Schneider rejected that claim, saying it was “simply not true,” and the statement was “designed to inspire sensational news coverage.”
Also last week, Realogy announced a major organizational shift, with NRT CEO Ryan Gorman heading up a “unified Coldwell Banker leadership team” and Coldwell Banker Real Estate CEO Charlie Young moving into an advisory role; Better Homes and Gardens Real Estate CEO Sherry Chris leading Realogy’s Expansion Brands, which includes Better Homes and Gardens Real Estate and ERA Real Estate; and ERA Real Estate CEO Simon Chen becoming executive vice president of Product and Innovation for Realogy.
Next week, Schneider is delivering the keynote presentation at RISMedia’s Real Estate CEO Exchange in New York City, where he will address “Surviving the New Real Estate Landscape.”
Stay tuned to RISMedia for ongoing coverage.
Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at email@example.com.