Re/Max on the rise

Sales: Enthusiastic agents, who pay a franchise fee and get 100 percent commissions, are a driving force in the company.

October 07, 2001|By Hope Keller | By Hope Keller,SPECIAL TO THE SUN

Norma Jean Marsho was about to quit the real estate business in 1980. Bosses' pets and the emphasis on big producers "just made me sick," she said.

Yet she already had bought tickets for the annual real estate convention in Ocean City, so she and a couple of girlfriends decided to go anyway.

Expecting the usual industry hobnobbing and hors d'oeuvres, Marsho instead met an "on-fire" guy - a Re/Max agent.

"What is a Re/Max?"

That's what Marsho and others were asking at the 1980 convention. The agent gave Marsho an answer - and in the process persuaded her to give his company a try before she quit the business altogether.

Good thing she listened.

Today Marsho is the broker-owner of Re/Max Columbia, with offices in Columbia and Ellicott City and about 96 agents who did $373 million worth of business last year. Through July of this year, the total was $314 million. She just bought herself an apartment at the beach.

"I was leaving the real estate business if I had to stay in a traditional company," Marsho said.

Instead, Marsho got converted. And she's not alone.

Re/Max International Inc., which recruits other companies' top-selling agents with near-evangelical fervor, has made great gains in the Baltimore area.

While the handful of local Re/Max franchises is not close to unseating Long & Foster Real Estate Inc. and O'Conor, Piper & Flynn ERA for market dominance, in dollar terms, Re/Max is making its mark. Since 1996, in the Baltimore area the company has tripled its number of agents, doubled the number of offices and more than doubled its sales volume.

"One of my agents once said that [Re/Max] was like a cult," said Cathy Werner, broker-owner of Re/Max American Dream, which has 75 agents based in offices in Bel Air, Lutherville and Perry Hall who sold $175 million worth of real estate last year. Through July of this year, agents sold real estate worth $189 million. "Re/Max agents are so happy."

Their enthusiasm is infectious.

Pat Hiban, who runs his own 10-person team at Re/Max Advantage Realty in Columbia, got talked into trying Re/Max by his old high school psychology and sex-education teacher.

Doug Poole, an agent at Re/Max American Dream's Lutherville office and a former broker-owner of a Re/Max franchise, made the leap after he attended a talk by Dave Liniger, who with his wife, Gail, founded Re/Max in 1973 in Denver.

These local Realtors are helping Re/Max - which stands for "real estate maximums" - realize its goals. The company is an international operation, with 68,000 agents in 38 nations, but it is not overlooking Baltimore.

"We will surpass the local companies that at this point have more local market share than we do," predicted Darko Kapelina, head of Re/Max's Central Atlantic region office, in Bethesda. "We're anticipating that over the next 24 to 36 months we will have surpassed local companies for market share in terms of listings sold."

Caution: Semantics are involved here. While Long & Foster and OPF, among others, use the dollar amount of their sales to rank market share, Re/Max uses the percentage of all property listings that it sells to measure its success, Kapelina said.

Re/Max's settled sales volume last year in the greater Baltimore region was $1.5 billion (up from $652.2 million in 1996), half the roughly $3 billion that Long & Foster and OPF each reported in sales for the same area.

Locally, the number of Re/Max agents rose from 231 in 1996 to 667 today, and the number of offices went from 14 to 32. (Many of the local franchises have multiple offices.) Almost all of this expansion has been the result of startups, not the acquisition of existing companies, Kapelina said.

The main difference between Re/Max and so-called traditional firms like Fairfax, Va.-based Long & Foster and Baltimore's OPF is that Re/Max is a "100 percent company": Its agents pay a monthly fee to their franchise and in return keep 100 percent of the commission.

Agents at traditional companies pay no outright fee and split the commission with their franchise owner. The more successful the agent, the higher his or her portion of the commission. Top agents can get 80 percent or more of this "commission split."

"All Realtors know the difference between traditional companies and Re/Max, but 90 percent of the public does not," said Doug Poole, who was the broker-owner of Re/Max Preferred in Lutherville until he sold the franchise to Cathy Werner last year.

Re/Max agents pay roughly $20,000 a year in fees to their franchise, plus smaller amounts to Re/Max International and a Re/Max regional office. (No franchise owner interviewed was willing to say how much agents paid in fees, but some Realtors were more forthcoming.) Fees vary by franchise and geographic area.

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