In conversation with Samir Chopra, chairman and founder of RE/MAX India, on the challenges of bringing structure into India’s unorganised real estate sector and the measures taken by the company to promote real estate brokerage as an entrepreneurial opportunity among youngsters
Samir Chopra is no stranger to the world of entrepreneurship or for that matter to the Indian real estate sector. A chartered accountant by qualification, he began his entrepreneurial journey in 1996, by founding CybizCall International Pvt. Ltd., a BPO, which contributed significantly to the ITES industry. This was followed by two consecutive terms as the president of Business Process Industry Association of India which he later stepped down from, to partake in the launch of RE/MAX India, the Indian franchise of the US-based global real estate company.
For Chopra, setting up the master franchise at India during global recession was the toughest challenge he has faced. “The Indian real estate market has never seen a fixed pattern. As an avid investor in real estate, I had always been on the other side wherein I knew of the image that the industry carried (of being unorganised). But given the true potential that it can offer to its stakeholders, I was willing to take a risk,” he says.
Today, five years hence, RE/MAX is present in more than 35 cities in India and has setup over 100 offices. It also has a Real Estate Brokerage Training Academy for aspiring agents and has earned several accolades for its consistent performance in the Asia-Pacific region. In the coming years, Chopra wants to position RE/MAX India as the market leader in India’s real estate sector and present it as a credible career opportunity for youngsters in India.
In this interview, Chopra talks about the need of the hour in India’s real estate sector, the potential it holds for the company to grow in this space and the initiatives taken by the company to make the sector more organised.
Take us through the company’s business and revenue model.
How RE/MAX works is quite simple. The company segregates India into sub-regions, called the RE/MAX master regional franchisees. Every franchisee has a regional owner who holds the responsibility of setting up broker office franchisees. These broker offices will further have broker owners who operate from different parts of a region. The revenue is generated through the royalty that the regions pay to the company. The regions earn by awarding broker office franchises in their region and earn a monthly and annual fee from the broker offices and the associates under them. The franchise owners earn from the agents, who generate revenues by earning the maximum commission (95 per cent to 100 per cent stake in commission) from transactions.
Please take us through the current state of India’s real estate sector. What is the ‘need of the hour’ in the industry today?
The current state of the industry is progressive and the need of the hour is professional real estate consultancy. The age group of people investing into real estate is moving from 40-plus to 25-plus. Today’s customers are more educated and aware and are looking for more professional, more easily available (in terms of technology) and more reliable brokerage services. In other words, they are looking for agent entrepreneurs who are armed with the right training to provide complete end-to-end solutions for all real estate needs. In fact, organisations such as National Association of Realtors (India) and Association of Certified Realtors of India (ACRI) are contributing significantly to this transition.
RE/MAX has made efforts in this direction by introducing the RE/MAX Academy of Real Estate for RE/MAX and non-RE/MAX affiliates, in India and abroad. The training guides them to work towards restoring the confidence of the clients by showcasing transparency and also by complying with processes and systems. In addition to this, I believe, the implementation of the Real Estate Regulatory bill will ensure transparency and professionalism in this industry.
You are trying to bring structure into a relatively crowded and unorganised real estate franchising and brokerage industry in India. What convinced you that this model will work? And what are the challenges you faced when you entered India?
The RE/MAX concept basically combines maximum commissions and the best support services to attract top agents. The agents share office overheads, pay a management fee and in return, receive a wide variety of real estate services like international and national referrals, high commissions, benefits from national and region centric advertising campaigns, superior training and a growing market share.
We signed RE/MAX India at one of the worst times of worldwide recession and this was the biggest challenge we faced. But, with the required support from my team, combined with my dream to change the face of the industry in India, I took the leap of faith and brought the company to India. From the beginning, my aim was to recruit and train real estate personnel at various levels of the business model, to create a network spanning the entire country which will not only organise the market but also create a good referral system.
How do you identify a potential market (or region), especially in a diverse market such as India?
The beauty of real estate is that it is a basic requirement and real estate brokers are needed everywhere. Right at the beginning, we segregated the entire country into different regions depending on the economic potential of the place, and started identifying entrepreneurs who could make the RE/MAX brand a success in their regions. We followed a simple expansion strategy wherein we did not sell franchises but awarded them. And, our partners were essentially people who had an entrepreneurial streak, believed in the systems and processes laid out by the company and were well capitalised.
In what ways does the company intend to promote entrepreneurship?
We believe that, in this business, the key to success is to have commission-based, full-time entrepreneurial agents. The moment you take away the commission part in the real estate business, you end up killing an agent’s motivation to close more transactions and deliver quality service to customers.
At RE/MAX, in return for a nominal monthly fee, our entrepreneurial agents take a 95 per cent to 100 per cent stake in the commission as a result of which their accountability to close sales and perform better is improved. These entrepreneurs, who typically work on weekends, generate their own listings, create their own marketing mechanisms, close their own transactions and ensure complete cooperation with the other brokers.
What are some of the regulatory and industrial level challenges you face today?
The biggest challenge on this front is the absence of a regulatory body to monitor the quality of transactions. Even though the sector is poised for a fast paced growth in the coming decade and poses high earning potential, it has still not presented itself as a lucrative career option among young professionals. The biggest reason behind this is the lack of credibility in the industry. It lacks proper licensing, professionalism and certifications that will make this business equally respectable to other professions.
Thus, when we launched the RE/MAX Academy of Real Estate, the motive behind it was to offer a combined flavour of classroom learning and practical training, to make anybody fit for practice in the real estate domain. This includes provision of proper certifications and designations to all agents after they graduate from the academy. On the other hand, we also work very closely with associations such as the National Association of Realtors (Global and India) and National Real Estate Development Council (NAREDCO), to connect with like-minded individuals and partake in their initiatives to bring professionalism into the industry.
What’s the best advice you’ve received?
The best advice I’ve received is from Dave Liniger, the co-founder and chairman of RE/MAX, at the time of signing the RE/MAX India Master Franchise. He said, “Your people are your best assets and you need to do something special to get them back to your office every day.” This has had a long-lasting impact on me and the way I run the organisation.
What is your leadership style?
My leadership style is democratic. All my team members have the right to think and express their opinion to me and as a leader, I ensure that they are a part of the end-decisions that I take.
The one big challenge you faced that kept you awake at night?
The biggest challenge I faced was in introducing the concept of RE/MAX into India. Looking at the past records and the way this business was conducted in India, it was a big step, but I was convinced of the tremendous potential that could be tapped by opening up a branch here.
What are the key learnings that an entrepreneur should keep in mind to lead a successful franchise?
The four steps to success would be to blindly follow the franchisor, have aggressive leadership skills and be convinced about what you are doing, because only if you believe in it will the others follow suit. Last of course would be luck, which plays an important role in the success of a franchise.