Nick Bailey argued Tuesday that agents are being told they need to save money — even if they might do better with a costlier but better business model.

RE/MAX Chief Customer Officer Nick Bailey argued Tuesday that the real estate industry is seeing a “race to the bottom” as industry professionals try to save even small amounts of money, even though higher-end models such as his company’s may serve top-producing agents better.

Bailey made the comments during a presentation at RE/MAX’s virtual Broker Owner Conference. The presentation began with Bailey recalling how some brokers have raised frustration with the company’s fixed-fee model and claimed it’s a deterrent for recruiting agents. Such frustration sometimes translates into arguments that RE/MAX’s model is “broken.”

But Bailey said the problem actually lies in the way the industry is telling agents to think about money.

“This industry is experiencing right now what I call a race to the bottom,” he said. “The industry is just absolutely telling agents, go somewhere you can save $12. Go somewhere you can save $35.”

He added a moment later that “agents are being programmed out there that they’ve got to go with just cheap.”

The result of this messaging, however, is that “87 percent of of agents in our business churn out in their first five years.”

“Why?” Bailey wondered out loud during the presentation. “They don’t sell enough real state.”

Nick Bailey at RE/MAX’s Broker Owner Conference Tuesday | Credit: RE/MAX

Bailey went on to position RE/MAX as a superior alternative. The company long ago pioneered a system in which agents pay a fixed fee to work at the brokerage rather than a more conventional commission or royalty. According to industry experts, that novel approach helped fuel an array of changes in real estate, including the rise of teams and coaching.

During his presentation, Bailey argued that fixed fees can be more financially attractive during a time of significant price inflation. If home values are skyrocketing — as they have in recent years — royalties also go up. Fixed fees, on the other hand, are more constant during times of inflation.

Bailey also argued that RE/MAX has an unparalleled brand reputation and marketing apparatus, which agents get to take advantage of when they join the company. Which is to say, even if some agents perceive of RE/MAX as “fee MAX” they’re actually getting more, Bailey said.

“It is the strongest marketing platform,” he added. “Not one other competitor has it.”

The comments come amid a long-running debate about agent pay. The debate is at least as old as RE/MAX itself, but has become more urgent in recent years with the rise of newer models from companies such as Redfin, which pays agents a salary and bonuses, and Opendoor, which works with agents but also enables consumers to circumvent them.

Ultimately, Bailey argued that brokerages struggling with recruiting may actually be struggling with things like their reputation in the market. And he said RE/MAX brokers should not “let the competition tell your story louder than you tell it.”

Bailey also said that RE/MAX’s model is specifically best suited for full-time, top producing agents.

“I believe RE/MAX is the country club not Sam’s Club,” Bailey added. “It is not for everyone.”

Email Jim Dalrymple II

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