Brokers’ Next Bucks
Brokers looking for the next place to make a buck in 2009 might do well to look in their own back yards and consider merging with or purchasing another brokerage. It’s a strategy that Mike Pappas, CEO at The Keyes Co./Realtors® has used frequently over the last few years, and one that he’s looking to maximize this year, having completed 12 mergers in 2008.
He says he’s not alone in his quest to join forces with other brokerages. “Once the realities of the market set in, I’d say more deals will happen in 2009 than in the last couple of years,” says Pappas, who expects unit transactions to be up, but prices to be down overall, thus creating a broker sales volume consistent with 2008. “The brokers that were holding on for an improvement in the market will start to pull out, thus opening the doors for others to buy them or merge with them.”
According to Pappas, mergers solve several problems and create various opportunities for brokerages. For starters, they help cut costs by eliminating multiple business and revenue models. That also creates synergies between the companies, and between the combined company’s real estate professionals and managers. “When done right, it’s pretty exciting,” says Pappas. “It allows brokers to provide services in areas where separately they were straining for resources to fulfill those needs.”
The firms’ associates also gain benefits, says Pappas. “A positive, energetic office that can provide a wide range of services and support,” he says, “is usually filled with associates who prosper and who close more business.”