Grab the handbag, Pam
Las Vegas vies with Constantia to be top of the SA residential property pile
In one corner, Remax, the glitzy 10-year-old upstart US franchise. In the other, Pam Golding, queen of Constantia and the undisputed regent of SA residential property for 25 years. At stake: to be SA's biggest estate agent.
The only thing these companies have in common is that their headquarters are in Cape Town. Golding is the epitome of tasteful Anglo-Saxon fine living, from the grand-estate gates on her corporate masthead to her restrained London offices. She has carefully nurtured the brand to make it a must-have for a seller with a house worth more than R1m who thinks it should be on the front cover of Architectural Digest - and that's every seller.
And she has backed the brand with a tough, well-run organisation that is the model for contenders for a place near the throne, from Sotheby's to Jawitz, Engel & Volker, Wakefield and Churchill Murray. Pam Golding Properties (PGP) staff are skilled in the more decorous ways of pinning down a deal.
Remax's logo also shows attitude - but of the kind you find on a giant neon sign outside a 1970s Las Vegas casino. Loud is too weak a word for the red-and-blue logo that would wake a sedated grandmother in the middle of the night.
Remax is staffed by 1 982 self-employed entrepreneurs with no delusions of grandeur. They earn 100% commissions - less overheads and franchise fees.
Starting from nowhere, Remax has built the SA organisation to 153 offices in 10 years and now claims it will get close to PGP's R13bn in house sales brought in by a 2 000-strong staff and 230 offices.
PGP CEO Andrew Golding acknowledges Remax's achievements. But he implies that its good run may not last.
Remax has grown by drawing experienced staff away from established firms with the promise of higher earnings per sale. They can choose to be "broker owners", who provide offices and infrastructure for "associates", who sell the houses and earn commission. They pay for their own advertising and a service fee to the broker owners. A third tier of "licensed assistants" is employed by the associates.
A tight market stifled by a shortage of houses for sale has recently attracted more agents with the promise of higher earnings per sale.
"But this model should be unpacked," says Golding, implying that the earnings may not be that great. Remax CEO Bruce Swain says the average agent takes home 82% of gross commission.
The real victims of this battle are the midsized agencies, says Jawitz CEO Herschel Jawitz. They are not niched enough to contain costs, or big enough to attract sellers.
"That's why we are going national to build size," he says. "Pam Golding's brand is taking sellers from the midsized agencies in the higher-end metropolitan areas. And Remax is gaining in the other areas where the relationship between agents and buyers or sellers counts most."
Article by: Ian Fife - http://free.financialmail.co.za