Realogy brand leaders compete … and do lunch

Top execs share business, market insights and outlooks

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NEW YORK — Yes, the leaders of Realogy Corp.’s major real estate brands — Better Homes and Gardens Real Estate, Century 21, Coldwell Banker, ERA and Sotheby’s International Realty — do sometimes sit down for lunch together at corporate headquarters in Parsippany, N.J.

"We each have our separate wing in the building on campus. We meet in the cafeteria, we have lunch together," said Sherry Chris, president and CEO for Better Homes and Gardens Real Estate LLC. Though they may share the same parent company, office complex and lunch table, "we don’t share our innermost secrets," she added.

Chris, joined on stage today at the Real Estate Connect conference by other top Realogy brand executives, noted that she learned of a new Sotheby’s International Realty brand affiliation in Chicago by reading the public press release.

"We compete heavily with one another," commented Rick Davidson, president and CEO for Century 21 Real Estate LLC.

The leaders also commented on what makes their individual brands distinct from others under the Realogy umbrella.

With 121,000 agents and explosive international growth, Century 21 is the "gorilla in the room," explained Davidson, "and we need to take that and leverage it the right way."

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That brand’s network features 2,000 franchise owners in the U.S. alone, and Davidson noted that the international market "represents a great opportunity."

He also said, "Our goal really is to grow globally. Davidson referenced the term "glocal" to describe how a lot of business "is traveling continent to continent, country to country."

In late December, Davidson visited China to check up on the brand’s substantial presence: the Century 21 network now has more than 20,000 sales professionals and 1,500 offices in that nation.

Sherry Chris, in her panel presentation with Realogy brand execs and in a separate session, discussed her ground-up approach in establishing Better Homes and Gardens Real Estate as a lifestyle brand and building a creative marketing campaign to communicate the brand’s values.

"Our goal is not to take from within Realogy," she said, but to find "companies that are looking for help in a new, different way," without diminishing Realogy’s existing brands.

Unlike the four other Realogy brands represented on the stage, Chris said hers doesn’t have an international presence … yet.

"Hopefully that will change this quarter. I’ve got a lot of catching up to do," she said.

Mike Good, CEO for Sotheby’s International Realty, noted that his brand has been selective in picking international markets that fit the Sotheby’s name — "we made a decision we were not going to want to be massive in any country," with more of a boutique focus.

Jim Gillespie, CEO for Coldwell Banker Real Estate LLC, noted that his network’s Canadian and U.S. operations are treated as one entity — "there’s no borders for Canada and the U.S." under that company’s structure. There are about 100,00 sales associates in 3,500 offices operating under the Coldwell Banker brand.

While some agents and brokers argue that staying small and lean can be beneficial when the housing market and economy are in a slowdown, Charlie Young, president and CEO for ERA Franchise Systems LLC, said he believes large franchises have a leg up in such an environment.

Brokers still in business now have survived, but they are asking, "How am I going to thrive?" he said. "You’ve got to figure out how to grow. (Brokers may) realize you need a certain size, a certain scope to make it through this market."

While there are some positive signs for the economy and real estate market, the execs were cautious in their forecasts.

"It’s not over," Chris said of the slow market.

And Good said, "There are many more struggles for folks to get through. If the economy doesn’t move forward I think there will be … continued consolidation."

"Real estate has led this country out of every major downturn or recession since World War II," said Gillespie, but "this time we need help from the economy and from jobs, and what we look to now is some of the other industries and how well they’re doing."

A positive: "The auto industry last year was up 11.1 percent over the previous year."

And for the recovery to take root, "it’s got to be a combination of the economy picking up, jobs starting to be created … many economists now are predicting well over 2 million jobs being created in 2011," Gillespie said.

"If that happens then I’m very, very optimistic. I don’t think we’re going to see a spike way up (in the housing market), but I think we’re all going to see a slow, gradual increase, which is the better way to do it," he said.

Realogy Corp. reported a net loss of $33 million in third-quarter 2010, with net revenue of $1.1 billion. The company has recently engaged in a debt restructuring effort relating to the company’s heavily leveraged 2007 buyout by an affiliate of Apollo Management.

During a separate panel at the Real Estate Connect conference, which focused on the economic outlook, Carter W. Murdoch of Bank of America said he expects it will take another three to five years for the housing market to recover.

"The number of distressed properties on the market over the next two or three quarters is going to be very significant," he said. "We need to get through (that inventory)."

On the flip side, there could potentially be a housing shortage when the housing market does pick up, as construction contracted so deeply during the economic dip, said Carter, who is senior vice president and national affinity business develop executive for the bank’s strategic business alliances.

The latest recession may have long-term consequences, and scar the U.S.’s financial position in the world. But Joel Singer, CEO for the California Association of Realtors, said that a "much more competitive world" may not be such a bad thing.

"I don’t see any reason you wouldn’t be optimistic in the long run," he said, noting that the U.S. still has strong in-migration.

But Noah Rosenblatt, founder of UrbanDigs.com, which offers market-charting tools for real estate professionals, said policy decisions are likely to shrink corporate profit margins and hit consumers’ wallets, too.

"We’re not on the right fiscal path," Rosenblatt said. "Confidence in housing as an asset class, in general, is hurt right now. (Consumers) don’t look at homes anywhere near where they did in 2006 and 2007."

Panelists during the "Housing 2011: Up, down or down-and out?" session generally said mortgage interest rates will remain roughly stable and flat this year, with real estate prices continuing to be impacted by the large volume of distressed properties.

"If (an area doesn’t) have a strong jobs market, it’s very hard to see real estate prices come back," Murdoch said.


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