RE/MAX SELECT - Putting Property Buyers and Sellers First
10th November 2008 - RE/MAX
Harj Thind, owner of RE/MAX Select in Kent, is a successful businessman who is willing to take a calculated risk in order to achieve his goals. Before joining RE/MAX Harj turned his skill to support his family’s growing business interests in retail, IT and property.
During this time Harj was struck by the poor service being offered by estate agents. Always highly customer focused in his own business dealings, Harj and his partners were convinced they could outshine conventional estate agents, and decided it was finally time to diversify and set up an independent estate agency business. Determined to make a difference in a sector associated with poor customer service, but conscious of a lack of experience in the property sector Harj and his partners chose franchising as a sound platform on which to build a business. Harj explains: “Franchising offers many benefits; it allows you to draw on the goodwill of a recognised and reputable brand, get help with professional training and receive support establishing an office an IT infrastructure and executing an effective marketing strategy.”
Harj conducted extensive research on the different estate agency franchises, all of whom had plus points, but equally all had one major minus - they were based on the conventional employer/employee model. Harj feels that this business model is outdated, and serves to trap the industry in practicing in a way that poorly serves both customers and agents. Harj continues: “We believe that the level of personal motivation is closely linked to the quality of service delivered to the customer. The old employer/employee model in this industry does not make sense to me, a salaried employee is not as driven to provide an excellent service as one whose income is completely dependant on performance.”
The research led Harj and his partners to RE/MAX, a unique franchise model born in the USA and spreading rapidly throughout Europe. “RE/MAX’s business model ensures that the people who deliver the goods get the rewards. Our agents are not paid a base salary, instead their income is linked entirely to completed sales or lettings. This means we attract highly motivated agents who understand the importance of customer service. RE/MAX agents work exclusively with individual clients (vendors and purchasers) and nurture them through the entire buying and selling cycle. Agents build personal relationships with their clients and a reputation for service excellence. This produces faster transactions and helps generate repeat business. This model is far superior to the employer/employee system and suits our management ethos, as well as offering a constant tide of fresh ideas, innovations and business opportunities from around the globe.”
The role of the franchise owner in the RE/MAX system is to recruit, support and manage agents. In addition to retaining a percentage of sales commissions, the franchise owner charges each sales associate monthly fee for the provision of office facilities, marketing, administrative and management support. This is similar to the model operated in barristers’ chambers and private medical practices.
This commission structure has two major benefits. On one hand it enables franchise owners to build and grow their business without incurring massive overheads. Whilst on the other hand, it allows the sales associates to react to market conditions quickly and efficiently through full management and control of sales processes and client dealings, allowing freedom to negotiate and innovate.
But can this business model flourish even under the present market conditions? Even during a market slowdown there will always be customers out there looking to buy, sell or rent properties, so estate agency services will always be in demand. The fundamental difference is that during the good times everyone can happily make a profit but only the strong and best equipped to compete will survive when the market gets tough. If there is a recession-proof mechanism in such circumstances it is entrepreneurship. Entrepreneurs embrace the philosophy of customer service, high quality, and fair price and are better positioned to react quickly to market conditions.
The RE/MAX business model, with its unique commission system rewarding the service provider at source (i.e. the sales associate), allows the entrepreneurial spirit to flourish, as well as always reaping the benefits of bottom-up thinking, thereby creating a direct link between the market and the direction of the business. As a result we have a sales force that is open to new ideas and committed to improving the industry. And in a contracting economy, it is good service that makes a big difference in the business transaction.
A further buffer to poor economic conditions is the relatively small capital outlay and overheads required to operate as a RE/MAX franchise owner. In contrast, big corporations are being forced to make redundancies in order to reduce costs, and small independent estate agencies are being squeezed out because they are no longer competitive.
Finally, RE/MAX can rely on a network of 100,000 agents operating in 67 countries linked together by a central intranet system. This represent the largest referral network in estate agency worldwide, and it encourages not only networking and referrals within the RE/MAX system but also with external agents. Any associate can refer customers to their counterparts abroad or in the UK and receive a referral fee on completion.
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