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It’s been more than seven years since real estate franchise giant RE/MAX launched Motto Mortgage, which means its franchise agreements with early adopters are about to be renewed.
Since launching Motto Mortgage in October 2016, Motto Franchising LLC continues to move toward RE/MAX’s long-term goal of growing its national mortgage brokerage franchise brand to 1,000 offices.
At the same time, it is celebrating the decision of the two original Motto franchise owners to renew their licenses.
Franchisees sign 7-year agreements directly with Motto Franchising (there are no regional franchises in the system), with 2024 being Motto’s first full year of renewed offices.
Dustin Oldfather, founder of Motto Mortgage Prosperity and The Oldfather Group of Compass Real Estate, gave an example of where Motto Franchising has been getting most of its new business lately: From companies not affiliated with RE/MAX Real estate agency and team.
Dustin’s father
“Partnering with the Motto brand to implement its one-stop mortgage brokerage solution is a strategic move that allows our real estate companies to be directly involved in the mortgage process and helps create a more seamless home buying experience for our customers.” The old father said in an article statement.
Mark Scuderi, broker and owner of Motto Mortgage Supreme and RE/MAX Supreme, is an example of most of the franchisees in Motto Franchising’s history (real estate brokerages affiliated with RE/MAX).
Mark Scuderi
“Owning a Motto Mortgage franchise provides us with a competitive advantage in in-house mortgage servicing and provides our loan originators unparalleled access to a variety of wholesale lenders and unique loan products,” Scuderi said in a statement. Help make it easier for us to own a home.”
Motto Mortgage does not provide loans, but provides technology, compliance, training and marketing solutions to mortgage brokers to help homebuyers purchase financing from a range of wholesale lenders, such as UWM, the largest mortgage lender in the United States.
RE/MAX also provides third-party loan processing services to mortgage brokers through another subsidiary it acquired in 2020, wemlo.
Motto Mortgage Number of offices, monthly revenue per office
Source: RE/MAX 2023 Annual Report to investors.
Motto Franchising sold 27 franchise licenses in 2023, down from 64 in 2021, with 246 open offices for the year. This means that of the 371 Motto franchises sold since 2016, 66% are still open, with 125 offices either closed or no longer affiliated with Motto.
RE/MAX disclosed in its latest report: “While not all Motto franchises are successful, over the first six years of their existence, Motto franchisees have had a higher success rate than comparable small businesses in the financial services industry. Average operating rate.” annual report Inform investors by citing U.S. Bureau of Labor Statistics data on private sector failure rates.
Rising mortgage rates make 2023 a difficult year for lenders. RE/MAX revealed that 56 Motto offices are receiving short-term financial relief through the end of the year with no invoices or late fees. This is a decrease from the 58 offices receiving relief at the end of 2022, but an increase from the 31 offices receiving relief in 2021.
But the average fee revenue generated for RE/MAX per office has climbed steadily over the years, from an average of $3,000 per month in 2019 to $3,700 per month last year.
Both RE/MAX and Motto are 100% franchised, which means the company does not own any real estate or mortgage brokerage companies operating under these brands.
Motto Franchising and wemlo generate revenue through fixed monthly fees, franchise sales and renewals, and loan processing.
New offices are not required to pay a monthly fee to Motto Franchising for six months after purchasing a franchise license. After that, the cost gradually increases, up to a maximum of $4,650 per month after 13 months. According to RE/MAX, as of the end of last year, more than nine out of 10 offices (91%) were in the highest monthly fee tier.
Motto’s office also pays Wemlo a mortgage processing fee, which increased by $100 on Jan. 1 to $825 per loan. Wemlo charges most customers who are not part of the Motto network $995 per loan.
Most Motto Mortgage franchisees are real estate agents
“Other real estate” includes national franchisees, local brokerages and teams from other brands other than RE/MAX. Source: RE/MAX 2023 Annual Report to investors.
RE/MAX said in its 2023 annual report that Motto helps franchisees build independent mortgage brokerages, “with a model designed to comply with complex regulations, essentially providing a ‘mortgage brokerage in a box.'”
“This model creates ancillary business opportunities not only for current real estate brokerages and professionals, but also for mortgage professionals looking to open their own businesses and other independent investors interested in financial services.”
Historically, nearly three-quarters (73%) of Motto franchise sales have been to real estate brokerages looking to get into the mortgage business. While RE/MAX-affiliated real estate brokerages account for the majority of franchise sales to date (51%), the majority of new franchisees are not RE/MAX.
Sales to national franchisees, local brokerages and other brand teams other than RE/MAX accounted for 56% of Motto franchise sales last year.
RE/MAX affiliated brokerage firms will take a much smaller share of the 2023 franchise sales pie — 18%.
Investors account for 19% of Motto franchise sales in 2023, with loan originators accounting for the remaining 7%.
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