The Reality of Real Estate (BlueRoof Blog)

Thoughts, opinions, and truths about real estate and life as I see it...

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Location: Salt Lake City, Utah, United States

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Sunday, August 06, 2006

The Fallacy of the Re/Max System

Re/Max is making a big push with it's new marketing and trying to get the word out they now have all listings on (like that's innovative). And of course the ads always say their slogan of, "Nobody sells more real estate than Re/Max".

First of all, there is no real measurement of who sells the most real estate. And really, what does that even mean? Does it mean selling the most pieces of property, and does that include residential, commercial, industrial and agricultural? Does it mean selling the most actual land (vacant land)? Does it mean only residential? Does it mean selling the most in dollar volume? Does it mean transaction sides or listings sold?

Well, it means something different to many people and there is no one place to see every sale of every company compared to each other.

Re/Max actually isn't that big of a real estate company. Like other major brands, it's actually a big network of different companies and offices branded with one name. And almost all of their entire network is franchises. There are only about 30 company-owned operations.

Re/Max saying that nobody sells more real estate than Re/Max is like saying
nobody sells more Hondas than Honda dealerships...

In reality each office is independently owned and operated. Each different from the next, with it's own set of policies and procedures, it's own set of standards and culture. They all just share the same name. If you actually compare real estate sold from agents working for the same company, then Re/Max isn't even close to being the top. NRT outsells all the other companies in the top 10 combined in transaction sides. But NRT is also a big franchise collection. And it goes under different names like Coldwell Banker, ERA, Century 21 and Sotherbys.

If you called five agents from five different Re/Max offices and asked them about their marketing plan you would hear five completely different marketing plans. Because Re/Max the company doesn't actually do any marketing for home sellers. Re/Max, the company, is more a collector of franchise fees, licensing it's brand to anyone willing to pay it's fees and sign it's franchise agreement.

One agent may pay for newspaper ads and color flyers while another does neither. One agent may believe the internet is a powerful tool so they decide to have virtual tours of their listings and another may not even believe in the power of internet, like the founder of Re/Max, Dave Liniger, who recently claimed that the internet is over-valued, which also makes me wonder why they even care about having reciprocity of listings on their website.

The fallacy of the Re/Max system is that it's not even a system at all. It's a collection of different systems with a common name.

To be fair- most other national brands are also franchises and also operate in the same way. If you work with a Century 21 agent in Alaska and you're really impressed with their service that doesn't you know anything about the Century 21 agent here in Utah. And that Keller Williams agent that didn't do their job well in Texas doesn't have anything to do with the Keller Williams company in Salt Lake.

And almost all agents are independent contractors anyway, so they're all competing with each other- even agents in the same office and company. In most offices of every company the agent decides what level of service they'll provide.

A small number of companies have employee agents so they can dictate the level of service, and some companies have models that ensure the same marketing strategies are met with every client.

The reason I single out Re/Max is not because I think it's a bad company. I actually think it's a great company, mostly because it was formed with the agent in mind, instead of the broker. And that was a big step at the time.

I single out Re/Max because I have to endure their claim that nobody sells more real estate than they do in all of their marketing. And let's not be naive about it- they don't say that because they are proud of their work or something, it's a way to elicit trust and respect. So people will think, "Oh, they sell more than anybody so agents that work there will give me better service".

Many Re/Max agents are very good Realtors, in fact there is probably a higher ratio of good agents at Re/Max in Utah then at most other companies, but it's not because of their company name, it's because they are good people. Just like with all professions there are good and bad.

My advice is simple. When it comes time to list your house, ask your agent if they will put in the listing contract, "Seller may cancel this contract and receive an unconditional release at any time". That way if you aren't happy with their services you can cancel and hire a better agent.

The important thing to remember is in an industry where most all of the sales people are independent contractors who make their own schedules, marketing plans, and service levels it's important to work with someone based on the person and not by the logo on their business card.


Blogger Todd Tarson said...

Greg, there is a freedom when hanging a license with them. First off, I'm a RE/MAX agent. My slogan is has nothing to do with selling the most property, not even close.

The freedom I enjoy comes from being a 100% agent, that I don't split my commission with the broker. I can make any deal I want with any client I want.

I'm a great negotiator, but sometimes the clients are just better. So I give in and meet their terms on occasion.

And I like what you said towards the end. I tell clients they are free to fire me in good faith. If I don't meet the conditions I set for marketing and handling the transaction... they are free to give me the Don Trump, "YOUR FIRED".

That wasn't something I could have done at the other two brokerages I have hung my license in.

Nice place around here, I love the content.

1:05 PM  
Blogger gt242 said...

I think the freedom that comes with Re/Max is probably the biggest draw for agents and I can understand why. And the marketing materials look sharp, which is a real benefit in this business.

You're doing it right earning the business with your service, not by binding them with a contract.

We need more agents like you around- it improves our image.

Thanks for the comments.

2:45 PM  
Blogger Sellrealest8 said...

Todd I have to agree with Greg. I too am a RE/MAX agent. I like the freedom to negotiate my own commissions even if only 1%.

I also put in my agreements feel free to cancel this agreement with no cancelation fees. I have been doing this 16 years and if me and the seller are not hitting it off I'd rather be at the beach then in a heated arguement over "who's right".

At other companies I have been at I had to charge a certain commission rate or have the seller paying cancelation fees etc. I like running my business on my terms not the managers.

5:34 PM  
Anonymous Anonymous said...

yeah talking bout freedom. thats wise you dont have to split your commision with the broker..good point man

2:16 PM  
Anonymous Anonymous said...

Greg, I am a RE/MAX broker owner and having worked in the industry for 28 years plus, I can tell you there is a difference (in my opinion) At my company and many other RE/MAX operations - not all - we tell our agents that they are in business for themselves but not by themselves. There may be more office to office marketing planning and networking than you think. In any case. The freedom to run their business as a business while under our umbrella is important. Congrats on a great blog, keep posting..

4:25 PM  
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This comment has been removed by the author.

12:53 AM  
Blogger said...

Great info.

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