OpinionIndustry News

Close and consolidate: The new reality of real estate

Guest perspective: Consumers won't continue to subsidize inefficiency

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Cendant Corp. -- which owns the Coldwell Banker, Century 21, ERA and Sotheby's real estate brands -- recently announced plans to close and consolidate offices to slash $50 million in costs at NRT brokerages in 2006. The bold move points to a new reality in the real estate industry: close and consolidate. The Internet has shaken the foundation of the real estate business and pricing model like no other change before. There are two forces driving the change that all real estate brokerages today are also facing. Inefficiency The first is the inefficiency of the current business model. If you compare the real estate business to the productivity standards of any other industry, the numbers are revealing. A company in the manufacturing sector of our economy must maintain a productivity rate of 75 percent-90 percent or they will be forced to cut capacity/cost or go out of business. (The current situations of Ford and GM serve as a vivid example.) According to the National Association of Real...