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Risk Management and Fair Value of Financial Instruments (Notes) | 12 Months Ended
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Dec. 31, 2022
Risk Management and Fair Value of Financial Instruments [Abstract] |
Risk Management and Fair Value of Financial Instruments | RISK MANAGEMENT AND FAIR VALUE OF FINANCIAL INSTRUMENTS RISK MANAGEMENT The following is a description of the Company’s risk management policies. Interest Rate Risk The Company is exposed to market risk from changes in interest rates primarily through senior secured debt. At December 31, 2022, the Company's primary interest rate exposure was to interest rate fluctuations, specifically LIBOR, due to its impact on variable rate borrowings under the Term Loan A Facility, and SOFR, due to its impact on our borrowings under the Revolving Credit Facility. In connection with the July 2022 Amendment to the Senior Secured Credit Facility, LIBOR was replaced with a SOFR-based rate plus a 10 basis point SOFR credit spread adjustment as the applicable benchmark for the Revolving Credit Facility. As of December 31, 2022, the Company had variable interest rate long-term debt from outstanding amounts under the Term Loan A Facility of $222 million, which was based on LIBOR, and outstanding amounts under our Revolving Credit Facility of $350 million, which was based on term SOFR, excluding $163 million of securitization obligations. The Company historically used interest rate swaps to manage a portion of the Company's exposure to changes in interest rate associated with variable rate borrowings. During September 2022, the Company terminated $550 million of its interest rate swaps which had expiration dates of August 2025 and November 2027 and the Company's remaining interest rate swaps, which had a value of $450 million, expired in November 2022. Credit Risk and Exposure The Company is exposed to counterparty credit risk in the event of nonperformance by counterparties to various agreements and sales transactions. The Company manages such risk by evaluating the financial position and creditworthiness of such counterparties and by requiring collateral in instances in which financing is provided. The Company mitigates counterparty credit risk associated with its derivative contracts by monitoring the amounts at risk with each counterparty to such contracts, periodically evaluating counterparty creditworthiness and financial position, and where possible, dispersing its risk among multiple counterparties. As of December 31, 2022, there were no significant concentrations of credit risk with any individual counterparty or a group of counterparties. The Company actively monitors the credit risk associated with the Company’s receivables. Market Risk Exposure Owned Brokerage Group operates real estate brokerage offices located in and around large metropolitan areas in the U.S. Owned Brokerage Group has more offices and realizes more of its revenues in California, Florida and the New York metropolitan area than any other regions of the country. For the year ended December 31, 2022, Owned Brokerage Group generated approximately 23% of its revenues from California, 21% from the New York metropolitan area and 13% from Florida. For the year ended December 31, 2021, Owned Brokerage Group generated approximately 25% of its revenues from California, 21% from the New York metropolitan area and 13% from Florida. For the year ended December 31, 2020, Owned Brokerage Group generated approximately 24% of its revenues from California, 20% from the New York metropolitan area and 11% from Florida. Derivative Instruments The Company records derivatives and hedging activities on the balance sheet at their respective fair values. During September 2022, the Company terminated $550 million of its interest rate swaps which had expiration dates of August 2025 and November 2027 and the Company's remaining interest rate swaps, which had a value of $450 million, expired in November 2022. As of December 31, 2022, the Company had no interest rate swaps. The swaps helped to protect the Company's outstanding variable rate borrowings from future interest rate volatility. The Company had not elected to utilize hedge accounting for these interest rate swaps; therefore, any change in fair value was recorded in the Consolidated Statements of Operations. The fair value of derivative instruments was as follows:
Not Designated as Hedging Instruments |  | Balance Sheet Location |  | December 31, 2022 |  | December 31, 2021
Interest rate swap contracts |  | Other current and non-current liabilities |  | — |  |  | 46 |
The effect of derivative instruments on earnings was as follows:
Derivative Instruments Not Designated as Hedging Instruments |  | Location of (Gain) or Loss Recognized for Derivative Instruments |  | (Gain) or Loss Recognized on Derivatives
Year Ended December 31,
2022 |  | 2021 |  | 2020
Interest rate swap contracts |  | Interest expense |  | $ | (40) |  |  | $ | (14) |  |  | $ | 51 |
Fair Value Measurements 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 December 31, 2022 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) | $ | 1 |  |  | $ | — |  |  | $ | — |  |  | $ | 1 |
Contingent consideration for acquisitions (included in accrued expenses and other current liabilities and other non-current liabilities) | — |  |  | — |  |  | 12 |  |  | 12 |
The following table summarizes fair value measurements by level at December 31, 2021 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) | $ | 1 |  |  | $ | — |  |  | $ | — |  |  | $ | 1 |
Interest rate swaps (included in other current and non-current liabilities) | — |  |  | 46 |  |  | — |  |  | 46 |
Contingent consideration for acquisitions (included in accrued expenses and other current liabilities and other non-current liabilities) | — |  |  | — |  |  | 9 |  |  | 9 |
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, 2021 |  | $ | 9 |
Additions: contingent consideration related to acquisitions completed during the period |  | 13 |
Reductions: payments of contingent consideration |  | (4) |
Changes in fair value (reflected in general and administrative expenses) |  | (6) |
Fair value of contingent consideration at December 31, 2022 |  | $ | 12 |
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:
| December 31, 2022 |  | December 31, 2021
Debt | Principal Amount |  | Estimated Fair Value (a) |  | Principal Amount |  | Estimated Fair Value (a)
Revolving Credit Facility | $ | 350 |  |  | $ | 350 |  |  | $ | — |  |  | $ | — |
Extended Term Loan A | 222 |  |  | 216 |  |  | 232 |  |  | 231 |
7.625% Senior Secured Second Lien Notes | — |  |  | — |  |  | 550 |  |  | 583 |
4.875% Senior Notes | — |  |  | — |  |  | 407 |  |  | 418 |
9.375% Senior Notes | — |  |  | — |  |  | 550 |  |  | 596 |
5.75% Senior Notes | 900 |  |  | 680 |  |  | 900 |  |  | 923 |
5.25% Senior Notes | 1,000 |  |  | 729 |  |  | — |  |  | — |
0.25% Exchangeable Senior Notes | 403 |  |  | 280 |  |  | 403 |  |  | 399 |
_______________ (a)The fair value of the Company's indebtedness is categorized as Level II.

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- Definition Risk Management and Fair Value of Financial Instruments [Abstract] + References No definition available. + Details
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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI https://asc.fasb.org/extlink&oid=126976982&loc=d3e19207-110258 + Details
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