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Liniger reflects on RE/MAX

Highlights:

  • RE/MAX shares up 23% on first day of trading
  • Liniger says company may have a market cap of more than $1 billion.
  • Liniger may not take a salary; he’s more interested in giving his fortune away.

REMAX_40year_2Col_logoOn its first day of trading on Wednesday,  the stock of Denver-based RE/MAX rose by $5.00, a 22.7 percent gain, making it the second biggest percentage gainer on the New York Stock Exchange.

Only Burlington Stores, parent of the Burlington Coat Factory, which also began trading today, showed a bigger percentage jump, rising 47 percent.

The 10 million shares of RE/MAX stock went public at $22, the equivalent of $220 million. That is higher than the $19-$21 share price originally anticipated.

Dave Liniger, who co-founded the giant real estate franchise company in Denver in 1973 with his wife, Gail, wasn’t surprised by the company’s meteoric rise.

Liniger said interest in the stock was high.

“I think with the amount we were over-subscribed and from the road show last night, it was pretty obvious there was a tremendous appetite for the company,” Liniger said in a phone interview from New York City.

Denver may have another billion-dollar HQ

He also said that he checked the market cap of RE/MAX on Bloomberg this morning and it was more than $1 billion.

“I have no idea how they arrived at that,” Liniger said. “I was kind of curious because I knew people were going to ask me. But I don’t really care.”

The company, with more than 90,000 agents and with $78.3 million in revenues in the first half of the year, is easy to understand and is widely known, he said.

“We are the No. 1 real estate brand in the country and really our brand name is known world-wide,” Liniger said. “Our logo (with the trademark red white and blue hot-air balloon) is one of the most recognizable worldwide. People are familiar with us. We are an easy business to understand. We’re not some high-tech company or new medical device company that is so complex you don’t really understand what they do. We have an easy to understand story. We’re really a franchise company that happens to be in real estate.”

RE/MAX changed the residential real estate world by popularizing the so called 100 percent commission concept, where agents paid a “desk fee” and kept all or most of their commissions.

“It is been a very happy, exciting day,” which included watching the trading of the stock on Wall Street for about a half hour this morning, Liniger said.

Can’t manage from the grave

The reason for going public was simple, he said.

“It has an aging founder,” said the 68-year-old Liniger. “You cannot manage this thing from the grave.”

In 2010, during the Great Recession, Liniger brought on some partners.

“They made it very clear they wanted to out of their investment in four to six years,” Liniger said.

“So that meant we had to either highly leverage the company, which I was not in favor of; we had to sell the company outright, which I certainly was not in favor of; or we could have an IPO (initial public offering.)

By going public, he said that he and Gail could continue to control and guide the company.

“I haven’t calculated how much of the company Gail and I own, but I think it is over 60 percent,” Liniger said.

He said they considered going public 10 years ago.

“To be honest, at the time we thought we were a little too small and we couldn’t sell enough of the company to have much of a trading following, so we put it off.”

Liniger had a brush with death in early 2012, and wrote a book about it, My Next Step; An Extraordinary Journey of Healing and Hope.

His near-death experience had nothing to do with bringing RE/MAX public.

“Nothing at all,” Liniger said. “We made that decision to go public in 2010. With the rebound in the real estate market, this turned out to be a great time to go public.”

Liniger said he won’t be troubled by public disclosures, such as releasing his salary, something he never had to do as the head of a private company.

“Frankly, Gail and I could care less what anybody knows about us,” Liniger said.

“We may not even take a salary,” he added.

“We’re at a point in our lives where we are far more interested in giving away our money,” to worthy causes, he said. “Our children are all taken care of and we’ve given away far more than we’ve earned from our investments.”

That will continue, he said.

Cowboy wisdom

Liniger said he recently had lunch with Alan Simpson, the former U.S. Senator from Wyoming.

“I told him I would like to give away my money away while I am still alive, instead of having it all go to charities when I’m dead,” Liniger said.

“He made this great quote to me in his Wyoming cowboy wisdom: “You should be giving your money away while you’re living, that way you know where it’s going.”

Liniger knows where he is going as soon as he leaves New York, although he will be back in the Big Apple in early November for a ceremonial ringing of the opening bell on the New York Stock Exchange.

“We’ll be back in Denver in the office tomorrow,” he said.

But it won’t be back to work.

“Since we founded RE/MAX 40 years ago, we have never gone to work a day in our lives. Every day is challenging and rewarding. Gail and I just have a passion for what we do. That hasn’t changed.”

Have a story idea or real estate tip? Contact John Rebchook at  JRCHOOK@gmail.com. InsideRealEstateNews.com is sponsored by Universal Lending, Land Title Guarantee and 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.