5 Now Ideas for Brokers Enterprising brokers know that with a new market come different opportunities for business success.
Brokers with staying power know that as the market changes, so do the opportunities. As they adjust to the current market, brokers are investing in lead management technology, training associates on the fine points of short sales, consolidating and buying offices, reaching out to an international audience of homebuyers and using other strategies to keep their firms growing in the right direction.
Here are some ways brokers are taking advantage of the market and seeing opportunity for boosting business down the road: Acquiring Other Brokerages
The fact that some brokers are scaling back and even getting out of the business has opened doors for others. Take Dewey Mitchell, CEO at Prudential Tropical Realty in Trinity, for example. In November, he brought his number of offices up to 12 by acquiring Marie Powell and Company Realtors®’ Pasco and Hernando county operations and Murphy-Matthews and Associates Inc. of Tampa.
“We’re actively pursuing acquisition candidates,” says Mitchell, who sees the strategy as a good way to gain market share, management expertise and experienced sales associates to augment the company’s 440-person residential ranks. Right now he has his eye on several offices in the southern portion of Pinellas County.
For the acquisitions, Mitchell says, his top two criteria are that the offices be located in areas where his firm currently has no presence and that they have a good blend of corporate culture and business philosophy. When those elements are in place, he says, the purchases prove beneficial for his company both now and later. “When we start cycling into a more normal market, we’ll be that much stronger,” says Mitchell, “and we’ll have more market share and that much more capability on the sales, executive and management side.”
Mike Pappas has taken a similar stance, buying up independent brokerages that are looking to join a larger firm, but not necessarily a national franchise. This CEO at The Keyes Co./Realtors® in Miami says that sales dips of more than 50 percent since 2005 have forced many brokers in South Florida to consider merging their operations with other companies, based on the fixed costs (rent, salaries, utilities, etc.) that companies have to cover regardless of market conditions.
“When they can eliminate one cost center and combine the revenue into a more efficient model, everyone wins” says Pappas. “The acquired broker gets a lot more money, and is alleviated of the hassle of paying bills, ordering signs, handling escrows and paying associates. Instead, he or she can focus on listing and selling properties.”
Take Keyes’ July acquisition of ERA Murray Realties, for example. The latter, which was founded in 1976, brought to the table 40 sales associates that serve the Broward County area. An integral part of the merger, says Pappas, was retention of the acquisition candidate’s president, David Stein, who also works in Plantation. “We’ve had several scenarios where the independent broker comes over and manages the merged office,” says Pappas. “We’re the only tri-county regional broker that’s not corporate, so they get the best of both worlds: a small broker with a family feel that’s large enough to compete with national brands.”
In the spirit of consolidation, Pappas says, his firm has also completed several “internal mergers,” which combine two or more offices that are in close proximity. With three such consolidations already completed—including the recent merger of two Keyes offices in Miami Lakes, and another that combined the firm’s Hallandale and Hollywood locations—Pappas says the philosophy mimics his external-acquisition philosophy of combining two cost centers into one.
“It’s about becoming more efficient and productive,” says Pappas. “It’s a very positive thing.” Pairing Up
When times are tight, the smart businesspeople shop around for affiliations and alliances that will help boost business. Some Florida brokers are taking this tack in the current market by beefing up relationships with mortgage lenders, title companies and other entities that have historically served as sources of business for real estate associates. At Prudential, Mitchell says his firm formed an alliance with Wells Fargo on the lending side about two years ago. Known as a fairly conservative lender by industry standards, Wells Fargo serves as a source of financing for the brokerage’s customers.
“We do a large majority of their product lines,” says Mitchell. “It’s been very beneficial for us because we’re viewed as a point of stability in the market right now.”
Pappas sees opportunity in the auction market, and says his firm recently partnered with national firm Sheldon Good in South Florida. There, he says many proposed condo projects are on hold and likely won’t be completed. “Builders will have to unload the remains of their properties, and many of them will be auctioned off,” says Pappas, whose associates, through the joint venture, will be serving as listing agents for the units. “It gives our agents another ‘bullet on their belts’ to shoot, by going into the back end of developers’ products.” Going International
As managing partner and head of franchise distribution for Engel & Volkers in Naples, Timo Khammash says his company is looking outside of Florida for opportunities to grow from a current 15 franchised offices in Florida to 300-plus offices worldwide. “We know it’s important not only to look at the local market, but also to reach out to the international market,” says Khammash, who sees the global approach as a good solution for brokers looking to overcome the challenges inflicted by a statewide and nationwide “financial crisis” that’s affecting the domestic real estate market.
Targeting “every country that uses the euro as currency,” Khammash says, his company produces lifestyle/architectural magazines for potential buyers in Switzerland, Austria, Germany, Ireland, England and other areas whose currency is “very strong” against the U.S. dollar. There, potential second-home buyers looking to invest in Florida real estate stand ready and willing to buy properties. “They want to live the Florida lifestyle,” says Khammash, “with many of them looking for second or third homes here.”
Engels & Volkers also sends associates to real estate conventions and fairs in target countries, and distributes its glossy magazines and brochures at the events—all in the name of building an international brand. “We do road shows, hitting places like Munich, Berlin, Dublin and London—all of the cities where we know our clientele is coming from,” says Khammash. The shows attract buyers and sellers alike, and the proof is in the numbers: roughly one-third of the firm’s listings are international in nature.
“These buyers and sellers have more buying power than Americans right now,” says Khammash, “and represent a real opportunity for ambitious brokers looking to overcome the challenges of the domestic market.” Tapping the Foreclosure Market
No real estate broker likes to hear that foreclosure rates are creeping upward at a steady pace, but in today’s market, such news actually presents opportunity for companies that are willing to learn the ropes of the real estate–owned (REO), foreclosure and short-sale markets. Currently in beta testing at Prudential Tropical Realty, for example, is a system of handling short sales that associates companywide will use to manage the “bureaucracy associated with these transactions,” says Mitchell.
“We’ve tried to eliminate some of the difficulties and handle some of the processes in a way that makes the transaction as seamless as possible for the banker and the ultimate sellers and buyers,” says Mitchell, who is contemplating a similar effort for the foreclosure arena. “We have individual sales executives who are dealing with some of the financial institutions, but we’ve yet to develop a coordinated, companywide effort for foreclosures.”
Pappas says Keyes has ramped up its REO department by adding staff and improving the systems used to handle real estate–owned properties. “We believe there’s more inventory coming online, so we wanted to have a process in place to front the money, secure the properties, pay the bills and then liquidate the units via distress sales,” says Pappas, who expects his firm to close on 1,000 REO properties in 2008. “It’s the kind of business that’s only profitable when you have a system in place, a direct point of contact (with the banks themselves) and associates who can execute the deals.” Online and Property Management
With a high percentage of today’s homebuyers hitting the Internet first for listing information, Florida brokers are also putting money and time into their lead-generation and lead-management systems, knowing that sales are often won or lost on customer service and response time. At Prudential Tropical, a lead-generation team incubates the incoming prospects (which come through the parent company’s Web site and various other online venues) and distributes them to associates.
Once distributed, the leads are tracked to ensure that their recipients are indeed following through on them until a sale is made or the prospect has lost interest. “We know they don’t want to hear from someone tomorrow. They want to hear from someone right away,” says Mitchell. “The key to success lies in a very short response time. If that doesn’t happen, the account managers reassign the lead immediately.”
Finally, Mitchell says, the brokerage is actively soliciting more property management accounts in an effort to tap the growing rental market. So far, the firm has signed up more than 1,200 units. “We’ve actually had leasing agents for about six months now. That’s something I’ve never seen before,” he says. The move is particularly attractive for real estate associates who have languishing inventory and sellers who are antsy to generate some revenue from the properties as they wait for the market to turn.
“Rather than taking the property off the market, they’ll consider leasing it now and selling at a later date,” says Mitchell. “To stay in contact with those customers, our sales associates are helping them do that. They’re fulfilling their current needs as a way to keep the relationship ongoing.”
Their hopes may be pinned to a quick return to normal within their markets, but Florida’s top brokers aren’t waiting around for that to happen. By investing money in new systems, training associates in the growing foreclosure arena, pooling their efforts both externally and internally, and tapping new areas like property management, these professionals expect to emerge even stronger and better braced for success. Bridget McCrea is a Clearwater-based freelance writer.