US real estate firm model set to rock property market

Thursday November 2 2017

RE/MAX, America’sleading real estate franchise,

RE/MAX, America’sleading real estate franchise, has set up base in Kenya and is expected to revolutionise property transactions. PHOTO| FILE| NATION MEDIA  

By PAULINE KAIRU
More by this Author

RE/MAX, America’sleading real estate franchise, has set up base in Kenya and is expected to revolutionise property transactions.

It is already recruiting existing agents to form a real estate brokerage hub.

Banking on technology and networks, RE/MAX uses an agent-centric business model with three tiers. So the Kenyan office will sell franchises to franchisees, also known as broker owners, who will in turn recruit more agents to cover as much ground as possible.

The Kenya regional office began operating in July and already has more than 20 franchisees, whom it is helping to establish independent brokerage companies countrywide. They will operate RE/MAX-branded offices.

Speaking at the RE/MAX regional office in Westlands, Chief Executive Officer James Muratha  said the franchise model is geared towards entrepreneurial-minded people who want independence, coupled with support and a well-established name.

“For now we’re focusing on getting our roots on the ground by helping our franchisees recruit as many agents as possible and training these agents so that they understand the concept, what is expected of them and also the technological tools, digital platform and other resources available to them to facilitate the smooth-running of the business. There’s quite a bit of training that goes into it, including computer software and application training as well as professional designation,” said Mr Muratha.

“Just like Uber, what we provide is the technology platform for our affiliates. We provide a nerve on the Web where the various teams list property for sale or rent and all the other agents can use this as a resource if they have a client looking for something similar on the market,” he added. 

EASIER FOR AGENTS TO SELL

He noted that operating under a popular brand makes it easier for the agents to sell:  “As opposed to an agent t selling as an individual, there is that credibility and trust in the brand that has a global reputation for observing industry standards.”

As a franchisor, RE/MAX offer agents cutting-edge resources to enhance performance. “Technology is what we need right now in the industry. We can’t do business the way we have always done it,” said Mr Muratha.

“But in all this, the more agents we have in our loop, the better, because then we have a huge network from which we can match buyer to seller swiftly and efficiently,” he added.

However, he noted, “Since we, as the regional office, get only eight per cent per transaction, the brokerages should trade a lot. This means the success of the whole is based on agent population and reach,” he said.

“Most of those who have joined us are pre-existing small property businesses looking for a strong name to buoy their business,” he said, adding, “As a franchisee, you get the model website and the marketing done for you by the company. This means that when one joins the franchise, they don’t have to struggle building a name for themselves.”

Another  advantage  is availability of a referral network within the wider global property market.

“What is even more exciting is that we will be able to reach the global frontier and bring Kenyan property to a new global market. We hope to tap into this market with expatriates and Kenyans if the diaspora customer who has interacted with the brand and knows it is one they can trust,” he said. “If one of our agents wants to reach out to agents anywhere in the world where there is a RE/MAX franchise, all they need to do is reach out to the country agents with whatever need and they’ll be matched with the appropriate property.”

Broker owners pay a one-time franchise fee of about Sh2million and to remit an 8 per cent fee to the franchisor for every transaction. Meanwhile, the brokerage firm and agents earn a commission of almost 50 per cent per transaction.

“The fact that they (agents) will be earning a commission makes them feel invested in the business too, so they are motivated to work very hard. We have set the commission split at 50: 50 but the franchisee and the agent can negotiate and agree,” Muratha noted, adding that the agents need a lot of support, which they get in the form of periodic training.