Company Background
RE/MAX is one of the fastest expanding real estate franchise operations in the United States and is an independently owned and operated network of offices and member sales associates. Dave and Gail Liniger of Denver, Colorado founded RE/MAX, in 1975. Their dissatisfaction of the real estate business pushed them to start the business since, "regardless of an operation's size, most real estate offices used the commission-split system, requiring sales professionals to forfeit half of their commissions to their brokers in exchange for an office environment and company services" (Official RE/MAX Web Site, 2005a, para. 2). What transpired was an industry hampered by high turnover with staff that did not have the experience or level of professionalism to make organizations profitable. RE/MAX used high commissions, advanced support services and national advertising to attract and retain the best associates. The associates paid the broker a fixed management fee, which gave them the freedom to succeed and prosper. "In an industry rife with mergers and acquisitions, RE/MAX is the only major real estate network still owned and directed by its original founders" (Official RE/MAX Web Site, 2005b, para. 9). As of 2004, RE/MAX had posted another record year, not only in revenue but also in new agents recruited.
Industry Background
The United States has an economy that supports private and commercial real estate ventures and this market is growing. A recent article by Robert Schiller "argues that housing in many cities is undergoing the same irrational exuberance as stocks did in their bubble days" (Schiller, 2005, p.74). What is driving this activity and will it continue, into the foreseeable future? With increasing housing prices, as witnessed across the U.S., is this a time to invest in real estate? "The fact is, according to many industry experts, a major national housing boom may be brewing over the next decade" (Earl, 2005, p.1).
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