Andrew Warner: My name is Andrew Warner. I’m the founder of Mixergy, where I interview ambitious, gritty entrepreneurs for an audience of ambitious, gritty, hardworking entrepreneurs. And if you’re in the U. S., actually not even so much in the U. S. anymore, it’s all over the world. If you are in the market to buy a house, there’s a very good chance that one of the brokers you’re considering is a seller.
Associated with REMAX, REMAX is an American institution that’s gone international. It’s a real estate company that operates through the franchise system. Joining me is the founder of the company, Dave Linegar. I invited him here to talk about how he built this thing up into such an amazing company and we could talk about it.
Thanks to my sponsor, lemon. io slash mixergy. If you’re hiring developers, go to lemon. I’ll tell you later why you should go there first. ,
can you give me some numbers?
Dave Liniger: We handle over 1 million houses in the United States alone. We have 9, 000 offices, 110 countries and about 150, 000 real estate agents worldwide.
Andrew Warner: I didn’t realize that RE MAX stood for real estate maximums. What were you maximizing when you needed to come up with that name?
Dave Liniger: We didn’t want to call it Dave Linegar Realty for sure. And I had Worked on a different concept called the 100% commission concept to relate this in the real estate industry. Real estate agents work for a brokerage and they split their commissions on traditionally a 50 50 basis. So the company gets half.
Agent gets half. Agent, that’s for their income, paid their overhead, automobile, entertainment, and personal promotion. The company paid for the signs, the office space, the administrative assistance, and tried to make a profit. What RE MAX did was we organized our company like a co op. Like a group of doctors, lawyers, dentists, that would all come to work in the office, pay a pro rata share of running the business, and keep the majority of their commission for themselves.
It was like going into business for yourself, but not by yourself. We decided to come up with a term Real Estate Maximus, Maximums. And that was maximum service for the customer, because we’d have only full time experienced agents. No part timers, no beginners maximum recruiting ability for the owner of the office maximum commissions for the agent.
Andrew Warner: And as a business, what you’re essentially doing is offering WeWork Plus to the real estate brokers. They pay for the office, they pay for the support, they pay for the infrastructure, but then they keep all of the profits. As an entrepreneur, didn’t you look at that and say what’s in it for me?
I’m coming up with this great idea and all I’m getting is, facilities fees.
Dave Liniger: It was interesting to note at the time that we had a a profit figure in for the management of the company because somebody has to organize, train, motivate, do sales meetings, and the broker is responsible for every listing agreement, every sales agreement. And so we had put in a management fee, which interestingly enough, after expenses of a traditional company, was about what they made per agent.
Most companies have this 80 20 rule. 20% of the agents are doing 80% of the business. And the 20% that were only getting half the commission were actually paying to keep the other 80% in business. And we didn’t like that.
Andrew Warner: So you’re saying ultimately what you discovered was, as a management organization, you made the same amount of money, but the good agents got to keep a bigger share of what they’ve earned, and the bad agents just weren’t part of the mix, and so you didn’t end up with the average, you just ended up with a bigger percentage, or you ended up with money from a smaller number of people.
Am I reading it right?
Dave Liniger: That’s correct.
Andrew Warner: As an entrepreneur, can you draw a bigger conclusion here? What’s the realization that someone could take from you and say, I’m gonna go and hunt for this approach in other businesses and see if I can do what Dave did?
Dave Liniger: It’s actually been imitated several times in the last 20 years or so. A lot of beauty salons and haircut places have gone to this rent a desk or rent a salon concept in that, they might work for two or three different hair salons. One in the north side of Denver and one in the south side, and they’re north three days a week and south two days a week.
And they literally have their own equipment, their own stall, their own locker, and that they book their own customers. And this can be done in lots of different places. I know some insurance people are trying a similar concept.
Andrew Warner: I’m wondering about your early success in real estate. What was one of the first ones that made you say, I love this business?
Dave Liniger: I got in the real estate business, not to be a real estate agent. I got in the business to buy and flip houses and I was military in Arizona 99 a month at that time, back in the 1960s as a brand new military guy and that’s miserable. That’s no living at all. So I worked three part time jobs and of all things.
I made 500 hours a month between all four jobs. I bought a 10, 000 property sold it six months later for 10, 600. I made more money on that one real estate transaction than I did four jobs. I got the commission, or I got the real estate license to start saving the commission on my deals. By the way, that house today would be a 450, 000 house.
In today’s market, 55 years, 60 years later. So it’s a normal house. No, I would tell you this much for the entrepreneurs that are listening to the program, our startup was an absolute disaster. Here is this beautiful, fantastic idea. And we ran into five major problems right off the bat. Number one, all the top producers I talked to said, man, that sounds like a great idea.
Yeah. Once you prove it, I’ll interview again. I’m already with the biggest and best company in town and I’m not going to risk that. So if everybody stands on the sidelines and nobody joins, you’re in a lot of trouble. The second thing is the industry hated it. The brokers I competed against said, if it works, we’re going to have to pay our people more than a 50% commission split.
And they tried everything they could to get me thrown off the multiple listing service, the board, and everything else. The third thing is the recession started. The first oil embargo and we couldn’t even get gasoline for our automobiles in 1973 to show customers our houses. The fourth thing that happened is that I made a lot of mistakes.
I had never been in a management position before, and so I was, it’s like trying to invent an airplane and fly it at the same time. This doesn’t work very good. And the fifth thing that really was difficult was I was so young. I was 27 years old had just got out of the military, had a crew cut, haircut, I looked like I was 19 years old.
I had become incredibly successful selling real estate the year before I started REMAX. And I just figured out how to do it, moved to Denver with all these dreams and hopes. Oh, and my financial backers went broke. And I never got the money after they had promised me a half million dollars in seed money.
You take all those problems, and they compounded for the first three years. And, I will tell you, it was a life or death struggle. I skipped my own paychecks for over two years, and lived off what meager savings I still had. And for any of your entrepreneurial startups Everybody doesn’t get lucky and get the billion dollar company off of it right away.
It’s a tough world out there until you can get it figured out.
Andrew Warner: Before I get into these issues, you said that you did really well as a real estate broker. So I could see you bought a house, you fixed it up, you sold it, you saw something here, you decided, you know what? I can buy houses and save money if I get a real estate license. You got a real estate license and then you said, all right, I’ll help other people buy and sell houses.
And as a result, I’ll make money from that. What was it about you that made you so good at buying and selling houses?
Dave Liniger: You have to take advantage of the situations that you’re in. And my situation back then was when I first got licensed, I was just barely 20, 21 years old. And I’m telling you. I was skinny, I was small I was shy a farm boy from Marin, Indiana, and I decided, I looked around my office, and I was doing a part time, and these old people, some of them are really old, some of them are like 50 and 60 years old, and they’re making deals.
And I thought, if they can do it, with my energy and drive, I can do it. I tried for six months, failed for six months. And I just picked up my goodies and told my broker I wasn’t going to make it, obviously. And he said we didn’t think you would. And I said, why’d you hire me? And he says, in the real estate business, we hire anybody.
Everybody has a brother, a sister, a next door neighbor, and a best friend. And that’s why the industry is so unprofessional. I had paid for a seminar the next day. I’d already spent the money, so I went to it, sat in the front row, and it was my first formal training. A motivational speaker, famous in the industry, his name was Dave Stone.
He was so smooth, every break I’d run up, grab his hand, shake his hand, Oh, Mr. Stone, if I could say stuff like that, I could be a success. And he, of course, just wanted his break to go to the restroom. And he said how long have you been trying? And I said six months. And he says how many deals have you done?
And I said, done. And he says if I knew, I’d quit. And I said, I did, but man, you’ve inspired me. I could do this. Of all things, I was going home that night. I understood the fix up market and there was a Latino girl, very young, like 19 or 20, grocery store line. And she was talking to her father, mostly in Spanish.
And I said, excuse me, are you talking about selling a house? And she said, yes, my father doesn’t speak English. He’s moving to Albuquerque. And we need to sell his house, but it’s in really bad shape. It’s a fix up. And so I said I’m a realtor. I can help you. So I went home with him. Fix up, I think it was 14, 000 property.
Fix ups were in the rage because everybody wanted to fix them up and flip them. And we had two offers on it that night. The next day I wake up and she was getting married, she was engaged and her boyfriend had a great job and she had a job. And so I sold him a house by noon.
Me to another Latino couple that afternoon and two more the next day.
In five days, I went from this skinny little white kid to being an expert dealing with the Latino market. And the thing was unique about it was I was no different 48 hours later, except for I’d done five deals. That’s unheard of. And my confidence just skyrocketed and they were so generous. Latinos are affectionate.
And the women would hug me and kiss me on my cheek, and they’d say, I never dreamed we were going to own our own home. And the husbands, macho, would pat you on the back and shake a hand and say, Man, this is great. My parents never owned their own home. And look at us at our age, and we’ve got our foot in the door.
And the rest was history. After that, I never looked at a customer with fear. And I started working with all kinds of different customers. I was selling houses to people who were 60 years old, and my reputation was, I was this young whiz bang kid that he really gets it done.
Andrew Warner: Was it what you heard at that presentation or was it just dumb luck that you happened to have turned things around? What changed?
Dave Liniger: I think both of them had an impact. I knew that I could do this. It was just, I had confidence when I walked out of that course. And I became a lifelong learner. As a matter of fact, that individual became a mentor to me for probably five years. And when I got ready to start RE MAX he was a management consultant.
I paid him to talk on my business and he gave me a 200 pages on a study and he said, Here’s 200 pages why it won’t work. And then he added 20 pages and he said, But if you’ll do this and this, you may have a chance.
Andrew Warner: What was it that he said wouldn’t work and what was it that was key to making it work?
Dave Liniger: If it was just going to be a rent a desk, which many people had tried agents need support, even successful agents. You have to have somebody that can help you with leadership, that can help you with the tough deals. Somebody that’s got 20, 30 years experience and all of a sudden… You’ve been in it two years, but you’ve never had a qualification problem on a mortgage like this or you can’t get the appraisal raised on a property to get the deal closed.
And what we ended up doing is we imitated the best manage of the very best real estate residential companies out there and that we had home trade ins, we had formal training programs we had bridge loans that we could give a customer if they wanted to sell a house and buy another, that we loaned them the money to get into the other until their house sold.
And we did all the great management and leadership devices and solutions. And still operated on this high commission concept. First year secret for the rest of your people. The two biggest companies in town were all men. You could be a woman if you were a secretary or a bookkeeper, receptionist, but only salespeople were men salespeople.
Very chauvinistic back then. I tried to recruit those men because they were the best in town. And every one of them said, no, I’ll watch and see if you make it. First month, I interviewed I had 1, 000 phone calls, 204 face to face interviews, and signed up four people. Three of the four were women.
Andrew Warner: I see.
Dave Liniger: And they had tried to go to work for the all men companies and couldn’t get in the door.
Andrew Warner: So then, were they experienced enough that they were strong players, and they just happened to be women, or they were brand new?
Dave Liniger: No, they were very experienced. I only took experienced people. And so the end result was, at the end of the first year, we managed to get to 21. Second year we got to 42. The third year we got to 84. Then we started being the top ten players with 84 agents. The next year, 134. The fifth year, two. I believe.
And the fifth year, we were number one in the state. We had the highest commissions, highest earnings, highest number of transaction sites, highest total transactions, and my sales force was 70%, women and multicultural.
Andrew Warner: And that was a question I was going to come back and ask you. When they said, prove that it works and come back, how did you handle it? And I think what you did was, instead of going to the people who wanted you to prove to them, you went to the ones who were underappreciated, undervalued, and you gave them something that they couldn’t get from others.
Dave Liniger: And one other point,
Andrew Warner: yes?
Dave Liniger: year six, 200 of those men that had said no for five years joined my merry band of ladies who had kicked their butts.
Andrew Warner: I wonder about your the transformation was partially due to you hearing the speaker. I forget his first name Stone,
Dave Liniger: Dave Stone.
Andrew Warner: Dave Stone, same name as you. I should have remembered. So Dave Stone, there was a plane accident in your family, right? Can we talk a little bit about that and the way that self improvement helped?
Is it too personal to bring up?
Dave Liniger: Not at all. When I started REMAX, I knew that I had no formal college background.
Andrew Warner: Would you mind would you mind putting that phone on silent just to avoid the dinging coming out of the
Dave Liniger: tried to figure out how to do that.
Andrew Warner: There should be a switch on the side. It’s the only physical thing that you can flip side to side.
Dave Liniger: The phone is off, actually. It’s coming off my computer.
Andrew Warner: Oh, you probably have Outlook on your computer. Is that right? Yep, Outlook is the thing that does it.
Dave Liniger: I’m sorry. Anyway without a formal management background I looked for an administrative vice president that would be capable of negotiating leases for offices, buy furniture, hire secretaries, supervise them, set up a bookkeeping accounting system, hire attorneys, and I would be the franchise recruiter.
And I would also be the person that did the sales training. My 28th interview was a lovely young woman. Her name was Gail Main. She had just gotten married. And she was a trailing spouse. And I had moved from St. Louis to Denver. I convinced her to take the job. And figured I’d be her mentor for the rest of my career.
As it ended up, I learned more from her than she did from me. About 10 years later we became romantically involved. Decided on getting married. We were in love with the company and we were doing a REMAX convention. And… Bracebridge area. She went for a ride in a seaplane. The pilot crashed on takeoff killed himself and gave her a traumatic brain injury and paralysis on her left side which continues to this day.
She was in a coma year rehab and then we did end up getting married. And
Andrew Warner: While she was in a coma or after?
Dave Liniger: That’s her, a year later after she was out of the hospital.
Andrew Warner: was told she may not come, or you were told she may not come out of the coma, right?
Dave Liniger: That’s right.
Andrew Warner: Okay.
Dave Liniger: And so the end result is she was already the CEO of the company. Over that 10 year period of time, she moved up from a vice president to the CEO. And I was literally traveling 200 to 250 days a year, selling franchises all over the United States. And so she was the management and leadership that did the day to day stuff.
I was the voice of the company convention speaker, that type of thing. And so she came back to work and continued to work. She’s been on the board for 50 years. We just made her emerita, which means that she doesn’t have to keep taking continuing education. And she’s still on the board, comes to the meetings.
And so it’s worked out fine for us.
Andrew Warner: Here’s the thing that got me. I heard while she was in a coma, you would read to her motivational self improvement books, something along those lines. What did you read to her?
Dave Liniger: at the time, cassette tapes were the rage. And I had a huge collection of cassette tapes from all the motivational speakers. Plus we were hiring dozens of speakers a year for RE MAX conventions. And so I was really into this continual self improvement movement. And it made a big difference in me.
And she had been doing the same thing. And I would sit with her at the, in the coma. And I’d play different tapes to her. Squeeze her hand and tell her I loved her. And it’s, we’re gonna make it. And it’s gonna be okay. You’re looking better today. The doctors, it was in Canada first, they actually encouraged it and they said, we have people that come out of a coma and say word for word things that they heard somebody say when they were in the coma and it says it’s not going to hurt anything and it might help.
We don’t have any idea nobody can tell me if it helped her or if it
Andrew Warner: I have to be honest with you, Dave. I’ve grown cynical of self improvement tapes and and speakers. And one of the reasons why I started Mixergy, this podcast interview where I talk to entrepreneurs, is I felt like a lot of them, a lot of the people who I’d heard, Weren’t real business people weren’t real entrepreneurs.
They were selling the rah, but they didn’t really have The weird little things that go into making a business successful But then I hear its impact on you. I can see its impact on people like I know will smith is someone that we’re all looking down on because he hit chris rock, but there’s no doubt that a lot of this type of stuff influenced him and others and I’m trying to come back to it, lose my cynicism, take what works, and leave the rest behind.
What do you think of that?
Dave Liniger: didn’t. Let me give you an example, if I could please, Andrew. Jim Rome. Very famous philosopher, passed away a while back. He made a comment that has stayed with me my entire career. And he said, you’re the average of the five people that you spend the most time with. And, if you look at it let’s talk about the real world.
If you’re a ditch digger, that is an honest job. That beats being a drug dealer usually fairly poor education. Very low on the economic front when you compare it to other positions. And you will work with other ditch diggers. You will dress the same way in muddy and dirty clothes. You’ll have a pickup truck on Friday nights when you’ll spend the money to go to a bar.
You’ll go to the local neighbor bar with your friends. You’ll tell the same jokes. You’ll have the same vocabulary. You’ll use the same cuss words. And if you have a vacation, you’re going to go to the river and fish at night. Or you’re going to the lake. Or something inexpensive because that’s what you have. You’re more fortunate, you’re born into a good family, you have a chance to go to college, you decide I want to be a doctor. You do four years of study at a college, then you do three years of medical study, then you do two years of residency, and then you work in a hospital setting. And everybody in that hospital setting is a college graduate.
The nurses are all college graduates. The assistants are all the fellow doctors and those are the people you’re surrounded with. You also join the same country clubs. You’ll buy the same luxury vehicles. You will go to Vail and Aspen skiing vacations with your family or maybe Europe. And you will adapt the same thoughts entertainment, et cetera, as those that you’re surrounded with.
So one of the motivational speakers says the person you’ll be in five years will be the result of the people you work with, the people that you listen to, the books you read, and the seminars you go to. I am living proof. I was an outstanding real estate agent. I learned how, I studied hard, but as a neophyte trying to run a business, it was a disaster at first.
I did not want to fail and so I took every course I could. Some were rah. It’s not my style. I don’t walk on coals and I don’t do anything like that. But everybody I met, I learned something. And we paid our own way when we were broke. We went to the American Management Association and took three and five day courses on how to read financial statements as a non financial person.
And so self development is incredibly important. Just going to get rah doesn’t get you any place. It gives you a one day lift maybe. But sincerely, building a path, a career path, that will get you where you want to be is important. Everybody looks at the overnight successes, especially in the internet and Facebook and Amazon and
Andrew Warner: is
Dave Liniger: Bill Gates Instagram, but nobody looks back on the fact that Bill Gates had worked with computers for 10, 000 hours because it was a fascinating hobby to him before he even started a business. And so it’s when you fall in love with something and you’ve got this infinite curiosity, you will learn. You want to be better. And once you’re competitive and you start being up in the big boys, you want to win.
Andrew Warner: Okay, I hear what you’re saying. You’re saying, look, I’m lumping every one of them together. Rah is not the answer. And I did see that one of the things that you at RE MAX was able to do for your team was bring these kinds of voices in, to bring expertise from the real estate market, to also get people pumped up.
And for me to have compared it to just a WeWork, I think, was underestimating all those other benefits that you were bringing in. The accountability, the support, etc. As an entrepreneur, and I know we’re going to take a break in a moment, but as an entrepreneur, who could do that for you? Who could be the person who could help you as you were trying to figure it out?
Who could help you when you had a problem? The way that you said, we’re not just going to offer office space, we’re also going to offer an infrastructure where these brokers can help each other and we could help them. How do you not get, get lost without it?
Dave Liniger: When the days were dark and dreary and the bill collectors were heavy, I had the common sense to realize I don’t have all the answers. I’m doing everything wrong. I sat down with my managers, who were all 20 years older than me, and I said, Can you help me here? We’re all embarrassed. We got bill collectors.
I’m struggling to recruit. We’re trying to prove a concept. What am I doing right that you really like? What am I doing wrong? If you were to help me become the leader you want me to be, what would you tell me to do? And I listened. I took notes. And one of the problems you have. You might know this. A lot of times you mentor people and they nod their head and they say yes and they leave and they never do anything different. And when you mentor somebody that says, thanks for helping me with the problem. I’m going to go solve that. Oh, I’m going to execute tomorrow on what you just said, then it works. And so that ability to take personal criticism, not to take it as an insult. But just, you just make them, you don’t keep your word on some things you say.
You’re so busy, you say, yeah, I’ll do it. Then you never remember. And I said, that’s not true. I keep my word. And they started pointing out you didn’t do this. Oh, I forgot. You didn’t do this. And you find your mentors where you can find them. But you don’t learn something from everybody.
Andrew Warner: So you’re saying it’s mentors wherever you can find them, but also coming back to your people and saying, level with me, tell me where I’m falling short of my obligations as a leader here and your expectations and needs. And then you lived up to the things that you said you would do when they called you out.
Dave Liniger: Andrew, can I give you another example? Special Forces. And everybody knows, oh my god, this is the Kremlin, man these are warriors. And it’s maybe one out of a hundred gets there. Typically, in a military structure, it’s a command down structure. And that is, charge the enemy, and a bunch of 19 year old idiots follow.
That’s just how it works. In the Special Forces, they are taught that every person has a voice. If you’re planning a mission, every person on that team, if it’s a nine man team, or a nine person, Now we have some women in the teams. If it’s nine individuals, every single one has a job function, but every single one has knowledge and from previous engagements they’ve been in.
And there’s no such thing as, there’s not a good idea. This is a collaborative effort. Of a team of nine, and then after it ends, they always do a follow up discussion, what we’re right, what we’re wrong, what could we have done better, and it’s very permissible to say to one of your friends, you screwed up there.
You walk right in front of me when I had my gun out, and we know we don’t do that, and it’s not taken as an insult, it’s don’t make the same mistake again because we’re going to have another battle a week from now someplace else. And this collaborative effort works, and by the way, You know who the best collaborators are?
It’s women.
Andrew Warner: Why?
Dave Liniger: No doubt about it. Women are much more attuned to the emotions of the group, and they’re much more likely to have this two way conversation whereas a man still is a little bit dictatorial.
Andrew Warner: One of the things that I loved about Sheryl Sandberg’s book Plan B, and I love that book, was she did talk about those postmortems that they would do when things weren’t working to figure out how to do it better next time, and frankly, even when things were working. All right, I’ll tell you what, I know that we said that we’d take a quick break for you at this point.
I’m, I’ve got to come back after this break and ask you about, still, with everything that we’ve talked about that went right, there was a major problem. A set of them. We’ll come back and talk about that. I’ll let you take a break. I’m going to talk to my audience about my sponsor and then we’ll wait.
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I don’t even think so. Actually. I know Alex is not bending on price, but great price. Great service. Thank you. Lemon. Welcome back, Dave. Can I go into the problem that led you to bring Frank and Walter into the business?
Dave Liniger: That’s an interesting situation. We started franchising in 1975 with one franchise. In Kansas City, we franchised two in 76, one in Calgary and one in D. C. Christmas of 76, my eight managers came to me and said, You want a franchise? Sell us our offices. That will give you the capital to start a franchise company.
We did. It worked out very well. In 77,
Andrew Warner: that they were no longer part of Remax, they now own their whole infrastructure, and they were separate business entities, and you got paid a one time lump sum.
Dave Liniger: They paid me monthly, but nobody had enough money, but they stayed Remax. They became franchisees instead of managers working in one of my personal offices.
Andrew Warner: I see. Okay.
Dave Liniger: In 77, we started master franchising across the United States, selling entire states for a large amount of money and passing on the rights for them to then sell individual franchises in their states.
That
Andrew Warner: Forgive me for interrupting. Dave, I want to understand, the reason that you did franchising at the time is, there wasn’t venture capital available the way it is today. Today you might say, I have this model, it works, I think we could scale it, you get venture capital and you get to go. Back then it wasn’t available and franchising was the way to raise money and put leaders in charge who had skin in the game.
Am I right about this?
Dave Liniger: Exactly right.
Andrew Warner: Okay.
Dave Liniger: So Andrew, that worked. We started having success. And in 19 I believe it was 80, it was 1980 Frank Posler, an elderly gentleman, God, he had to have been 60 years old flew to Denver and he wanted to talk about taking a region in Canada. He had a couple of young kids that were 23 years old that were hard chargers and I wasn’t available to meet with him.
He met with some of my senior officers and he left me a note. He said I came down to negotiate general to general. And I said, and didn’t even shake my hand. I got on a plane that day and almost beat him back to Canada. And the next morning I walked in and he was in a sales meeting. And I walked into his sales meeting and I said, who’s Frank Posler?
And this distinguished gentleman, an Austrian by birth and well dressed and, beard and looked perfect. And he said I’m Frank. I said general to general, my name is Dave Liddiger and I came here to shake your hand. Shook his hand, turned around, walked out, went back to the airport. They called my office.
And he said what was that about? And he says you didn’t say can, so he came and we wanted to buy. And so they told him my flight, American Airlines, they came out. I’m in the Admirals Club waiting for my plane. And they said we want you to stay and talk to us about selling us Ontario. And I said, oh, okay.
What do you want to talk about? And I looked at the figures, he was going broke. He was about 600, 000 in debt and losing money, and he just wasn’t, and it was a typical real estate company at the time. And he says, if I use your system, I know we can make it work. And the youngsters they said, yeah we’ll work our tails off.
And they finally gave me a deposit check. And laughed before I got on the plane, I called my office and called my three or four best officers and Gail. I said, Oh, I think I just made the biggest mistake in my life. This guy is so old. He’s never going to have the energy to make it work. He’s broke. And then he’s starting in the hole worse than we were. At the time we were in a recession in the United States. The interest rates have gone from seven and a half on a mortgage to fifteen, sixteen and a half. We weren’t selling any franchises. Our franchisees were having a terrible time. And we have every quarter we would get together as regional owners at some place like Chicago, O’Hare, or a big airport and do a two day weekend meeting and talk.
How are you selling franchises? How are you collecting bills from your brokers when they’re broke? And then we had to bring in franchise sales and maybe between the 30 people in the United States, we’d have three franchise sales first meeting, Frank and Walter walked in and they said we’ve got 10 all cash next meeting, a quarter later, we had four or five from the remix and United States, they came in and said, we got 27 this quarter and they literally a.
revolutionized our company. We would have probably failed in that recession. And they kept us alive, and eventually, they had explosive success. Today, in Canada, we have three distinctive regions. Western Canada Eastern Canada, and Quebec is a separate one. They have 38% of the Canadian market total. Very profitable.
They came to me 20 years ago and said, we’d like to open Europe for you. The Canadians are much more cosmopolitan than Americans are. It’s part of the British empire. And so they have all these people and immigration. Whereas when we left England, nobody wanted to go back to Europe. Canada was just part of Europe, so to speak.
And so free flow of trade and so on, they went over, it took them, I don’t know, 10 years to get to 10, 000 agents. I don’t know how many they got, 25 or 30, 000 agents over there now. And that really catapulted our international expansion.
Andrew Warner: What did they do that allowed them to sell so much that even in that difficult period they were outselling the U. S.?
Dave Liniger: More than any other regional director we ever had, the two of them imitated my marketing. And that is, don’t be afraid of people saying, no, you got to kiss a lot of frogs before you find a Prince. And so many people are so afraid to go out and ask for the order. And once you get rejected enough, you just stop asking.
Andrew Warner: And so they just kept, it was, they hit the num they played the numbers game even when they were hearing no, and not getting dissuaded. So you know what? I saw a YouTube video from Remax that implied that they had bought the business from you. I did research and it seemed they didn’t buy the business from you, but it did.
It was like a company email that said they had. That’s not the relationship, right? Where you would…
Dave Liniger: Master Franchises.
Andrew Warner: Just master franchise. Okay. And then you, there was, though, you did say in that video from REMAX, it’s from five years ago on the YouTube channel, where you did say, we were struggling so much, we had to sell assets, essentially, to pay the bills, right?
And this was because of what? What were those early business challenges that you eventually got a hold of?
Dave Liniger: It was tough going for three years. It was in 73 through 76. And then we did pretty good until 1980, the savings and loan crisis hit, and we lost 60% of the savings and loans in the United States in a one year period of time. And the mortgage business was entirely different back then.
And again, we had just an unbelievable number of foreclosures in the hundreds and hundreds of thousands. And those were difficult to sell. The recession because of the second oil embargo hit. And the interest rates because of inflation in the United States had gone to 17. 5%. Those are tough times for everybody.
And even good top producing agents saw their incomes drop in half. And you just have to do what you have to do to survive. We’ve only laid people off in the company’s history at headquarters two times. Once was in 1980 and again we had to do a little bit of that in 19, I’m sorry, in 2007 during the financial crisis.
During COVID, we never laid a person off. We had enough cash flow and enough cash reserves that we said, let’s hold on to this thing together. And as a matter of fact, we went out to our franchisees and said, if you can’t pay, we understand because nobody’s making sales right now. Pay what you can and we’ll collect later.
And so we’re strong enough position. We could do that. COVID for the real estate industry only stopped us for about three months. And then all of a sudden the market just exploded. The interest rates went down to 2. 9, and we were a necessary industry, and we had one of our best years during that period of time.
Andrew Warner: What do you think is going to happen in real estate now? We’re looking at going from a high of that came from low interest rates, people being willing to go out and buy property outside of their, the city that they were renting in and so on. Where do you see it going now?
Dave Liniger: I think it will re evolve. In my time in the real estate industry, I’ve lived through nine presidencies. A couple were brilliant, a couple were absolutely stupid, and several of them were crooked. We made money. Eight recessions, we made money in all but two recessions and the real estate cycle has not stopped.
We have the largest group of people that want to buy homes in the history of America now. You got the millennial Y generation, you got the Z generation. You now have 60% of the workers in the United States are in those two generations. They put off marriage by an extra five to 10 years. And they put off children by an extra five or so years.
In essence, the demand is there. People, once you have a baby or two, you start thinking suburbs and yards and park and church and dog or two dogs or whatever. And there’s an ebb and flow that happens. We are stuck because limited inventory people who have a long term mortgage at 2. 9% and they want to move up, realize that they’re going to lose 2.
9, have to pay seven, and then they want to buy something bigger. It’s going to cost more. And so a lot of people are reluctant to move up. That means a lot of home fix up and repair remodeling. However. The interest rates will start coming down next year. I do not anticipate them coming down in this year.
I think they’re still going to raise the Fed rate probably a quarter of a point, at least two more times this later this summer, this fall, and next year they will start coming back off the interest rates. Bear in mind, 32% of the houses in the United States are owned free and clear.
Andrew Warner: Wow, I wouldn’t have thought
Dave Liniger: Yeah, nobody thinks that interesting to, to note hard to
Andrew Warner: that in what’s the relevance of that
Dave Liniger: part of it is location. If you look at Hurricane Katrina
A disaster for black folks. White people had mortgages and they had mortgage insurance for floods. Because it was required. The black folks lived in low lying areas, and many of them are very thrifty, and they managed to pay off their home over a period of 30 or 35 years.
They had homeowners insurance, but not hurricane or flood insurance. And when they got wiped out, they lost everything. And a lot of times when you look at farming communities, urban communities, all over the country, you get out of the coast. The two coasts always have the highest prices and you get through the rest of the country and now work from home has been proven.
People can leave California and whatever reason they’re leaving, whether it’s taxes, crime, fires, floods, whatever it makes a difference. Many of them have moved into rural areas in Oregon and Washington, Montana, Idaho. They’ve got Wi Fi and they can do the job someplace. And so this migration that started of everybody wanting to go to the Sun Belt or everybody wanting to go to the coast is now changing.
And so some people go to the Sun Belt, but for practicalities, a lot of people have found out you leave the big city in Seattle or Portland and you live in a small city, the traffic jams are gone. You’re working out of your home most of the time anyway. And we’re going to have another housing boom, and it’s just, it’s the way it works.
The pendulum swings back and forth. If you’re a good enough manager and leader, you’ll get through it.
Andrew Warner: Hey, we’re getting close to the end So I’m gonna ask you a personal question and then I want to come back and ask about your podcast the personal question I’ve been holding off on is When did you get rich from Remax? Like, when did you, after all this work, get to look back and say, I did it?
Dave Liniger: By 10 years, we got to 3, 000 agents, and we were making very good paychecks. At 20 years, we were at 30, 000 agents, and at 30 years, we were at 90, 000 at 20 years with 30, 000 paying agents my wife and I had everything free and clear. I’ve had significant investments outside of REMAX. And by the way we own 22 businesses altogether that are as far ranging as oil drilling and oil exploration to mortgage companies.
To private golf course to a NASCAR racetrack NASCAR race teams travel agencies and motorcycle shops.
Andrew Warner: What ties them all together? I don’t see connections here. Is it just fun?
Dave Liniger: That’s the word is fun. If I had kept selling houses after that first year, I would have been out of the business in five years. It is hard work, but also. There’s nothing to it after you become an expert. What I got to do was grow with the company. And I put on the first convention. We had 26 of us there.
The convention for our 50th anniversary was 12, 000 or so. It is a production. And so I got to, I kept fresh with my business by going from brokerage to master franchising to mortgage companies. And I was finding out that as much as I love the adventure of business, I was burning out and opening businesses stalled it.
Andrew Warner: The newness and freshness, but still a connection back to the original thing, that’s what kept it all interesting.
Dave Liniger: Today I’m still chairman of the board of the RE MAX. We own approximately half of the company, even though it’s public. I work 60, 70 days a year for RE MAX, major conventions, speaking engagements, investor calls, public relations. I get to do what I want to do. I have a friend who’s one of the great leaders of leadership development, Darren Hardy, and he’s been very important to me in my life.
And he said, my definition of success is I want to do what I want to do, where I want to do it, when I want to do it, how I want to do it, and with who I want to do it. And over the last three or four years, I started a private family business you would call it a private activity company. And we’re investing in emerging franchisors.
We have our own offices. We recently bought a sub sandwich company called Port of Subs. Very regional to the Las Vegas and Reno area. Few stores around it, 52 years old. We’re regionalizing it, selling it across the United States. Bought a chicken concept. We’ve already sold 16 regions and so the pleasure of coming to work is those five things.
I said I get to have fun. Coming to work and building things is fun.
Andrew Warner: And the connection I’m guessing with, I’m looking at portasubs. com right now, the connection there is it’s similar to Remax in that you’re selling a franchise. It’s similar to Remax in that you’re dealing with business people. And at the same time, it’s different enough that it’s a completely different industry, a completely different part of people’s experience.
And that’s what you’re doing. Is that right? Okay, your podcast, I want to close it out with this. Why did you decide to create a podcast?
Dave Liniger: When I first stuck my toe into social media I went on Facebook. And in three days I had 10 requests for friends, 10, 000 requests for friends from Remix, and I looked at it and said, I can’t read this stuff. I’m building a business. And so I said, social media, we have a department for that. You guys go do that.
But basically I’m looking at my legacy and, how do I pass this on to the next generation? I did write a New York times bestseller back in 2012 or 13. And I enjoyed that process. And I decided I’m going to finish my career out with the final book. It’ll come out March 26th. Very in depth, big book.
It’s about leadership. It’s called the perfect 10. And in accumulating this information for this book, I started a podcast. I’ve had some really great people on there. Joan London was an absolute delight. Fly Girl, first combat black woman combat pilot in America’s history. I’m meeting people on my podcast and totally different.
Businesses, lifestyles that I’ve ever been in. And to me, it’s just fascinating.
Andrew Warner: You know what, it is the same pleasure that I used to get as a kid when I discover A book of someone that I never would have thought to meet or learn from, except now it’s much more interactive. It is really an incredible experience. All right. The podcast for anyone who’s interested, and I think a lot of people who’ve listened are now into your approach to business.
The podcast is called ambition and grit. You can find it at ambitionandgrit. com or just go to your podcast app and same when you’re listening to me on and find ambition and grit. Dave, thanks so much for being on here.
Dave Liniger: Thank you, Andrew. Best of luck.
Andrew Warner: Absolutely. Thanks. Bye everyone.