Basis Of Presentation Basis of Presentation (Policies)

3 Months Ended

Mar. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Fair Value Measurement, Policy

The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value.

Level Input:	Input Definitions:
Level I	Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
Level II	Inputs other than quoted prices included in Level I that are observable for the asset or liability through corroboration with market data at the measurement date.
Level III	Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

The availability of observable inputs can vary from asset to asset and is affected by a wide variety of factors, including, for example, the type of asset, whether the asset is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level III. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy.  In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

The fair value of financial instruments is generally determined by reference to quoted market values. In cases where quoted market prices are not available, fair value is based on estimates using present value or other valuation techniques, as appropriate. The fair value of interest rate swaps is determined based upon a discounted cash flow approach.

The Company measures financial instruments at fair value on a recurring basis and recognizes transfers within the fair value hierarchy at the end of the fiscal quarter in which the change in circumstances that caused the transfer occurred.

The following table summarizes fair value measurements by level at March 31, 2020 for assets and liabilities measured at fair value on a recurring basis:

	Level I		Level II		Level III		Total
Deferred compensation plan assets (included in other non-current assets)	$	2	$	—	$	—	$	2
Interest rate swaps (included in other current and non-current liabilities)	—		96		—		96
Contingent consideration for acquisitions (included in accrued expenses and other current liabilities and other non-current liabilities)	—		—		5		5

The following table summarizes fair value measurements by level at December 31, 2019 for assets and liabilities measured at fair value on a recurring basis:

	Level I		Level II		Level III		Total
Deferred compensation plan assets (included in other non-current assets)	$	2	$	—	$	—	$	2
Interest rate swaps (included in other current and non-current liabilities)	—		47		—		47
Contingent consideration for acquisitions (included in accrued expenses and other current liabilities and other non-current liabilities)	—		—		4		4

The fair value of the Company’s contingent consideration for acquisitions is measured using a probability weighted-average discount rate to estimate future cash flows based upon the likelihood of achieving future operating results for individual acquisitions.  These assumptions are deemed to be unobservable inputs and as such the Company’s contingent consideration is classified within Level III of the valuation hierarchy. The Company reassesses the fair value of the contingent consideration liabilities on a quarterly basis.

The following table presents changes in Level III financial liabilities measured at fair value on a recurring basis:

	Level III
Fair value of contingent consideration at December 31, 2019	$	4
Additions: contingent consideration related to acquisitions completed during the period	1
Reductions: payments of contingent consideration	—
Changes in fair value (reflected in general and administrative expenses)	—
Fair value of contingent consideration at March 31, 2020	$	5

The following table summarizes the principal amount of the Company’s indebtedness compared to the estimated fair value, primarily determined by quoted market values, at:

	March 31, 2020				December 31, 2019
Debt	Principal Amount		Estimated Fair Value (a)		Principal Amount		Estimated Fair Value (a)
Senior Secured Credit Facility:
Revolving Credit Facility	$	755	$	755	$	190	$	190
Term Loan B	1,056		903		1,058		1,048
Term Loan A Facility:
Term Loan A	712		641		717		705
5.25% Senior Notes	550		519		550		557
4.875% Senior Notes	407		342		407		401
9.375% Senior Notes	550		459		550		572

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(a)The fair value of the Company's indebtedness is categorized as Level II.

Equity Method Investments, Policy

Equity Method Investments

At March 31, 2020 and December 31, 2019, the Company had various equity method investments aggregating $77 million and $69 million, respectively, which are recorded within other non-current assets on the accompanying Condensed Consolidated Balance Sheets. The investment balances at March 31, 2020 and December 31, 2019 included $69 million and $60 million, respectively, for the Company's investment in Guaranteed Rate Affinity, LLC ("Guaranteed Rate Affinity").

For the first quarter of 2020, the Company recorded equity earnings of $9 million at Realogy Title Group primarily related to earnings from the operations of Guaranteed Rate Affinity. For the first quarter of 2019, the Company recorded equity earnings of $1 million at Realogy Title Group primarily related to earnings from the operations of Guaranteed Rate Affinity.

The Company received $1 million in cash dividends from equity method investments during both the three months ended March 31, 2020 and 2019. The Company invested $2 million of cash into Guaranteed Rate Affinity during the three months ended March 31, 2019.

Income Tax, Policy

Income Taxes

The provision for income taxes was a benefit of $132 million and a benefit $32 million for the three months ended March 31, 2020 and 2019, respectively.

Derivatives, Policy

Derivative Instruments

The Company records derivatives and hedging activities on the balance sheet at their respective fair values. The Company enters into interest rate swaps to manage its exposure to changes in interest rates associated with its variable rate borrowings. As of March 31, 2020, the Company had interest rate swaps with an aggregate notional value of $1,600 million to offset the variability in cash flows resulting from the term loan facilities as follows:

Notional Value (in millions)	Commencement Date	Expiration Date
$600	August 2015	August 2020
$450	November 2017	November 2022
$400	August 2020	August 2025
$150	November 2022	November 2027

The swaps help to protect our outstanding variable rate borrowings from future interest rate volatility. The Company has not elected to utilize hedge accounting for these interest rate swaps; therefore, any change in fair value is recorded in the Condensed Consolidated Statements of Operations.

The fair value of derivative instruments was as follows:

Not Designated as Hedging Instruments	Balance Sheet Location	March 31, 2020	December 31, 2019
Interest rate swap contracts	Other current and non-current liabilities	96	47

The effect of derivative instruments on earnings was as follows:

Derivative Instruments Not Designated as Hedging Instruments	Location of Loss Recognized for Derivative Instruments	Loss Recognized on Derivatives
		Three Months Ended March 31,
		2020		2019
Interest rate swap contracts	Interest expense	$	51	$	14

Revenue [Policy Text Block]

Revenue

Revenue is recognized upon the transfer of control of promised services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those services in accordance with the revenue standard.  The Company's revenue is disaggregated by major revenue categories on our Condensed Consolidated Statements of Operations and further disaggregated by business segment as follows:

	Three Months Ended March 31,
	Realogy Franchise Group				Realogy Brokerage Group				Realogy Title Group				Corporate and Other				Total Company
	2020		2019		2020		2019		2020		2019		2020		2019		2020		2019
Gross commission income (a)	$	—	$	—	$	850	$	799	$	—	$	—	$	—	$	—	$	850	$	799
Service revenue (b)	13		16		5		2		133		111		—		—		151		129
Franchise fees (c)	127		123		—		—		—		—		(56)		(53)		71		70
Other (d)	28		40		14		15		4		3		(2)		(2)		44		56
Net revenues	$	168	$	179	$	869	$	816	$	137	$	114	$	(58)	$	(55)	$	1,116	$	1,054

______________

(a)Consists primarily of revenues related to gross commission income at Realogy Brokerage Group, which is recognized at a point in time at the closing of a homesale transaction.

(b)Service revenue primarily consists of title and escrow fees at Realogy Title Group, which are recognized at a point in time at the closing of a homesale transaction.

(c)Franchise fees at Realogy Franchise Group primarily include domestic royalties which are recognized at a point in time when the underlying franchisee revenue is earned (upon close of the homesale transaction).

(d)Other revenue is comprised of brand marketing funds received at Realogy Franchise Group from franchisees, third-party listing fees and other miscellaneous revenues across all of the business segments.

The following table shows the change in the Company's contract liabilities (deferred revenue) related to revenue contracts by reportable segment for the period:

	Beginning Balance at January 1, 2020		Additions during the period		Recognized as Revenue during the period		Ending Balance at March 31, 2020
Realogy Franchise Group:
Deferred area development fees (a)	$	48	$	—	$	(1)	$	47
Deferred brand marketing fund fees (b)	13		20		(19)		14
Other deferred income related to revenue contracts	11		8		(7)		12
Total Realogy Franchise Group	72		28		(27)		73
Realogy Brokerage Group:
Advanced commissions related to development business (c)	9		1		(1)		9
Other deferred income related to revenue contracts	4		1		(1)		4
Total Realogy Brokerage Group	13		2		(2)		13
Total	$	85	$	30	$	(29)	$	86

_______________

(a)The Company collects initial area development fees ("ADF") for international territory transactions, which are recorded as deferred revenue when received and recognized into franchise revenue over the average 25 year life of the related franchise agreement as

consideration for the right to access and benefit from Realogy’s brands. In the event an ADF agreement is terminated prior to the end of its term, the unamortized deferred revenue balance will be recognized into revenue immediately upon termination.

(b)Revenues recognized include intercompany marketing fees paid by Realogy Brokerage Group.

(c)New development closings generally have a development period of between 18 and 24 months from contracted date to closing.

Receivables, Trade and Other Accounts Receivable, Allowance for Doubtful Accounts, Policy

Allowance for Doubtful Accounts

The Company estimates the allowance necessary to provide for uncollectible accounts receivable. The estimate is based on historical experience, combined with a review of current conditions and forecasts of future losses, and includes specific accounts for which payment has become unlikely. The process by which the Company calculates the allowance begins in the individual business units where specific problem accounts are identified and reserved primarily based upon the age profile of the receivables and specific payment issues, combined with reasonable and supportable forecasts of future losses.

Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy

Supplemental Cash Flow Information

Significant non-cash transactions during the three months ended March 31, 2020 and 2019 included finance lease additions of $4 million and $5 million, respectively, which resulted in non-cash additions to property and equipment, net and other non-current liabilities.

New Accounting Pronouncements, Policy

Recently Adopted Accounting Pronouncements

The Company adopted the new accounting standard on Financial Instruments—Credit Losses (Topic 326) effective January 1, 2020. The new standard amends the guidance for measuring credit losses on certain financial instruments and financial assets, including trade receivables. The standard requires that companies recognize an allowance that reflects the current estimate of credit losses expected to be incurred over the life of the financial instrument. The valuation allowance for credit losses should be recognized and measured based on historical experience, current conditions and expectations of the future. The adoption of this guidance did not have an impact to the Company’s Condensed Consolidated Financial Statements upon adoption on January 1, 2020.

Recently Issued Accounting Pronouncements

The Company considers the applicability and impact of all Accounting Standards Updates ("ASUs"). Recently issued standards were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position or results of operations.