Thank you, Polly. Good morning, and welcome to Realogy's Third Quarter 2012 Earnings Conference Call.

On the call with me today are Realogy's Chairman and CEO, Richard Smith; and Chief Financial Officer, Tony Hull.

I would like to call your attention to 3 items. First, you should have access to a copy of our financial results press release and our Form 10-Q for the quarter ended September 30, 2012, which we have filed with the Securities and Exchange Commission.

Both documents are available on the Investor Information section of our website, as well as a copy of today's webcast slides.

Second, the company will be making statements about its future results and other forward-looking statements during this call. Statements about future results made during this call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These statements are based on current expectations and the current economic environment. Forward-looking statements and projections are inherently subject to significant economic, competitive and other uncertainties and contingencies, many of which are beyond the control of management.

The company cautions that these statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements.

For those who listen to the rebroadcast of this presentation, we remind you that the remarks are made in are as of today, November 2, and have not been updated subsequent to the initial earnings call. Important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements and projections are set forth under the headings, Forward-Looking Statements, Risk Factors and Management's Discussion and Analysis of the Financial Condition and Results of Operation in our filings with the Securities and Exchange Commission, including our financial prospectus filed with the SEC on October 11, 2012, our annual report on Form 10-K for the year ended December 31, 2011, as amended; and our quarterly reports on Form 10-Q for the quarters ended June 30, 2012, as amended and September 30, 2012, and in other periodic reports filed from time to time.

Third, we will be referring to certain non-GAAP financial measures during the call. Our press release contains definitions of these terms, a reconciliation of these terms to their most comparable GAAP measure and a discussion of why we believe these non-GAAP financial measures are useful to our investors.

For those unfamiliar with industry data, we use the National Association of Realtors and Fannie Mae as benchmarks of the direction of the residential housing market. We believe changes in Realogy's home sale statistics will continue to vary from those reported by NAR, because they use survey data as the basis of their historical reports, where we use data based on our actual reported results.

Let me briefly review the headlines from our release issued yesterday afternoon regarding Realogy's third quarter 2012 results. Specifically for the quarter ended September 30, 2012, we reported revenue of $1.3 billion, an 11% year-over-year increase; EBITDA of $213 million, a 14% increase from third quarter 2011; net loss attributable to the company of $34 million, which is largely due to $187 million of interest expense and $42 million of depreciation and amortization.

Now I will turn the call over to our Chairman and CEO, Richard Smith.

Thank you, Alicia, and good morning. Thank you for joining our call as we report our third quarter performance, as well as our performance for the first 9 months of this year.

Before we get started, a hurricane update is in order. Our Parsippany, New Jersey headquarters is without primary power, but otherwise undamaged and operating under backup power and we're informed power will be restored in the very near future.

Cartus, headquartered in Danburry, Connecticut, is fully operational as is Title Resource Group, TRG, which is headquartered in Mount Laurel, New Jersey. And out of the 718 NRT brokerage offices, only 60 were located in the path of the storm generally, and are without power, but otherwise undamaged.

It will be fully operational as soon as the respective municipalities restore power, and majority of the affected NRT or company-owned offices are not in the New Jersey, New York coastal communities, where much of the hurricane damage occurred, and early reports from our franchise offices in the affected areas are similar to the reports from our NRT offices, power loss, but little to no damage. As Tony will point out in his comments, we expect the financial impact of the storm to be short term, mostly timing related and ultimately, not material.

We extend our prayers and best wishes to those affected by the hurricane.

Let me begin by acknowledging that this is a momentous occasion for Realogy, as we report for the first time, following our October IPO, which year-to-date, was the third largest IPO in the United States. We began positioning our company for a possible initial public offering in part with our refinancing transaction in early 2011 and the issuance of convertible debt, which combined with extending a number of our maturities by several years, laid a strong foundation for our IPO and our stated objective of deleveraging the balance sheet.

Simultaneous with the IPO, $1.9 billion of convertible debt converted into equity, further with the sale of 46 million shares and proceeds of approximately $1.2 billion. We are paying down a considerable amount of debt.

Most notably, we used a portion of the net proceeds to prepay all of our outstanding 13.5%, $650 million second lien term loans that were scheduled to mature on October 2017. And as Tony will discuss, with the remaining IPO proceeds, we will continue to pay down debt, effectively reducing our debt by $2.9 billion, a 40% reduction from our September 30, 2012 levels.

Effectively, Realogy's annualized interest expense will decline by approximately $338 million, which includes the convertible notes annualized interest expense of $232 million. In aggregate, this represents the elimination of approximately 1/2 of our interest expense.

Although we do not have any significant debt maturities until 2016, our primary balance sheet objective is to continue to reduce debt.

Now onto the housing market. First and foremost, the early stage housing market recovery that we referenced in the first 2 quarters of the year continued into the third quarter.

Once again, we experienced strong year-over-year gains in homesale units and average homesale price, as the housing market continued its recovery. Our revenue and reported EBITDA were strong in the third quarter.

Revenue was up 11% to $1.3 billion compared to the same period of last year, and the EBITDA increased 14% to $213 million for the quarter. Our EBITDA for the first 3 quarters of this year was greater than our EBITDA for the full year of 2011.

Adjusted EBITDA for the first 9 months of 2012 was $502 million, up 10% over the same period in 2011.

During the third quarter of this year, Realogy's company-wide transaction volumes, that is average homesale price times the number of homesale transaction sides, increased 14% compared to the third quarter of last year. Our performance is in line with the National Association of Realtors, which reported that third quarter national existing homesale transaction volume increased 16% on a national basis compared to the third quarter of last year.

Now let's review the operating highlights for each of our business units and in doing that, I'll take you to Slide 5 in the schedule. For the quarter, the Realogy Franchise Group, which manages our franchise brands, generated new franchise sales, totaling $40 million in gross commission income or GCI and as forecasted 2012 sales are expected to be in the range of $200 million to $250 million in GCI.

With respect to international franchise sales growth for the quarter, Coldwell Banker signed a new master franchise agreement for Spain, and Sotheby's International Realty signed a long-term franchise agreement to develop offices in Australia. CENTURY 21 announced the renewal of its long-term master franchise agreement in France.

CENTURY 21 France began operating in 1987, and today has grown to approximately 870 offices and 6,000 sales professionals. Also during the third quarter, Sotheby International Realty strengthened its luxury market presence in the Caribbean and Europe, with the opening of offices in Puerto Rico, Lithuania and Coldwell Banker opened its first offices in Brazil.

Website traffic for all of our branches, up materially year-over-year, and our franchisee receivables or day sales outstanding are 16 days, a strong indication as to the improving financial condition of our franchisees, and our franchisee retention rate continues to be about 97%.

NRT, which operates our company-owned offices, reported strong operating quarter for the 12-month period, ending with the third quarter. Management recruited new sales associates, representing more than $69 million in annualized gross commission income, and retained approximately 94% of the production of its first and second quartile sales associates, the top producing segments of its 41,800 independent sales associates.

NRT management continues to have active conversations with regional brokerage companies regarding potential acquisitions, while continuing to tuck-in smaller real estate companies into its existing brokerage footprint. Year-to-date, NRT has acquired approximately $14.5 million of GCI.

Moving onto Slide 6. During the third quarter, initiations at Cartus, our employee relocation company, increased 3% over the prior year while its broker referrals were up 8% year-over-year.

Through the first 9 months of the year, Cartus initiations were up 5%, and broker referrals were up 9%. Cartus signed 29 new clients in the third quarter and expanded services with 106 of its existing clients.

Year-to-date, Cartus has added 93 new clients and expanded services with nearly 300 clients.

In our Settlement Services segment, Title Resource Group's refinanced title and closing units were up 70% during the third quarter, bolstered by the expansion of existing client relationships and the continued historically low mortgage rate environment. Purchase title and closing units were up 11%, which tracks the NRT homesale units for the quarter.

The strong gains were partially offset by a 5% decrease in its average fee per closing unit, reflecting the shift to refinance units, which are about 1/2 the price of a purchase unit.

For the first 9 months of 2012, TRG's refinanced units are up 53%, and purchase units were up 11%, which again were modestly offset by a 6% decline in its average price per closing unit. TRG's underwriter, Title Resources Guaranty Company, reported a 27% increase in net premiums as compared to the third quarter of last year.

TRGC's underwriting claims experience for the third quarter was approximately 1.3%, which continues to outperform the industry average loss ratio of approximately 7%.

Now let's look at the current operating environment. NAR reported in October that the inventory of existing homes for sale through the end of September was 2.3 million, which has trended down from a record 4 million homes in July 2007, and is 20% below last September's inventory levels.

The September 2012 inventory level represents a 5.9 month supply of the current sales pace. In our view, inventory levels will likely remain low until the 2013 spring selling season.

The NAR existing homesales report issued in mid-October indicated that September homesales were up 11% year-over-year from September of last year. In addition, the national average sales price was up 9% on a year-over-year basis, unadjusted for seasonality.

In our view, the continued growth in the national average sales price strongly supports the forecast of recovery. When inventory levels decline, demand outstrips supply, and prices rise in response.

More sellers realizing that they can get their asking price move back into the market as sellers.

Shadow inventory is the phrase used by the industry to identify homes in various stages of default, but not yet available to the market as listed inventory. While we continue to monitor the impact of shadow inventory and prices, we do not believe that it will have a significant impact on our business, as the size of the shadow inventory has declined to 2008 levels, the majority of which is concentrated in select markets.

Should the shadow inventory be released more quickly, we believe a potential increase in unit sales could offset in whole or in part the potential adverse impact on home prices in those regions.

In its October 2012 report, Core Logic, a leading provider of housing data, reported that completed foreclosures since September were down 50% nationally since the peak in September of 2010 and 22% less in the beginning of this year. According to the National Association of Realtors, the percentage of distressed properties declined to 24% of sales in September of this year, down from 30% of sales in September of last year.

on a full-year basis in 2012, NAR anticipates a 9% year-over-year increase in existing homesale units and a 6% increase in median homesale price. The NAR 2013 forecast calls for a 9% increase in existing homesales to 5.05 million units compared to 4.64 million in 2012, and NAR's 2013 forecast calls for a 5% increase in median existing home price.

Fannie Mae, which is historically better at forecasting down cycles and up cycles, is currently forecasting a 14% year-over-year gain on a combined sales volume basis in 2012 by virtue of an 8% increase in homesales and a 5% increase in the median homesale price. For 2013, Fannie Mae is forecasting a 4% increase in combined sales volume comprised of a 3% increase in units and a 1% improvement in median sales price versus 2012.

Other positive housing market trends include Freddie Mac's primary mortgage market survey, showed mortgage rates averaging 3.39% as of November 1, just above the all-time record of 3.36%. Last year, at this time, the 30-year fixed rate mortgage averaged 4%.

The NAR monthly Housing Affordability Index for August of this year was 1.85, and has remained at or above 1.80 for the past 14 months. At current levels, the affordability index means that the average family has 185% of the income necessary to purchase a home at the median sales price of $188,700, with a 20% down payment.

Core Logic estimated in its second quarter report released in September that when home prices rise by 9%, approximately 3.2 million homes will move back into positive equity. This represents 30% of the 10.8 million mortgages currently in negative equity.

On October 2, Core Logic also released its home price index, in which it reported that home prices nationwide rose 5% in August of this year compared to August of last year. This marks the sixth consecutive increase in home prices nationally on both the year-over-year and month-over-month basis.

Core Logic's data shows that all but 6 days are experiencing price gains. This drops to all but 3 states when distressed sales are excluded from the analysis.

In addition, the Core Logic pending home price indicates that September 2012 home prices, including distressed sales, are expected to rise by 6% on a year-over-year basis from September of last year, excluding distressed sales and increased by 5% overall when including distressed sales.

In less than 2 weeks ago, the U.S. Commerce department announced that September housing starts increased 15% from August and housing permits were up 12%.

This is good news for the homebuilders along with the entire housing industry. Furthermore, these strong gains in housing starts and permits offer yet again another signal that the housing recovery is underway.

With that as a backdrop, it's not surprising that in October, the homebuilders confidence index rose for the sixth consecutive month and is at its highest level since June 2006. For these and many other reasons, we believe that in spite of approximately an 8% unemployment and 2% GDP growth, the data is increasingly clear that the housing market is in the early stages of a recovery.

And before I conclude my comments, last but certainly not least, we are very pleased to announce that Michael Williams, former Chief Executive Officer of Fannie Mae from 2009 to 2012, has joined our board as an Independent Director, actually effective as of yesterday. Mike's more than 21 years in the housing industry has expert knowledge of the mortgage finance industry, and his very practical regulatory experience will add substantial value to the knowledge of our board.

We intend to add a third independent Director to our board in the very near future. And with that, I'll turn this over to Tony.

Tony?

Thank you, Richard. Before I discuss the results for the third quarter and the 9 months of 2012 in detail, I have a few brief comments on Realogy's IPO sources on uses, which are shown on Slide 8.

As you can see, we raised $1.242 billion in the IPO, with those proceeds and other IPO-related transactions. By the middle of November, we will reduce our corporate debt level by about 40% or $2.9 billion.

Just after the IPO, we repaid $650 million of 13.5% second lien debt, plus accrued interest, and $50 million of LC-backed other indebtedness. We also sent out redemption notices for $64 million of 10.5% bonds and $41 million of 11% bonds.

This debt will be redeemed on November 16 for $109 million, as shown on the slide. The slide also details the fees and expenses related to the offering and the payment to the significant holders of convertible debt that was made as part of the IPO in lieu of accrued and unpaid interest on our notes.

After these payment and redemptions, cash and cash equivalents will increase by $220 million, as shown on the bottom of the slide. Currently, all but $116 million of our $2.1 billion of 11% converts have converted into equity, and we will know whether we will redeem any remaining at 90% of par in the next 2 weeks or if they too will convert into equity.

In any event, all convertible debt will be eliminated by mid-November. To the extent any of the converts are redeemed, it will reduce the cash and cash equivalents line.

Realogy pro forma annual interest expense will be cut by approximately 48% or $338 million on a 9.30 LTM basis, with an average cost of debt of about 7.5% after the anticipated debt pay downs. In addition, to these repayments, we intend to redeem $190 million or 12 3/8% percent notes at par in the second quarter of 2013, as well as $10 million of 13 3/8% extended maturity notes.

We will continue to analyze and optimize our capital structure using much of our free cash flow to retire debt with the ultimate goal of becoming investment-grade as quickly as possible. Total shares outstanding will be 144.8 million on a primary basis, assuming all convert note holders convert.

We will update you on that number as soon as we get the results of the convert redemption process.

Turning to Slide 9. Realogy's Q3 EBITDA was $213 million, a $26 million increase from Q3 2011 results.

Year-to-date EBITDA was $446 million, an $83 million or 23% increase from 2011 results. The main driver of the EBITDA increase was that combined sides and price of NRT and RFG increased 12% on a company-wide basis during that period.

Applying our EBITDA sensitivity of 1 percentage point change in sides or price equaling $11 million of EBITDA on a full-year basis or approximately $8.25 million on a 9-month basis, we would expect to see a $99 million year-over-year EBITDA improvement attributable to the sides and price increase alone, if all else remains constant.

There are 2 items that we're not constant, however, in the year-to-date results. First, we recorded both a previously instituted retention plan chart -- charge of $26 million, as well as the normal annual 2012 bonus plan in the first 9 months of the year.

Realogy did not have an annual bonus plans in 2010 or 2011, but implement the retention plan in November 2010, which was expensed through September 2012. The last payment under that plan was paid in the beginning October, and the charge for this retention plan will not recur in 2013.

Second, RFG incurred a nonrecurring legal expense of $11 million due to the settlement of a legal matter and related legal expenses. The $99 million expected improvement should be adjusted for these expense items, offset by net gains of $21 million across the rest of the businesses.

This results in a reported EBITDA increase of $83 million for the 9 months. Year-to-date, adjusted EBITDA was $502 million.

That's for the first 9 months of 2012, and that's after the $11 million expense incurred to defend and settle the litigation referred to earlier.

overall revenue was up 11% from Q3 2011; gross commission income totaled $939 million in NRT, an increase of 13% from third quarter 2011; service revenues, principally from Cartus and Title Resource Group increased to $231 million, up 9% from 2011; and Realogy Franchise Group's third-party franchise fees increased $3 million to $76 million for the quarter. Other revenue decreased $5 million to $35 million.

Lower NRT REO fees, RFG marketing and RFG international revenues were the largest components of this revenue decline. The decline REO fees was driven by reduced inventory being made available by our client or by REO clients.

RFG marketing revenue is collected from our franchisees and an equal amount is spent during the year on national advertising campaigns so it is EBITDA neutral.

On Slide 11, we compare expenses during the third quarter of '12 versus 2011. Total commission and other related costs of $633 million increased $86 million or 16% year-over-year, corresponding to the $108 million increase in gross commission income.

The commission expense is exclusively an NRT variable cost, which is paid to our 41,800 independent sales associates. Operating expenses of $336 million increased 4% year-over-year, primarily due to greater TRG refinance activity.

Marketing cost decreased by $1 million. General and administrative cost increased $12 million, primarily due to the incremental compensation expense we discussed above.

overall year-to-date revenue was up 9% versus 2011. Gross commission income totaled $2.5 billion NRT, an increase of 11% from the first 9 months of 2011.

Service revenues increased to $611 million, up 8% from 2011, and Realogy Franchise Group's third-party franchise fees increased $12 million to $206 million for the first 9 months.

On Slide 13, we compare expenses during the first 9 months of 2012 versus 2011. Total commission and other related costs of $1.7 billion increased $199 million or 13% year-over-year.

Operating expenses of $979 million increased 2% year-over-year, primarily due to greater refinance activity at TRG. Marketing costs increased by $5 million due to greater national advertising spend, which is primarily funded by franchisees, as well as greater NRT marketing expense due to increased transaction volume.

General and administrative costs increased $41 million primarily due to the incremental compensation expense discussed above.

Next, I will discuss our key revenue drivers from Slide 14. In Q3 2012, RFG homesale sides increased 5% year-over-year and average homesale price increased 9% to approximately $219,000.

RFG's overall volume increase was adversely impacted by 1 less business day in Q3 of 2012 compared to Q3 of 2011. Each business day change could increase or decrease year-over-year homesale sides by about 2 percentage points in a quarter, assuming all else remains equal.

Compared to NAR, RFG's transaction volumes or sides times price, increase of 14%, came within 2% of NAR's increase of 16% in the quarter. We believe the difference is primarily due to the fact that NAR reports survey data, while we report on actual closed homesale sides based on our national footprint.

NRT homesale sides increased 12% year-over-year in Q3 compared to 2011, and average homesale price increased 2% to approximately $442,000. Again, the loss of the business day in the most recent quarter impacted sides growth at NRT by about 2 percentage points.

Overall, we believe that the combined Realogy average sale price increases of 7% in the quarter was driven by lower levels of home inventory in many markets, greater overall demand than we saw last year and fewer distressed sales. The percentage of distressed sales decreased from approximately 30% in Q3 2011 to 23% in Q3 2012, according to NAR data.

Moving from an overall perspective, here's a look at select regional NRT performance data for the 3 months ended September 30, 2012, compared to the same period in 2011. NRT's best-performing region was again, the Midwest in Q3, which had a 20% increase in homesale sides, along with an average price increase of 4%.

In particular, Chicago performed well with a 28% increase in homesale sides, offset by an average price decrease of 1%. New England region sides increased 13%, and average price was up 1%.

The New York tristate area experienced the most pricing pressure, with an average price decline of 5% during the quarter, which was more than offset by sides increases of 14%.

Florida had a 7% increase in sides and a 3% increase in price. NRT's Southern California operations strengthened compared to last year, and reported a 12% year-over-year increase in homesale sides, and an 8% increase in average price while Northern California enjoy a 14% increase in sides, along with a 5% increase in average price.

Moving on, NRT's average broker commission rate for Q3 2012 was up slightly at 2.50% year-over-year, while RFG's average broker commission rate declined 3 basis points to 2.53%. Year-to-date, RFG's commission rate is down 1 basis point, as would be expected given its franchisees improving average sales price trend.

Also, Realogy's franchise Group's net effective royalty rate declined 23 basis points to 4.65% compared to Q3 2011, as its larger affiliates continued to achieve incentives for higher volume levels. RFG's top 250 companies represented 58% of total franchisee GCI in Q3 2012 versus 56% in Q3 2011.

Also, this year, our top 250 brokers have seen an increase in their GCI of 18% compared to the remainder of our franchisees who were up 6%. Cartus relocation initiations for Q3 increased 3% and referrals increased 8%.

The increase in initiations and referrals was driven primarily by an increase in affinity business.

At TRG, Q3 2012 purchase unit volume increased 11%, which was consistent with the NRT unit sales gains. TRG's refinanced title and closing units increased 70% in Q3 2012 compared to 2011, and TRG's average fee for closing decreased by 5% in Q3 2012 due to the increase in refinance volume in the overall mix of business.

Slide 15 provides a year-to-date look at RFG and NRT drivers. In the first 9 months of 2012, RFG transaction volume improved 13%, with homesale sides increasing 7% year-over-year, and average home sale price increasing 6%.

NRT transaction volume year-to-date improved 12%, with homesale sides increasing 11% year-to-date -- year-over-year and compared to 2011, and its average homesale price was relatively flat due to the mix of business shift to lower-priced regions.

With regard to what we are seeing so far for the fourth quarter of 2012, first, let's look at October. Preliminary closed homesale sides combined for RFG and NRT are expected to increase approximately 19% in October versus 2011.

This is impacted by 2 extra business days in October 2012 compared to October 2011. We also expect average sales price will increase 10% in October.

You shouldn't read too much into this overall 29% increase in volume because of the 2 extra business days in October, and the impact of a gain or loss of a day in a month is much more significant than for a quarter. Although it is too early to know the effect of Hurricane Sandy on the fourth quarter, we expect that most of the impacts will be a delay in the timing of closing of transactions from October to November.

Historically, significant storms have been immaterial to our financial results.

Based on the October results, as well as what we are seeing in our pending contracts, we expect to see between 9% and 10% increases in transaction sides year-over-year in the fourth quarter for RFG and NRT combined, and average price increases of between 6% and 7% on a combined RFG and NRT basis. As a result, transaction volume is expected to be up 16% to 18% in the fourth quarter.

One trend we are seeing in the fourth quarter that is contributing to the forecasted sales volume levels is more high-end activity in NRT. In the fourth quarter of the last year -- fourth quarter of last year, high-end buyers were not very active in the market.

This quarter, we are seeing more relative activity in NRT's high-end markets, particularly the West Coast. We expect this to positively impact NRT's average sale price in the current quarter.

Let me spend a minute on the impact business days have on our revenue drivers, assuming all else remains equal. On Slide 16, we show our combined 2012 RFG and NRT transaction volume by quarter, as reported on the actual number of business days in 2012 in red, and adjusted for the same number of business days we had by quarter in 2011 in blue.

Looking at the first quarter, you can see that we gained a business day in 2012. There were 63 days in Q1 2012 due to the leap year compared to 62 in 2011.

As a result, we reported a volume increase of 6% in Q1. Adjusting out the extra business day, volume in the quarter would have been up 5%.

In the second quarter, the number of business days were the same in 2012 and 2011, thus, there is no adjustment needed to the 15% volume increase we reported. In the third quarter, as mentioned above, we've lost a business day, 63 days in 2012 compared to 64 in 2011.

Accordingly, on a same-day basis, the combined transaction volume, homesale sides times average sales, price would have been up approximately 16% rather than the reported 14% increase for the quarter compared to 2011. This is shown in the blue, same business day adjusted bar for the third quarter.

We expect to get that 2% back in Q4 as it has 1 extra business day in 2012, 64 days compared to 63 days last year. So as mentioned, we expect transaction volume, sides times price, to increase 16% to 18% in Q4 compared to last year on an actual days basis, and 2% of that growth is recapturing the volume we lost in Q3.

On a same-day basis, we expect Q4 will be up 14% to 16%.

Now let's look at revenue and EBITDA by business unit for Q3 2012 as shown on Slide 17. Total revenue at RFG was $161 million in Q3 2012 compared to $151 million in 2011.

The 7% revenue increase was due to the 5% increase in homesale sides and a 9% increase in average homesale price, partially offset by the decrease in net effective royalty rate and lower commission rate discussed earlier. Marketing revenue and related expense decreased $1 million and $2 million, respectively, primarily due to lower advertising spend during the third quarter of 2012 compared to 2011.

EBITDA at RFG was $107 million in Q3 2012 compared with $92 million in 2011. The EBITDA increase was due to the $10 million increase in revenue, a $3 million reduction in bad debt expense, a $2 million decrease in legal expenses, and a net $1 million increase to EBITDA due to reduced marketing spend.

These were partially offset by a $3 million increase in employee-related expenses due to the compensation accruals mentioned above. Revenue at NRT increased $107 million or 13% due to a 12% increase in homesale transaction sides and a 2% increase in average sales price.

NRT EBITDA in Q3 2012 was $67 million. This was $20 million better than a year ago.

The EBITDA improvement was due to the revenue increase, along with a $9 million increase in PHH home loans venture earnings and a $6 million decrease in operating expenses. These improvements were partially offset by $86 million of higher commission, as a result of higher gross commission income, an increase of $6 million in intercompany royalties paid over to RFG, and an $8 million increase in employee-related costs primarily due to the compensation accruals mentioned above.

At Cartus, EBITDA was $45 million in Q3 2012, down from $50 million in Q3 2011. Revenue declined $2 million, which consisted of a $2 million decrease in financial income due to higher securitization costs and a $2 million reduction in at-risk revenue due to expected lower volume.

These were partially offset by higher referral revenue of $1 million.

The EBITDA decline was primarily due to $2 million of foreign currency exchange rate losses in 2012 compared with gains in 2011, along with $3 million in higher employee-related costs due to the compensation accruals mentioned above.

Over the past several weeks, expectations for Cartus' Q4 results have come down modestly. While Q4 2012 EBITDA results should outperform Q4 of 2011, Cartus experienced -- experiencing lower than anticipated volumes.

Many of its corporate clients are reducing employee moves, given economic uncertainty these clients are seeing on the near-term horizon. We believe any shortfall will be more than offset by strong results we are seeing in the other business units.

At TRG, revenue increased $19 million or 20% as a result of a $6 million increase in resale volume, a $5 million increase in underwriter revenue and an $8 million increase in refinancing volume. EBITDA increased $4 million due to the revenue increases, partially offset by a $14 million increase in variable operating costs from increased volume and $2 million of higher employee-related costs due to the compensation accruals mentioned above.

Interest expense increased $28 million in Q3 2012 compared to Q3 2011 because of the incremental interest related to the note offering in January 2012, as well as nonrecurring financing costs incurred, providing us with financial flexibility in the event the IPO did not proceed as planned.

Turning to the balance sheet on Slide 18, we extended -- we ended the quarter with a cash balance of $141 million, which includes $89 million of readily available cash and $52 million of statutory cash required for our title business.

Turning to the liability side of our balance sheet on Slide 19. At September 30, 2012, the amount borrowed under our non-recourse Apple Ridge securitization, together with amounts borrowed under our U.K.

securitization, was $310 million. These borrowings were supported exclusively by relocation assets of $395 million shown in the current asset section of the balance sheet.

The current portion of debt on the balance sheet was $120 million at September 30. This consisted a $20 million of borrowings under our revolver -- our revolving credit facility, and $100 million of other debt that is backed by letters of credit.

On October 31, our revolver balance was $65 million. Subsequent to the transaction, $50 million of the LC-backed other indebtedness was repaid, and we anticipate repaying the remaining $50 million before year end.

1, which is within the required 4.75:1 limit. We expect to remain in compliance with our covenant for the next 12 months.

I would like to make note of some changes, going forward, in the adjusted EBITDA adjustments. First, the Apollo Management fee adjustment will go away due to the termination of the contract in conjunction with the IPO.

Also, the adjustment relating to retention expense in the business optimization line will decrease since the last payment under the plan was made in October.

Let me remind you of certain nonrecurring IPO related charges anticipated in the fourth quarter that were fully described in the pro forma financial section of the company's IPO prospectus.

First, a fee of $105 million was paid to the significant holders at the IPO closing in lieu of the fully accrued and unpaid interest such holders would have otherwise received on October 15, 2012. This will be an expense in the fourth quarter in the statement of operations and not included in interest expense.

The statement of operations in the fourth quarter will also reflect a noncash charge of between $250 million and $280 million due to the issuance of the additional 0.125 shares for each share of common stock of the company upon conversion of convertible notes held by the significant holders and holders of up to an additional $130 million of convertible notes.

This was in return for agreeing to lock up all the shares for 180 days following the date of the IPO. The issuance of these additional shares and the related charge will have no impact to shareholders' equity.

The additional shares issued are included in the $144.8 million total primary shares outstanding noted above, and that assumes that all the remaining holders of the convertible notes convert their holdings into common stock prior to November 16 redemption day.

Finally, the termination of the Apollo Management agreement that occurred upon consummation of the IPO result in a $40 million expense to be reflected in the fourth quarter statement of operations. The termination payment will be made in January 2013, of which $15 million will be paid in cash and $25 million will be paid in common stock.

The termination agreement also waived the $15 million Apollo Management fee for 2012. Accordingly, $11 million accrued in the first 9 months of 2012 for such management fee will be reversed in the fourth quarter, and there will be no accrual for the remainder of the 2012 annual fee in the fourth quarter.

In conclusion, Realogy's balance sheet was materially improved by the recent IPO. With almost $3 billion of debt repaid or converted in conjunction with the IPO, Realogy has substantially reduced its corporate debt, which will result in an annualized interest expense reduction of approximately 50%.

As shown on Slide 21, based on the visibility we have into the coming months, we anticipate Q4 will outperform the revenue driver trends you saw in the first 9 months of 2012 at RFG, NRT and TRG. Specifically, at RFG and NRT, based on our pending contracts with those 2 business units, combined, we expect to see approximately a 9% to 10% increase in transaction sides year-over-year in the fourth quarter and average sales price increase of approximately 6% to 7% also on a combined basis.

I'll turn it over to the -- I'm going to turn it over to the operator for Q&A.

Congratulations on the completion of the IPO. It's been a long road.

Coming back to the operating expense line, if one were to annualize that for the first 3 quarters and then remove around $12 million of the management fee, that's -- you guys have said won't be there next year, and about 75% of the $31 million of incremental employee bonus-related costs, in other words, excluding the portion in G&A, that implies about a $318 million quarterly run rate. Is that the right way to think about that?

It sounds right. I'd have to run the numbers more carefully, but it sounds like you're making -- you also have to take -- you're just looking that the third quarter?

No, I'm looking at the first 3 quarters that...

You also have to add -- you'd also have to adjust for the $11 million of the Larsen or the litigation settlement.

Okay. And then, I guess, for my second question, obviously, you guys said in your 10-Q that you're looking at possible refinancing transactions.

When you approach that, how do you look at it in relation to the bank debt and the 11.5% notes?

I think, generally, we're going to look at refinancing opportunities to lower our overall cost of debt and minimize our cash outlay so nothing specific on that yet. We sort of told you significant part of our plans for 2013 so that's about where we are right now.

So Tony, you kind of talked a little bit to some of the points around that rule of thumb about $11 million of EBITDA for every point of growth that you use as a rule of thumb, and maybe some of the comp and the other stuff getting in the way there, but can you just maybe talk to that a bit more in terms of when that sort of rule of thumb really takes effect, like does that really work for us in '13? Is it a little bit higher?

Because you don't have those comp in other items or how should we think about that?

Well, the way that is calculated is we take -- I'm thinking back to the roadshow. We take the gross profit from NRT and RFG in 2011, basically, which was $1.1 billion and then we take 1% of that, and that gets us to our $11 million per point.

So that number will change when we have the full-year 2012 results. It will -- it can change in '13 too, but the bonus issues and all that things don't have anything to do with it.

It's really just purely -- everything else is excluded from that calculation. It's really just looking at the gross profit at the point in time that we generate from volume at NRT and RFG and taking 1% of that.

So that happens to be $11 million -- that happen to be $11 million in 2011. And when we report year-end if that changes for '12 when we report that, and it should go.

As the market improves, that sensitivity should go up. I think it was as high as like $18 million back in 2005 per point, but that's kind of -- $11 million is kind of the current point in time number.

Okay. Got it.

And then just -- I know that for you, Tony, on the retention bonus plan burns off, but now you're a public company, you have things like stock option and executive comp plans and so forth. Can you just give us a sense as to what that might look like in terms of the unallocated corporate G&A on a go-forward basis?

I think in the Q, we said it was about $2.5 million per quarter of expense going forward.

Additional versus where you've been running?

Right.

Okay. And then Richard, just a couple items.

2012 is shaking out to be very nice pop in growth. If the macro backdrop just stays where it is and we just model along, how do you think that shakes out as you look into 2013?

Does the comp get pretty tough or can you sustain this level of growth if we don't get a material macro improvement?

Well, we're macro-driven. We'll pick up a couple of points through our organic growth, franchise sales, tuck-in acquisitions.

We'll never be able to outperform the macro, but listen, we don't anticipate that, and we think the NAR forecast is based on sound judgment and data, and we think Fannie is clearly wrong, as they traditionally are this time of the year. So we feel pretty good about what NAR is forecasting for the year.

So listen, our expenses are not -- they're manageable. As you all know, we do a very good job of that.

The organic growth will continue to add franchise sales, will continue to do tuck-in acquisitions, will continue to recruit new clients to Cartus. We'll pick up more business at TRG through the REO business.

I'm very, very bullish on 2013.

Okay. And then just last one, a little bit more specific to the Midwest.

It's been a big contributor to growth, given the relative to the road to the affordability there. Is that a region that you think can hit a tough comp just given the balance there?

Or do you think that has some legs?

No, I think the good news is we're off a low base. So we've got long ways to go both on units and price.

I think what's remarkable is that all this is -- I've said in our times and now you've heard me say this. All this is occurring in spite of high unemployment and in spite of low GDP growth.

So with just a slight uptick and improvement in both GDP and/or the unemployment number, I think we're going to see even more growth. I mean, we're -- I am -- I'm very, very encouraged by the growth that we're seeing in spite of those macro issues.

So with the Midwest, in particular, never really saw the price volatility because it's a pretty stable market for the most part. It doesn't see the swing in units or price so that we're seeing that kind of unit growth is remarkable.

I think the coast are going to start contributing in a much bigger way in terms of price in the near-term because they're again working off a very low base. So we're pretty bullish on all counts.

I think, if you want to pick on a market, you can pick on Florida, which -- Florida sort of adjusted while no one was paying attention. So unit growth was fairly significant.

Price is going to follow at some point. So we're -- we're very bullish on all counts.

We think there's a lot of upside.

It's John, filling in for Steve today. Since you said that high-end activity in NRT is starting to pick up, should we expect in '13 NRT price growth to track more closely to RFG -- to the RFG price growth?

Because it's now for like the last 2 years has been an underperformer relative to RFG.

Yes, just remember, NRT's price is twice the national average, so that's to be expected, but we're seeing pretty significant price gains in NRT, and we think that's going to continue. Though, again, working off of -- even though they're twice the national average, the high-end was beaten up pretty bad in the downturn.

So the high-end, as inventory levels increase, you're going to see price rebound at the high-end. So we certainly believe that it will start participating at a higher level, perhaps even higher than RFG as their markets recover.

Got it. And then just turning to the average broker commission and effective royalty rate in RFG.

The effective royalty rates now basically at the bottom of the range that you've guided. So I was wondering if you can maybe give a little more color on how you view that looking out to '13?

And then for the broker commission rate, what was the cause for the 3 basis point decline?

Well, as we've stated, it's -- it's mix of business, and it's really -- it continues to be more of the top producing agents who're doing more of the business this year. So that's putting -- 15% of our franchisees are eligible for volume discounts and more of the top brokers who are eligible for that are doing more of the business, thereby increased to 18% this year versus 6% for the rest of their franchisees.

So what's going to happen -- what we've seen in previous cycles happens is, next year, maybe they'll be up 10% and the other franchisee, which will be up 15%. I'm just picking numbers out of the air.

So if that happens, the average broker commission rate, as it has in previous cycles, the average broker commission rate will start to go back up towards 5%. At the peak in 2005, the average broker commission rate was like 5.10% or 5.20%.

So it sort of -- as the market improves and the small franchisees do more of the business, you'll see the net effective rate go up if previous cycles are an indication. On ABCR, I wouldn't take too much -- I wouldn't take too much from one quarter's performance.

We're up 1 basis points for the 9 months. I think that's more relevant in terms of the trend.

And as we said on the roadshow and we will always say is the biggest driver of ABCR is average sales price. And as you pointed out in your first part of your question to Richard, the price being up, as it has been at RFG for our franchisees at RFG, you would expect some pressure on ABCR, and that's exactly what we've been seen for the first 9 months of this year.

Got it. And just going back to the effective royalty rate, earlier, you said that 53% of your revenues came from your top 250 versus 58% last year, right, is that correct?

I think it was 56% last year for the third quarter and 58% this past quarter.

Got it, okay. All right, sorry.

I got this stuff.

That's okay. I could have said 53% -- the script said 56%.

Congratulations on the completion of the IPO and the third quarter results. Richard, I guess, my first question, with the news this week of HomeServices and Brookfield announcing a new residential real estate franchise brand through a JV that create Berkshire Hathaway Home Services, does this impact your strategy at all over the next few years?

And will this affect your appetite for acquisitions of realty brokerage operations or expansion plans for certain brands of NRT or even potential tack-on acquisitions for Cartus? How should we think about that?

That's a good question, Michael, at the very minimum validates our business model. It's nice to see a smart money trying to replicate what we built over the past 20-something years.

I think what's important to note about the announcement is it's sort of the same that we're competing against now. We don't see -- Prudential, as you know, is a brand that was sold and is being wound down.

Literally, the brand Prudential will cease to exist within a defined period of time per the contract that they executed when they purchased the assets. HomeServices is an operating brokerage firm.

The comparable in our company, would be NRT, although HomeServices is -- we're about 2.5, almost 3 times larger than they are, so they have to amass the competency and franchising and they have to, which is not an easy task, and they have to actually build a brand. As to the brand, Berkshire Hathaway Home Services is not a consumer brand, and it's not a real estate brand.

So in 10, 15 years from now, maybe they'll actually make some progress. But in the near term, they're validating our business model.

So it won't change anything we're doing. In fact, it may open up new opportunities as there's a great deal of confusion in the marketplace currently as to what their intent actually is.

So we'll see. We'll see how it plays out.

We've competed against tougher competitors in the past, and I'm sure we'll complete against tougher competitors in the future. So as to Cartus, it's an interesting question.

Cartus is dominant in terms of market share, and no one really measures market share, but we think they're probably the largest provider in that space. They don't really need to grow through acquisitions.

The vast majority of the competitors are small, they're little niche providers or they have a completely different business model-like service, which is an at-risk model, which is contrary to how we operate. So I think Cartus will just continue to grow by adding clients.

Okay. Now I appreciate that, and just on -- I guess, mortgage finance legislation, I guess, post elections, what is your sense of timing for legislators to revisit the Dodd-Frank Act and actually clarify the QRM rules and risk retention rules?

Is this high up on the agenda? Or what are you hearing from Washington, D.C.

on this matter?

No, it's very high. Now whether they actually -- it's really -- be determined by the outcome of the election.

I think at the very minimum, QM and QRM must be defined by the regulators. I know they're working hard to try to satisfy all the various constituents as to what QM and QRM are going to look like.

I don't see anything, but strong positives behind that because, right now, as you know, lenders are underwriting to the highest possible standard evident in the average FICO score. So with some definition under QM and QRM, I suspect lending underwriting standards will become more practical and certainly more realistic.

But to be very specific, we think that it will be addressed within the first half of the year, worst case; probably within the first 90 days, best case.

I see, okay. And just if I could sneak one question is for Tony, just to clarify, the guidance on debt of about $4.1 billion at year-end, that's exclusive of securitization debt, correct?

Yes, it's net -- I said net corporate debt, so not corporate debt.

Net corporate debt, okay. Understood.

And I guess in the past, you provided some sort of guidance on revolver draws for the following quarters, I guess, I can bag into it, but where do you think outstandings should be at year-end or is that...

It's TBD based on redemptions and versus converts so -- but we think net-net, we'll be at -- we're comfortable with $4.1 billion. That's the overall net debt number.

I wanted to -- first around your royalty rate. Can you just give us some clarity on what could drive that up from here?

I guess, I was just a little surprised to see it down sequentially in the quarter, and would love to get some clarity on what gets that back towards the midpoint of that 4.6 to 5.1 range that you've been in over the last few years?

Again, as I mentioned to the other questioner, what we're seeing this year is that our top 250 brokers who were the ones eligible for the volume discounts. Their volume is up 18% this year versus 6% for other franchisees.

So if next year -- just because of year-over-year comps, whatever, I'll just give an example, that the top 250 are up 10%, and the remainder of our franchisees are up 15%, again, picking a number out of the air, that's going to -- that will start to move the ABCR -- I'm sorry, the net effective royalty rate back up. So it's really -- that's -- it's again at the peak of the market.

As you look back to 2003, the net effective rate was 4.6%, 4.65%, and then at the peak of the market in 2005 and 2006, it went right to 5.10%, 5.20%. So as the market improves, and the rising tide lifts off boats, we'll expect that to improve.

Joshua, this is Richard. I view the issue as a strong positive.

I mean, if the top producing brokers are producing more of the business, they're achieving much higher threshold, so they're working much harder to get there. So I'll do this trade-offs all day.

They're outperforming the market but -- and are rewarded through the incentive plans that are in the franchise agreement we have with each of everyone of them. And the more people can achieve those higher thresholds, the better off we are at the end of the day.

Now that said, this all driven by contracts, all in the franchise offerings circulars and it's just -- that's just how the business operates so...

And then the other question I had for you, I know you sort of answered it a little bit in one of your first questions, but I'm trying to understand your willingness to do a wholesale refi of your balance sheet after April 15. Is that something that you guys are willing to explore?

Or are you more looking to do it on a piecemeal basis?

As I answered before, I'm going to give the same answer, which is we continue to analyze our corporate structure and our balance sheet, and we'll look at opportunities to lower costs of debt and we'll continue to do that. It's -- we have great ability to do that and a lot more flexibly so we'll continue to do that.

Okay. I figured I would get a better answer, I was hoping...

Joshua, we are debt averse. So we're -- just remember, always keep that in your back pocket and you'll know where we're going.

Understood. My last question is just a small sort of detailed question.

That 144.8, is that basic or is that diluted? And if it's not diluted, can you give us a sense of what your diluted share count would be?

It's basic, and I think the diluted has of there about 2 million shares.

That's ends our Q&A. Thank you.

A few quick points of information before we conclude today's call.

First, if any convertible note holders do not have the necessary conversion documents or have any questions on conversion, please contact me. Second, a transcript of this webcast will be available on the investors section of the realogy.com website by the end of the day today.

Third, we anticipate announcing our full-year 2012 results at the end of February, with the exact date still to be determined. We thank you for taking the time to join us on the call and we look forward to speaking with you in February.

Thank you.