If it's not broken, should Remax fix it?
Remax Holdings is focused on "what it does best" with its Motto Mortgage business and in facing off against Zillow's new home buying and selling initiative, a company executive said.
Zillow announced its Instant Offers program in April, which allowed the company to test its financial success in flipping houses.
While this move may brew competition in the real estate industry, Remax doesn't feel threatened, said Remax Chief Financial Officer Karri Callahan at the Keefe, Bruyette and Woods' Mortgage Finance & Asset Management Conference in New York on May 31. The company will continue focusing on the drivers for success it always has, though it will keep an eye on the initiative and the concept of quick, digital offers.
"I think one thing that our CEO [Adam Contos] has said, and it's a very valid point, is in the platform with Zillow or others in the loan industry concerning what the industry is referring to as 'iBuyers,' the protection for the consumer does not exist. In an agent-assisted transaction, that is a huge focus because the agent is really acting entirely on behalf of the consumer, trying to protect the consumer, both from a legal perspective as well as from a monetary perspective," said Callahan.
"In terms of how it affects us, we definitely are watching what the industry is doing, we're very aware from a competitive environment perspective, but what we're really focused on is what we do and what we do well, and we're focused on our network of highly productive agents and how we serve them better," she added.
The company also applies this same thought process to its Motto Mortgage business.
Motto was rolled out about 18 months ago with a mission to help Remax franchisees and others to develop independently owned mortgage brokerages. This includes franchise opportunities for real estate companies, investors, loan originators and mom-and-pop brokerages looking to convert.
What makes Motto work for its franchisees is that Remax approaches the mortgage industry in the same way it does the real estate business, according to Motto President Ward Morrison.
"Originally the industry didn't really understand what we were offering, but I think as we get more loan officers on board who are wanting to be entrepreneurs, I think that particular marketplace is untapped, of teaching them how to do this," said Morrison.
"They don't have to go out and find how to do this, they don't want to go out and find the technology. We go out and we buy them licensing guides, we provide them tools like technology you'd see around on the Remax side, websites, everything so that they have a turn-key solution," he added.
Motto training for franchisees includes lessons in operations, marketing and compliance.
There have been 80 Motto franchises sold to date (including 40 already open) with a long-term target of about 1,000 nationwide, or roughly a third of the 3,700 Remax brokerages throughout the country, which should eventually account for 20% of total revenue.
For now, the company plans to focus on ensuring current franchises are successfully up and running from both operational and regulatory perspectives.