Re/Max plans to expand locally National realty firm prepares to sell four to five franchises

Explosive growth foreseen

Company's current sales are centered in Howard County

Agents

April 28, 1996|By Daniel H. Barkin | Daniel H. Barkin,SUN STAFF

The man who co-founded Re/Max, one of the nation's largest real estate firms, came to Baltimore last week with hopes of boosting the company's market share here with as many as five new franchises.

David Liniger, chairman of Re/Max International Inc., said his firm is looking to become more competitive in a market that is dominated by three firms -- Timonium-based O'Conor, Piper & Flynn, Long and Foster of Fairfax, Va., and Coldwell Banker Grempler Realty of Towson. Together, the three companies' agents are involved in nearly half the home sales recorded by area multiple-list services.

"I've been doing this for 23 years, and we just keep going into more markets and opening more offices," said Mr. Liniger, whose corporate headquarters are in Englewood, Colo. Re/Max has more than 2,600 offices in the United States, Canada, Mexico and overseas with more than 42,000 sales associates.

He said he was meeting with some 25 prospects with the goal of selling four or five franchises with offices within a 20-mile radius of downtown Baltimore. Regional Re/Max officials have "targeted specific communities they want to get into," Mr. Liniger said.

Darko Kapelina, director of the Re/Max Central Atlantic Region, declined to say where the new franchises would be located.

"We've honed in on Baltimore as an area primed for explosive growth," Mr. Kapelina said.

Re/Max is strongest in affluent Howard County, where Re/Max Columbia, Re/Max Columbia-Forty West, and Re/Max Advantage Realty operate. Re/Max agents were involved in a third of Howard's settled sales last year. But that accounted for the bulk of Re/Max activity in the five-county Baltimore region, where its agents were involved in just over 3 percent of settled sales.

Re/Max may be best known for its 100 percent commission concept. In most real estate firms, Realtors split their commissions with the company, which provide marketing and administrative services for the agents. In most instances, Re/Max agents receive 100 percent of the home-sale commission, and pay monthly fees to the company, essentially renting a desk. They also do their own marketing, for the most part.

Mr. Liniger's visit here, the end of a three-day swing through the mid-Atlantic, was driven by his company's ambitious 1996 global expansion plans. He has said Re/Max wants to add 250 franchised offices and boost its pool of agents by 3,000. At least in the United States, he'll have to accomplish that in a shrinking industry.

"In the last four years, the National Association of Realtors has dropped from a dues-paying membership of nearly 850,000 to currently about 720,000," he said, a trend that has been reflected in the Baltimore region.

The real estate business is a "mature" industry, he argues. The Baby Boomers have slowed their home buying after pumping up the market for decades.

This drop in sales volume is driving out part-time and marginal agents, he said, and it has greatly intensified competition among firms for the most productive Realtors.

That has put pressure on brokerage profits, added Mr. Liniger, who claims that Re/Max -- because of its 100 percent commission and its embrace of productivity-boosting technology -- is better-positioned to compete for the best agents.

"The profitability of brokerage companies is disintegrating" because of the deals some firms are forced to offer high producers, said Mr. Liniger, "and I think there will be tremendous changes in this market in a very short period of time."

In the Baltimore region, Re/Max has 15 offices and nearly 300 agents. By contrast, O'Conor, Piper & Flynn, the market leader, has some 1,400 agents in more than 40 offices. Re/Max has not been as aggressive as it should have been in building its presence here, he said.

"We are much more powerful in Washington, D.C., where we located the regional office years ago," Mr. Liniger said. But not enough attention was put on Baltimore, he said.

"Over a period of time, we managed to change some of the contracts, replace some of the inefficient people, and little by little, we're filling in all the locations that we're not [in]," Mr. Liniger said.

Pub Date: 4/28/96

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