Century 21, Betterhomes enter German real estate broker market

In Germany the debate rages on as to who should be primarily responsible for paying real estate agents’ commissions – the buyer or the seller, the tenant or the landlord – with still no fundamental reform of the system in sight.  In Germany, it’s nearly always the buyer, or the tenant, who pays – irrespective of the amount of work the agent puts in.

In any event, the mouth-watering commissions payable to brokers on successful mediation of a property have attracted a number of pioneers in the past who believe they can do a better job, and chains such as ReMax realtors have enjoyed rapid growth in recent years. A number of new arrivals are also announcing ambitious plans.

The US franchise network Century 21, which bills itself as the world leader in private residential estate agency, started up in Germany last year with one office in Düsseldorf, growing to six offices by the end of the year. This year it plans to open fifty offices, and is ambitiously targeting more than 300 offices with more than 3,000 employees by 2017.

Century 21 has over 8,000 independent sales offices in 71 countries worldwide, employing more than 121,000 sales agents. The company is a part of NYSE-listed Realogy Corporation, headquartered in Parsippany, New Jersey, which also owns ERA Franchise. ERA itself started up in Germany in 1998 with ambitious plans to open up 400 offices, although after initial growth, this seems to have settled down now at just over 50 offices nationwide.

Also entering into the fray is Swiss broker Betterhomes, which is setting up headquarters in Stuttgart in March. To date active only in Switzerland and Austria, the company brokered property in Switzerland last year worth CHF 1.1bn, or about €900m. The company’s strategy is to build a multi-level sales distribution structure nationwide, rather than a chain of bricks-and-mortar offices, and to ‘pass on the resulting savings to the end customer.’ Rather than relying on property expertise, the company says it will be looking to looking to attract sales professionals from the financial services sector. The Betterhomes business model is based on direct sales and a powerful IT system, which scours online websites for classified property ads which feed its network of sales-hungry reps.  Given the new more stringent qualifications demanded of financial advisers these days, there are likely to be plenty of refugees from the sector happy to make the switch.