With the recent spate of mergers and acquisitions taking place in the residential real estate industry, one may expect almost every agent statewide to be affiliated with a company like Coldwell Banker Hunneman, DeWolfe, or Carlson GMAC Real Estate. But rather than riding that wave, some Realtors are seeing the period of consolidation as a time to break away.
Officials at those larger companies, while hoping to gain all of the market share from a company they acquire, acknowledge that there will always be agents who don’t go along with the merger and set up shop for themselves.
Lillian Montalto of Lillian Montalto Signature Properties in Andover decided to open up her own real estate office earlier this year after being affiliated with ReMax. Though her previous office was not itself involved with a merger, that trend in the region was one of the reasons why she thought it was good time to establish an independent office.
“I’m in an area where the independent companies over the past five to seven years have all been coming together through mergers and acquisitions,” said Montalto. “I tend to zig when everyone else zags.”
Thus far, the decision has proven to be a successful one. “There hasn’t been a hiccup,” Montalto said of the transition from working with a larger company to branching out on her own. While no longer having an internationally known name brand behind her, Montalto said she can now has other qualities as an independent agent that are equally marketable.
“As an independent firm, I’m now able to provide my clients with more than just a franchise,” she said. “I’ll never have 50 or 60 agents working for me. The other companies will always have more feet on the street. It’s like Fleet (Bank). If you do your mortgage with Fleet, you’re just a number in a pile of papers, but in a smaller bank, you walk in and they say ‘Good morning. How are the wife and kids?’ We’re still in that touchy-feely business, and people are willing to pay for that service.”
Montalto added that her office is able to provide the latest in technological advances to her customers as well as larger companies, “and we all have the same speed as FedEx.”
“I think even in this business with all of the changes going on, you’ll still see room for boutique offices,” said Paul Grover of Kinlin Grover GMAC Real Estate in Osterville, whose company over the past couple of years has secured a large market share on Cape Cod through a number of acquisitions.
“One of the reasons we sold our own company [to GMAC] was the costs of maintaining your own office today are high, but that’s not to say we won’t be seeing any more individual offices,” he added.
Kinlin Grover GMAC experienced its own miniature exodus as the result of an acquisition when Compass Real Estate became part of the company earlier this year. While agents from the company’s Orleans office went along with the merger, a number of the agents in Compass’ Wellfleet office decided not to join GMAC and joined Thomas D. Brown Real Estate Assoc., which set up shop in the office space formerly occupied by Compass.
Grover said that type of occurrence with Kinlin Grover GMAC acquisitions on the Cape has been the exception, though, not the rule. “For us, that was unique that that type of thing has happened,” he said. “Though if people aren’t happy, you will see them break away.”
Paul J. Harrington, president of Lexington-based The DeWolfe Co., said independent agencies won’t be going away anytime soon because much focus remains on the individual agent, not just the company he or she works with.
“This business is so agent driven,” he said, “that an agent from a company that’s being acquired can still leave and start up their own operation. It has not happened to us in large numbers in our conversion, but we have had some agents leave, and I have seen it happen in other situations.”
Local Business
Though most agree that agents already established in an area may break away and form their own companies from time to time, those interviewed said a much less likely scenario would be a real estate company moving into a new area just to give homebuyers a greater choice of agencies after a merger. That scenario happens frequently when a large bank merger takes place and smaller banks try to grab a share of customers dissatisfied with the new, larger entity.
“We haven’t really seen new people jumping into a new location just because of a merger,” Grover observed. “I don’t think [banks and real estate offices] are exactly the same in that respect.”
“I don’t think in the real estate business people are strategically thinking at that level,” said Fred Meyer, 2000 president of the Massachusetts Association of Realtors. “Real estate is such a local business. If people are in a town and they work at a big real estate firm there, they might open an independent office after that. But I don’t think people in Cambridge would say, ‘Let’s go open an office in Framingham.’
“They wouldn’t have the local real estate knowledge to survive in that market,” he continued. “In banks, for the most part a checking account is a checking account no matter where the bank is located, but real estate is so much more local.”
One example of a company making the move into unfamiliar waters occurred with DeWolfe about two years ago in the Springfield area, Harrington recalled.
“When GMAC bought Stearns & Yerrall, a lot of the agents there were unhappy about it and were going to either open their own office or start at a new office,” he said. “At the time, we went in and opened up new offices in that market and a large number of their agents joined is. In that case we were the new competitor in an unfamiliar market, but the trend is really not that widespread.”
Harrington added that the trend of companies opening in unfamiliar markets is not widespread because even in communities where there have been mergers, several agencies often remain. “In any decent-sized town, you’re going to have eight or 10 real estate offices; with banks you usually have two or three branches,” he said.
“If you go from three branches to two, or two to one because of a merger, there’s a better chance if you open a new office,” he continued. “But to go from nine to eight or eight to seven real estate offices, people really don’t see it as having less of a choice.”
Although recent statistics show Kinlin Grover GMAC’s market share on the Cape is growing, Grover said he still takes seriously any new competitor in his region.
“This kind of thing happens with the economy being so good, brokers and agents will go out on their own,” he said. “I never underestimate other companies that are out there.
“In this business, there’s enough to go around as long as you do the work,” he said. “You can write your own ticket if you’re willing to work for it. If new offices come into town, we’ll be aware of it and work harder. They keep you on your toes. There’s a concern [about Realtors going independent]. I wouldn’t want to see it happen a lot.”
