RE/MAX Holdings, Inc. Fair Value Disclosure
10. Fair Value Measurements
Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering assumptions, the Company follows a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
| ● | Level 1: Quoted prices for identical instruments in active markets. |
| ● | Level 2: Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations, in which all significant inputs are observable in active markets. The fair value of the Company’s debt reflects a Level 2 measurement and was estimated based on quoted prices for the Company’s debt instruments in an inactive market. |
| ● | Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Level 3 liabilities that are measured at fair value on a recurring basis consist of the Company’s contingent consideration related to the acquisition of Motto. |
A summary of the Company’s liabilities measured at fair value on a recurring basis is as follows (in thousands):
As of December 31, 2025 | As of December 31, 2024 | |||||||||||||||||||||||
Fair Value | | Level 1 | | Level 2 | | Level 3 | | Fair Value | | Level 1 | | Level 2 | | Level 3 | ||||||||||
Liabilities - Contingent consideration (a) | $ | 1,275 | $ | — | $ | — | $ | 1,275 | $ | 2,175 | $ | — | $ | — | $ | 2,175 | ||||||||
| (a) | Recorded as a component of “Accounts payable”, “Accrued liabilities” and “Other liabilities, net of current portion” in the accompanying Consolidated Balance Sheets. |
The Company is required to pay additional purchase consideration totaling 8% of gross receipts collected by Motto each year (the “Revenue Share Year”) through September 30, 2026, with no limitation as to the maximum payout. The annual payment is required to be made within 120 days of the end of each Revenue Share Year. The fair value of the contingent purchase consideration represents the forecasted discounted cash payments that the Company expects to pay. Increases or decreases in the fair value of the contingent purchase consideration can result from changes in discount rates as well as the timing and amount of forecasted revenues. The forecasted revenue growth assumption that is most sensitive is the assumed franchise sales count for which the forecast assumes 30 franchise sales in the final Revenue Share Year. This assumption is based on historical sales and an assumption of growth over time. A 10% reduction in the number of franchise sales and a 1% change to the discount rate applied to the forecast would not substantially change the liability. As of December 31, 2025, the Company does not anticipate making any further cash payments for contingent consideration associated with the acquisition of Gadberry Group. The Company measures these liabilities each reporting period and recognizes changes in fair value, if any, in “Selling, operating and administrative expenses” in the accompanying Consolidated Statements of Income (Loss).
The table below presents a reconciliation of the contingent consideration (in thousands):
Total | |||
Balance at January 1, 2024 | $ | 2,760 | |
Fair value adjustments | (225) | ||
Cash payments | (360) | ||
Balance at January 1, 2025 | $ | 2,175 | |
Fair value adjustments | (109) | ||
Cash payments | (791) | ||
Balance at December 31, 2025 | $ | 1,275 | |
The Company assesses categorization of assets and liabilities by level at each measurement date, and transfers between levels are recognized on the actual date of the event or change in circumstances that caused the transfer. There were no transfers between Levels I, II and III during the year ended December 31, 2025.
The following table summarizes the carrying value and estimated fair value of the Senior Secured Credit Facility (in thousands):
December 31, 2025 | December 31, 2024 | |||||||||||
Carrying | | Fair Value | | Carrying | | Fair Value | ||||||
Senior Secured Credit Facility | $ | 436,751 | $ | 432,711 | $ | 440,843 | $ | 435,022 | ||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Feb 22, 2019 | |
| 2017 | Mar 15, 2018 | |
| 2016 | Feb 24, 2017 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.