The explosive increase in the amount of property representatives in Ontario has left too many people dabbling in the profession, reducing the standard of service and exceeding the business’s future relevance, based on Re/Max Integra president Walter Schneider.
Mr. Schneider, whose franchise firm oversees all Re/Max operations in Ontario and Atlantic Canada, said tens of thousands of new realtors have become licensed in the Greater Toronto Area over recent years since markets have boomed, but many do too little business to accrue the expertise needed to guide clients through complex transactions.
“People come in, they think it’s a simple game and they’ll just pick up a $20,000 commission, thank you very much,” Mr. Schneider said in a recent interview. “I love to say, ‘You do not try real estate, property attempts you,’ in relation to being a professional in this organization.”
The Toronto Real Estate Board has seen its membership more than double 20,500 licensed brokers in 2004 to 45,000 as of October this year, including about 24,500 agents. The GTA has seen 6,000 new realtors enter the market since the end of 2014 alone.
Mr. Schneider said he does not want Canada to undergo the sort of jarring industry upheaval found from the U.S. market, in which the number of accredited brokers belonging to the National Association of Realtors dropped by 26 percent between 2006-12 following the nation faced a sharp housing-market correction. As of last month, the amount still hadn’t recovered to its 2006 summit.
“They were not qualified, they simply didn’t serve their clients correctly,” he said. “They were basically order takers, not professional sales executives.”
The real estate sector is facing a long-term struggle to remain relevant as online technology reshapes the industry, which makes it easier for buyers to do more independently. The industry’s solution, Mr. Schneider believes, is for agents to become more professional, with more qualifications and training, so that they can become indispensable service suppliers.
For Re/Max Integra, a part of the response would be to take its 21,000 agents in Ontario and Atlantic Canada to create property their main, full-time profession rather than a job they do on the side.
His company’s agents do a mean of 16.7 transactions per year, he said, while 75 percent of representatives working in the GTA do fewer than three deals annually.
“Unfortunately, there are those in the company now who are there to market a couple of houses a year to cover their holiday in the Dominican Republic,” he said.
“Our schedule is to get full-time professionals. We do not want you to just purchase a home through us we want you to return. We would like you to refer us to others and be pleased with our services.”
Mr. Schneider is confident there is a strong future for property agents, even as technology has radically shifted other careers, such as travel agents. Technology is a tool, he said, but won’t be a disruptor.
Individuals will still work with representatives, and brokers will face new pressures to show their value. Mr. Schneider is a fan of online customer evaluations, saying agents ought to be rated so everyone knows who’s doing a fantastic job, and who’s not.
“There’s a good deal more to a trade than 30 or 40 years ago … The broker today just needs to be a great deal more capable, more educated.”
His confidence in the profession’s future is such that he and partner Frank Polzler, who’s chairman of Re/Max Integra, have enlarged the Re/Max brand globally and continue to cultivate their network.
Their firm, based in Mississauga, is a master franchisor, selling Re/Max franchises in jurisdictions where it has bought the Re/Max brand rights in the Denver-based parent firm, Re/Max Holdings Inc..
The franchisees pay yearly fees to Re/Max Integra, which then pays some of its earnings to the U.S. parent.
The Integra group controls 30 percent of the complete Re/Max network globally, holding the rights for Eastern Canada, nine U.S. states, and all Europe, plus Israel and Turkey. Its 37,600 brokers are expected to finish over 468,000 trades in 2017, with their commissions expected to top $3.3-billion.
The firm also hopes to market 430 new franchises this season — 350 of these in Europe — bringing the total number of franchises in the Re/Max Integra group to over 2,800, Mr. Schneider said.
New franchisees are generally smaller local players that are attracted by the advantages of joining a large community, providing them access to technology, training, advertising, promotion, and bulk deals from vendors for everything from photocopiers to yard signs.
Mr. Schneider, Mr. Polzler and a third partner launched Re/Max Integra in 1980 after hearing the Re/Max brand in a property business conference in Detroit. At the moment, Re/Max had only one office in Canada — established in Calgary — and approximately 200 offices in america.
After obtaining the rights to Eastern Canada, the trio launched into rapid expansion mode, selling franchises to help unify a splintered industry. Mr. Schneider stated he took home only $15,000 in pay in 1980 as they fought to launch the firm with $20,000 in funds.
In 1985, the third partner sold his stake to Mr. Schneider and Mr. Polzler. The rest of the duo realized Canada was too small a market to rely on for accelerated growth levels, and started to acquire rights to nine U.S. countries during the next ten years.
As U.S. opportunities started to slow, the next frontier for expansion was Europe, which had no Re/Max offices once the partners purchased the European rights in 1994. They spanned the continent to present the Re/Max new to the highly fragmented sector.
Together with traditional franchise advantages, the group also brought North American-style technology to their partners in Europe. When they started in Europe, Mr. Schneider says there were no MLS-style listings that the public could see, and no databases of comparable sales data to assist agents decide on record prices for homes.
“We have 20,000 agents in Europe today, which is a terrific number, but I see our company still in the first thresholds of growing. … I think we are at the tip of the iceberg.”
Mr. Schneider calculates he has spent roughly eight decades of his life — approximately 3,500 nights — in hotel rooms, and has travelled 2 1/2 million miles on planes as he and Mr. Polzler developed Re/Max to a major brand.
They no longer share hotel rooms, as they did in the first days to reduce prices when they travel, and Mr. Schneider long ago stopped sleeping in his car before sales meetings. But they’re still hustling to create the company.
Mr. Schneider is looking at new places to attract customers where they’re currently shopping — such as places in grocery stores. He’s also working on strategic partnerships with vendors to provide customers access to discounts on services that they may need after purchasing a new home.
“The sweetest memories come in the roughest times, and I regret not 1 ounce of the hardships we have gone through to create this business,” he said. “It made it richer, and it allows me love every day where we are.”
Courtesy: The Globe And Mail