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May, 13 2010

A REALTY REFORM

Real estate, one of the fastest growing sectors in India, has once again picked up pace after the slowdown. Leading the way is RE/MAX (Real Estate Maximums), which had entered India in 2009 when the effect of economic crisis was at its peak.

Real estate, one of the fastest growing sectors in India, has once again picked up pace after the slowdown. Leading the way is RE/MAX (Real Estate Maximums), which had entered India in 2009 when the effect of economic crisis was at its peak. RE/MAX brought together 80 countries across the world on a single realty map and re-wrote its unique success story. Here's a snapshot!

INDIA leads the pack of top real estate investment markets in Asia for 2010, according to a study by PricewaterhouseCoopers (PwC) and Urban Land Institute, a global non-profit education and research institute. The real estate industry is standing up again, leaving the worse behind and RE/MAX is all set to revolutionise the way real estate functions in this part of the world.

Birth of RE/MAX

RE/MAX was founded by Dave and Gail Liniger in 1973. With a pen and pad in a small room, they laid the foundation of a system, which is today the most powerful brand in the real estate sector. From a single office in Denver, Colorado, it has grown into a global network of nearly 1 lakh sales associates and 7,000 franchised offices in 80 countries.

Blending the administrative skills of its franchisees and the salesmanship skills of its real estate agents, RE/MAX has enjoyed unprecedented and historic global growth even at the time of economic and financial instability in many countries. Be it maximum commission model, which gives agents up to 90 per cent of commissions, cutting-edge technology, industry training or highly-effective corporate advertising, RE/MAX ensures that all agents gain maximum value from the system, which motivates them to give their best. RE/MAX has always been inspired by women professionals. As per Saloni Chopra, Executive Director, RE/MAX India ,  “One of the key factors behind the success of RE/MAX has been the profiling of housewives and working women professionals as real estate agents; something which nobody else had initiated before RE/MAX. Gail Liniger was one of the founding members of RE/MAX and even today it is being led internationally by a woman.”

“Global expansion not only expands the network's brand presence, but also creates more opportunities for agents in the US, Canada and other established regions to focus more on international business and exchange more referrals,” says William Soteroff, RE/MAX International Senior Vice-President, Global Development.

Road to India

Less than a year ago, Executive Director, RE/MAX India, Saloni Chopra and Director and Chief Spokesperson, RE/MAX India,  Sam Chopra were given the key responsibility to expand the RE/MAX network in India. Speaking about RE/MAX's entry into India,  Chopra says, “Slowdown was a major reality check for this industry. The biggest learning lesson was the fact that this business of individuals will fall apart once the buyers/sellers get into a conservative mode. The only way to counter such crisis situation was to have a strong network so that even when the industry hits a slump, there is some business for everybody through a proactive referral programme.”

Presently, RE/MAX has a network of 20 master regional franchisees (regional offices) and about 50 broker owner franchisees (franchised offices) in 11 states across the country, including Punjab, Chandigarh, Delhi NCR, Rajasthan, Madhya Pradesh, Gujarat, Maharashtra, Andhra Pradesh, Karnataka, Kerala and Tamil Nadu.

Why India?

Before entering India, RE/MAX conducted an extensive research, involving about 500 brokerage houses pan-India with agent strength of at least five agents per office. They received a mixed feedback from this research with about 57 per cent people saying that RE/MAX would be successful in India and about 43 per cent saying the Indian market was not ready for RE/MAX.

The two important conclusions that RE/MAX drew from this research were, firstly, the franchise model would gain acceptance mostly among younger entrepreneurs and agents, as against people who have spent 20-30 years operating the conventional modus operandi. Secondly, this model would make better economic sense to existing offices which will have more number of agents working in the office.

Franchise model

As a first step, RE/MAX divided India into 32 regions, depending upon the market potential. As per the RE/MAX franchise model, these master regional franchisees further appoint franchisees who open RE/MAX franchised offices in their regions. The owners of these RE/MAX  franchised offices further appoint broker associates, who are real estate agents working on an independent quasi-franchisee contract and carry out real estate transactions under the globally trusted RE/MAX brand.

Benefits for everyone at every level

RE/MAX's commission-based model is best suited to one and all because it benefits everyone at every level. On every transaction, the commission earned is apportioned among different levels of hierarchy. Ninety per cent commission is split between the franchised office and the real estate agents on the basis of a predecided split which is based on the experience and tenure of the real estate agent.  The remaining 10 per cent gets segregated in the following percentage:  master regional franchisee -7 per cent, RE/MAX India-2.1 per cent and RE/MAX International-0.9 per cent.

This commission split ensures maximum satisfaction to the agents, who as quasi-franchisees under an independent contract, share the office expense of franchised office in order to get most part of the commission. The franchised office thus bears minimal operational expenses and can work even on a low commission by having a huge team of real estate agents.

Brand expansion

Five years down the line, RE/MAX aims to open 1,000 broker offices across 32 regions. It is also looking at expansion in tier I, tier II and tier III cities across India. It is looking for master regional franchisees with an investment potential of Rs 50 lakh-1.5 crore in Jammu & Kashmir, Uttar Pradesh, Uttaranchal, North East, West Bengal, Orissa, Bihar, Jharkhand, Goa and some parts of Madhya Pradesh, Chattisgarh, Rajasthan and Punjab. It is also looking for broker office franchisees across the country with an investment potential of Rs 5-15 lakh and broker associates with an investment potential of Rs 10,000 to 1 lakh across India. RE/MAX also keeps under consideration the location where the franchise office is going to be opened. Commercial centres are on the priority list, as they are likely to attract more visibility and accessibility.

Train to gain

All RE/MAX franchisees undergo an extensive training, comprising modules on sales, marketing, technology, administration, franchise and enterprise management. The training is an ongoing initiative, depending upon the category of the franchisee, training is conducted at multiple levels which includes the training at RE/MAX International Headquarters at Denver-Colorado, international conventions and conferences in Las Vegas and Orlando, international broker owner conferences at Chicago and  Denver, training at the national office in  Gurgaon and all regional offices across the country. All franchisees enjoy support on all aspects of their job profile, including recruitment of agents, office promotions, tie-ups with developers, technology, etc.

RE/MAX's headquarter and regional offices extend complete support to the franchisees, right from setting up the office, creating internal and external processes to recruit agents and tie-ups with developers for listings at national, regional and local level.

Partnering with RE/MAX

RE/MAX facilitates its franchisees with network, training, technology and the power of the world's strongest brand in real estate which helps them in making their local business global.

Real estate builders/developers also enjoy multiple benefits after having a tie-up with RE/MAX, as it provides a global window for their inventory. The local network of about 50 RE/MAX franchised offices supplemented with the global network of 7,000 RE/MAX offices, helps them in seeking prospective buyers not only from the local and the national geography but also in form of NRIs and expatriates from 80 countries across the world. Hence RE/MAX facilitates its affiliate developers/builders a highly organised and well structured one-point marketing solution as real estate agents from each RE/MAX office in the network would market their properties.

Return on Investment

The RE/MAX franchise model has divided the Return on Investment (RoI) on the level of transactions made. For the master regional franchisee, RoI depends upon the number of broker office franchisees appointed and the transactions made in the network of broker offices in his/her region. For the broker owner franchisee, RoI entirely depends upon the number of real estate agents appointed and the transactions which are made by the agents in his/her office.

Realty institute on anvil

Adding another feather in its cap, RE/MAX plans to open a RE/MAX Realty Institute. This initiative, open to all, will encourage academic learning in the real estate industry. The flagship course will blend classroom learning with practical exposure to help candidates attain a 360-degree perspective of the profession and imbibe the best practices in the profession.

The primary aim of this initiative is to groom fresh graduates into efficient real estate agents, through which most of them could be further absorbed by their own franchised offices, this will further facilitate the franchisees with the most important aspect of their key responsibilities, recruiting agents.

Success story

RE/MAX has a strong network across the world. RE/MAX's global franchise sales in 2009 witnessed an explosive growth in several regions. RE/MAX International has already established a strong presence in US, Europe, South Africa, Australia and Middle East but the strongest growth for RE/MAX in the coming years will come from newly appointed regions like Bahamas, Brazil, Columbia, Ecuador, Jamaica, Morocco, Peru,  Uruguay and India. In 2009, RE/MAX witnessed 200 per cent growth in South-West Germany, 100 per cent growth in Portugal and 45 per cent in Israel.

In India, RE/MAX has grown from a startup in 2009 to an organisation with pan-India presence in less than a span of one year. Mirroring strong history of growth, RE/MAX India is positioning itself to become a household name in real estate. Joining RE/MAX as a broker/owner of a franchised office or as a real estate agent means that you are in business for yourself, but never by yourself!

For franchise enquiries,

please contact Aman Raj at:

Email - araj@remax.in

Phone: +91 9654965013.

THE REALTY LEADER

Sam Chopra, Director, RE/MAX India in conversation with TFW shares the prospects of the realty sector

What kind of growth do you perceive for the industry in the next five years?

We expect the industry to grow at a rate of more than 25 per cent CAGR. Real estate has always been a key contributor to the growth of the country and will continue to do so.

In the coming few years, consumers could see manifold housing options emerging in the industry. Besides this, affordable housing projects are also going to drive volumes for the business, which would mean massive increase in the number of second time and third time end-users and ultimately, increase in the number of transactions.

How do you monitor service standards being followed by the brokers?

The real estate agents are monitored by the franchisees, franchisees are monitored by master regional franchisees, master regional franchisees are monitored by RE/MAX India and RE/MAX India is monitored by RE/MAX International.

Post slowdown, is the market back in revival mode? Throw some light on the present market conditions?

Yes, certainly. The real estate industry is on an upswing and both end-users and investors are back in the market. Encouraged by this development, many developers have marginally raised their prices and some are even going to launch their IPOs to raise capital for starting new projects, which are a part of their scheme of things for 2010. But looking at the present day real estate brokerage market, there is a need gap in the industry and a huge opportunity which we are trying to take advantage of.

What is the reason behind limited players in organised realty brokerage sector?

The main reasons behind few numbers of players in the high potential real estate industry are:  

  • Lack of respect for the industry because of its highly unorganised functioning and extremely unprofessional and uncouth image.
  • Every market is unique, hence, local network and its knowledge is of paramount importance.
  • Involvement of cash component in most real estate transactions.
  • Most of the organised players in this category have confined their business to only high value or commercial projects.
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