Realogy is making major changes to its organizational structure at a time when the company’s stock is trading at near historic lows, including the consolidation of Coldwell Banker, the 113-year-old franchise, executives told Inman Thursday.
The structural shift, which also includes launching an expansion brands portfolio and carving out a new product and innovation footprint, are intended to help the company grow, move more rapidly and support its agents and franchise brands, executives said. Such changes are expected to piggyback on lead generation partnerships like one announced this summer with Amazon, upcoming consumer value propositions and an open-architecture tech platform.
Amidst the changes, Better Homes and Gardens Real Estate CEO Sherry Chris will shift into a new role as chief executive across the expansion brands portfolio of Better Homes and Gardens, ERA Real Estate and Climb Real Estate, for which she’ll be tasked with building a leadership team. ERA Real Estate CEO Simon Chen will head up Realogy’s new product and innovation team.
“This, for us, is looking at the way we’ve been structured the last couple of years and thinking about the best way to be structured going forward so that we can deliver on an innovative value proposition for our agents and brokers, owned and franchise,” Realogy Franchise Group President John Peyton told Inman.
The integration of Coldwell Banker
Under the changes, New Jersey-based Coldwell Banker will integrate its leadership and operations under NRT CEO Ryan Gorman. Current Coldwell Banker CEO Charlie Young will stay on in a senior advisory role.
Set to take place on January 1, 2020, the planned integration is aimed at bringing the brand to market under a unified voice and giving agents of the own-side brokerage and the franchise brand access to each other’s tools, like NRT’s in-house marketing tool, The Studio.
“This is the next step in a strategy designed to not only maintain our leadership position, but to grow our market share,” Young told Inman. “So by bringing together the company-owned and the affiliate business to operate as one, you know, we bring several obvious advantages to the marketplace, all really around the idea of leveraging our size and scale.”
Realogy CEO Ryan Schneider has been focused on getting the overall company to move more nimbly, and Young believes this integration will help Coldwell Banker achieve that goal.
“What this does is enable us to attack the market with one unified voice,” Young said. “It also enables us to move more quickly and to make better strategic decisions about the markets that we’re going to attack.”
The integration begins with the transition of leadership at the top, with Gorman assuming the position as president and CEO of Coldwell Banker and Young acting as an advisor. The integration of the leadership team will follow, then all of the operational functions underneath, meaning the company will be able to spread those tools and services across the combined 92,000-agent base.
Sotheby’s International Realty, another Realogy brand, announced a similar move back in March, to consolidate both its own-side and franchise business under CEO Philip White. Corcoran, which began franchising earlier this year, also operates under one umbrella.
“We believe fundamentally in the management philosophy that businesses should be united,” Peyton said. “Putting the franchise and owned business together for Sotheby’s, launching the Corcoran franchise as part of the current Corcoran structure, and now doing the same for Coldwell Banker enables us to manage the brand, the entire business with a single strategy, a single toolset and tech platform, a united message and the strongest teams we can assemble by putting together in one team.”
The new ‘expansion brands’ portfolio
Realogy identified the three brands most primed for expansion: Better Homes and Gardens Real Estate, ERA Real Estate and the yet-to-launched franchise brand for Climb Real Estate. Sherry Chris, the CEO of Better Homes and Gardens Real Estate, will run the company’s new expansion brands portfolio.
Chris took Better Homes and Gardens from a brand with zero locations at the time of launch 11 years ago to one now operating 380 offices globally.
“These are the brands that have the most opportunity for growth,” Chris told Inman. “They are a smaller group of brands that have the ability to grow, domestically and internationally. And so my focus will be on taking best business practices and utilizing them across all of those brands and helping them grow.”
Chris will deploy a number of tools and tactics that fueled Better Homes and Gardens Real Estate’s growth over to ERA and Climb – like Better Homes and Gardens Real Estate’s marketing prowess – and pull things from the other brands too, like ERA’s strong, collaborative broker culture.
“It’s just taking proven good business practices and applying them across all three brands,” Chris said. “For me, that’s an exciting opportunity to leverage that.”
Better Homes and Gardens has historically targeted areas where the Better Homes and Gardens magazine has a strong presence and will continue to use that as a sales technique, as well as the 200 million customer database that goes along with the brand. ERA has typically been in what Chris calls “outlying markets,” and will now focus on bringing the brand to more “main market trading areas.”
Realogy is still currently mapping out Climb’s growth, with no exact target for franchise sales to begin, but Chris said there was never a plan to launch this year. Since the company announced its intention to franchise, CEO Chris Lim moved into a founder and advisor role, while Christine Kim has been serving as president.
A new product and innovation group
As more real estate brokerage and companies seek to build out tech offerings, Realogy decided it was time to launch an official product and innovation group, which will be overseen by former ERA CEO Simon Chen.
At a high level, the team’s goal is to build out the industry’s largest and leading platform that connects the company’s agents, brokers and consumers for the entire homeownership lifecycle, not just the transaction.
“The platform, in particular, is a passion of mine that I’ve had in the 20-some-odd-years or so that I’ve been real estate,” Chen told Inman. “I feel like all of the audiences within real estate are being currently underserved by the various solutions that are available.”
“Those include, obviously, not just the broker and the agent, but the consumer and helping to facilitate the interaction over not just the transaction, but the entire homeownership lifecycle, that sort of 10 years where the transaction only comprises one 10th of that,” Chen added.
Realogy already has a product team in place so it’s not exactly new ground for the company. But the biggest change now will be that it’s someone from the business end, leading the product and innovation team.
“I think up to now, business hasn’t led product innovation, it’s been primarily from our tech department,” Chen said. “Business certainly participated throughout the process to sort of mandate how the development should go and what sort of functionality, but the most important change is that business is now leading the development of products.”
“And honestly, having been a developer myself in the old old days, it is a very different set of prioritization in terms of how the product is built out, and how it functions for the users,” Chen added.
Realogy’s innovation and research and development around boosting its value proposition will focus on four key areas: the business-led product development, as mentioned by Chen; the learning team from a content and tech perspective, to ensure the company’s artificial intelligence remains on the cutting edge; a team that works on products and services around recruiting; and a team focused on offerings around the company’s partnerships.