Even as originations have fallen precipitously from last year’s levels with further slowdowns expected — and a move to reduce staffing for another part of the business — Remax announced plans to increase investment in its mortgage segment.
Denver-based Remax Holdings, parent company of real estate services firm Remax and home lending brokerage chain Motto Mortgage, said its focus on generating more revenue from mortgage operations will include new hiring. Changes to its technology platforms and new programs intended to bring more agencies under the Remax brand also are involved. Those changes will include a 17% reduction of Remax’s workforce this year, mostly within its tech team.
“Within our mortgage segment, we are investing in sales and marketing resources for both our Motto Mortgage and wemlo brands, with a plan to double our related personnel over time,” said Remax Holdings CEO Steve Joyce in a press release. The company recently hired industry veteran Chris Erickson to manage product and strategy for both units. Wemlo is the company’s loan processing platform serving brokers.
“We believe this investment can measurably accelerate our ability to achieve our goal of $100 million in annual mortgage-related revenue, perhaps achieving this milestone as early as 2028,” he said.
Motto has sold 300 franchises and currently has 200 offices in operation. “We believe we can eventually grow that number to more than 1,000 open franchises,” said Motto Franchising and wemlo President and CEO Ward Morrison in an announcement, adding that the growth objectives made sense based on evaluation of the brand’s current momentum.
“Each sales professional on our team currently covers a large territory, and we think more personnel will increase our ability to capitalize on incremental opportunities.”
Motto will require new franchisees, in most cases, to use wemlo’s loan processing tools, including its broker-facing origination system. Remax acquired the fintech in 2020.
Remax’s mortgage-growth effort was one piece of a revamped overall business strategy the company announced last week. In an emailed statement, a company spokesperson said “the new initiatives are closely aligned with our current strategy, and we plan to fund them through the reallocation of existing resources.”
Remax’s intent to grow its mortgage businesses marks a departure from the recent news of accelerated downsizing within the mortgage industry. Recently released employment data shows mortgage-related staffing numbers have now fallen below their levels from a year ago. Lenders shed staff by the thousands in the first half of 2022, while other mortgage-adjacent real estate and home-buying operations including Compass and Redfin, have also laid off employees.
But it’s a move welcomed by equity researchers at Keefe, Bruyetee & Woods. “With U.S. agent count growth appearing difficult, we think investing in Motto’s growth represents a good use of capital, particularly given the large accessible candidate pool of existing Remax agents that could benefit from also opening a Motto franchise,” its analysts said in a research note.
Remax expects to adopt Inside Real Estate’s cloud-based platform later this year. The switch to a new system will remove the need for existing software products managed internally and lead to the elimination of 17% of Remax’s workforce this year, mostly within its technology team. The company had 639 employees at the end of 2021 according to a Securities and Exchange Commission filing.
Remax also plans to introduce a pilot program in five states, which modifies the fee structure for teams of six or more licensees. The move is intended to encourage growth of Remax agencies and help brokerage owners in recruitment. The company unveiled a formal initiative to increase efforts to encourage real estate brokerages to join Remax’s network or merge with an existing franchise as well.