Shifts in the housing market and the U.S. economy may have some concerns about the future, but RE/MAX Holdings, Inc. has its sights set on further growth despite the changes on the horizon.
The parent company of RE/MAX and Motto Mortgage announced yesterday that it was implementing a series of initiatives aimed at bolstering agent growth in the U.S. and accelerating the expansion of its mortgage business.
In a recent statement, RE/MAX Holdings CEO Steve Joyce said that initiatives align with the company’s continued focus on increasing its near- and long-term profitable growth.
“We have two fantastic franchise brands, and we believe we can make a difference in driving their growth through smart, strategic moves,” Joyce says. “All of our planned initiatives are closely aligned with our current strategy, and we plan to fund them through the reallocation of existing resources.”
Among the initiatives is a five-state pilot program designed to attract teams and add a flexible, competitive cost structure to RE/MAX brokerages. The year-long pilot program will launch on August 1, 2022, in California, Florida, Maryland, New Jersey and Texas.
According to the company, teams of six or more licensees will be eligible for a unique pricing structure and a cap on the broker fee paid to RE/MAX, LLC. The program will feature expanded education, improved technology and an enhanced economic structure to support team offices’ growth and profitability.
“We think that just based on the evolution of teams and the economics, we’ll be putting into play some financial components to our fixed monthly business model that will create some incentives to grow teams and be a reduction of some of the fixed monthly expenses,” says Nick Bailey, president, and CEO, RE/MAX, LLC.
According to Bailey, the program could expand beyond the initial five states if the pilot goes well.
The pilot program will coincide with RE/MAX’s newly established Brokerage Mergers-and-Conversions Initiative. The endeavor launched at the start of the year and is designed to help interested brokerages convert to the RE/MAX network or combine forces with an existing RE/MAX franchise.
“We understand that at a time when brokerages need scale to have competitive advantages, they need brand, training and tools and systems to remain competitive in a marketplace that is going to get even more hyper-competitive, so we are really looking at reallocating resources and focusing not only on teams, but those companies that are going to find themselves in a position where they say ‘I need a greater competitive advantage in this market,” Bailey says.
The company also plans to enhance its suite of tech and software through a new partnership with Inside Real Estate.
As part of a phased rollout beginning later this year and continuing into 2023, RE/MAX affiliates in company-owned regions across the U.S. and Canada will gain no-cost access to the state-of-the-art kvCORE platform—with several add-ons, including a module specifically for teams.
The partnership also includes news that RE/MAX will sunset its booj products by mid-2023. Over the past few years, the company has developed many software and agent-facing tools in-house through booj.
As a result of the shift in strategy, the company expects to reduce the size of its workforce by about 17% by the end of the year, with impacted positions primarily in technology. The majority of anticipated savings from the labor cuts will be reinvested back in the business, according to RE/MAX.
On the mortgage side, RE/MAX Holdings is doubling down on its investment in its Motto Mortgage Franchises. The company has committed to investing in additional sales and marketing resources and staff, according to Bailey, who says that the brand is positioned to weather the storm brewing in the mortgage lending market as rates have risen and refinance originations have all but dried up.
“At a time when we’re seeing mortgage companies that are downsizing, Motto is kind of the opposite because the vast majority of the Motto Mortgage business is based on purchase, not refi,” Bailey says.
Given Motto Mortgage’s increased presence, RE/MAX Holdings leadership believes that these initiatives will position the company to best capitalize on the rising number of incoming inquiries Motto Mortgage is receiving.
“Motto has sold over 300 franchises to date, and we have 200 open offices,” says Motto Franchising, LLC and wemlo President and CEO Ward Morrison. “We believe we can eventually grow that number to more than 1,000 open franchises. Motto has a unique and attractive value proposition, and we would like to get to 1,000 open offices much sooner than our current growth trajectory suggests.”
Bailey shares similar sentiments with RISMedia regarding RE/MAX overall, touting the company’s newly announced initiatives as “strategic investments” that will carry the brand through whatever cycles lie on the horizon for the housing market or the economy.
“This is the time when changes are happening that so many of our competitors have never dealt with,” he says. “We have before, and we are adjusting these initiatives—not straying from our foundation—that we believe will help grow the business and meet agents and consumers where they need to be met.”
“While we see competitors cutting their business, we’re investing in the business in these key areas to where we see going to match the market not only in the next 12 to 18 months but, especially in the tech side, in the next three to four years,” Bailey adds.
Jordan Grice is RISMedia’s associate online editor. Email him your real estate news ideas to email@example.com.