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Real Estate News and Advice |
November 13, 2009 |
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 Local Brokers Recruit Bonanzas From Coldwell Banker
by Blanche Evans
As publicly traded Cendant subsidiary NRT's Coldwell Banker Residential Brokerage grows larger through acquisition and recruitment, it's a little known fact that the company's independent rivals are growing, too. Agents from boutique or independent brokerages sold to Coldwell Banker Residential Brokerage are staging mass walk-outs in certain markets to join independent competitors. Mass exits of agents from Coldwell Banker Residential Brokerage are far from rare, Realty Times has learned. Whether agents follow a manager or the manager follows the agents, mass exits of agents are giving local independent brokers recruiting bonanzas. And it's happening in major markets as far flung as Denver, Dallas, Washington D.C., and Chicago, among others. Explains Pam O'Connor, CEO of RELO.com, a network of independent brokerage firms, "If they are used to a family environment, when that changes, you see this attrition and fallout. It's happening everywhere." When agents leave a brokerage, it's called "breakage." And according to NRT spokespersons, a certain amount of breakage is anticipated with any acquisition. Says Bob Becker, president and CEO of NRT, Inc., "Since 1997, NRT has acquired nearly 250 of the nation's premier real estate firms, both large and small. Organizational change can be difficult for people, but we're proud to say that during the course of these acquisitions we have an acquisition-related retention rate of 95 percent. This is an exceptional statistic for any industry and almost unheard of in an independent contractor environment. Since our inception, NRT has tripled our number of sales associates through acquisitions and organic growth." However, in a number of local markets, Coldwell Banker Residential Brokerage "breakage" has far exceeded five percent, according to the brokers who benefitted from recruitment windfalls. Dallas A spokesperson for agents who organized as a group to leave Betty Abio and Associates, a boutique office that was part of a larger acquisition by Coldwell Banker Residential Brokerage, in Dallas said that so far, the breakage has been near 50 percent of about 100 agents in that office. Agents who left and joined local independent Virginia Cook Realtors numbered 48 out of 64 agents who were eligible to leave. "Other agents had signed a noncompete agreement," explained the spokesperson, who preferred not to give his name. One agent went to a different brokerage. NRT spokespersons said that since entering the Dallas market, about 18 months, Coldwell Banker Residential Brokerage has recruited over 360 agents for multiple offices. Chicago Chicago's Baird & Warner has been the beneficiary of mass walkouts from Coldwell Banker several times. Jim Schiefelbein, vice president of marketing for Baird and Warner says, "Earlier this year, we recruited the vast majority of people and the managing broker from Coldwell Banker's Goldcoast office in the Hancock building. That was close to about 80 people – that's an enormous chunk of sales associates. That was a leading office, for that competitor. Two years ago, we got the entire Downer's Grove office from Coldwell Banker Residential Brokerage." Denver In Denver, John Fitzpatrick, managing partner of the Kentwood Company, said that his office recruited a whole Coldwell Banker Residential Brokerage office a few years ago, "the highest per-agent production of any company in the country." "About four years ago when NRT bought Moore Realty," explains Fitzpatrick, " one of the offices didn't want to go to that brand, and they called us and we bought them out. Thirty-five out of 38 agents went with us. They did have some walk-outs and some formed new companies, Prestige and Fuller Town and Country, with people previously with Moore." "It is their comfort zone, and when the 300 pound gorilla comes in, they think it is a step back in their ego," explains Fitzpatrick. "They might feel like they are getting steamrolled. By contrast, Fitzpatrick says he hasn't had a turnover in his brokerage in seven years. "We've added a few, and a new office or two." Washington D.C. In early December, 2002, Washington D.C. area agents under the management of broker Paul Gale moved into their new office at Long & Foster Realtors in McLean, Virginia. Explains Gale, "This company was originally Pardoe, and it was bought out in 1998 by NRT and changed to Pardoe ERA. It stayed Pardoe until last February, and that's when NRT purchased all the Coldwell Bankers franchises in the metro Washington/Baltimore area. They changed the name to Coldwell Banker Residential Brokerage in March. Out of my office, there were 95 percent that left, six agents stayed back." If the company was already NRT-owned, what prompted the mass walk-out of agents in 2002? "In our Alexandria office, Anne Rector, the manager of one of the Coldwell Banker offices left and 30 agents went with her," says Gale. "Pardoe had been a high-end boutique brokerage in the Washington area. One day, the agents in my office came to me and said they no longer felt they were in a boutique company and the closest they could come to the same kind of company was Long & Foster, so we stayed with Coldwell Banker until there was room for myself and the 68 agents that came with me." According to Gale, Foster met with the agents and signed up 68 on the spot, finding them temporary office space in one of his buildings before outfitting their new office in McLean. An NRT spokesperson says, "The problem with agent attrition is there is no way to quantify breakage. Of course there are people you are sorry to lose, but you can look at figures both ways by the number of agents and the volume they generate. The real difficult thing is while we track breakage from a number of indicators, past a year, we don't know what attrition happens and where it is significant in the context of recruiting." What most of the agents have in common is long experience and many have high splits. In each metro, the managers told Realty Times that the agents universally said that they wanted a family-type atmosphere, quick responses from a broker that they can get on the phone or walk into his or her office, and that they didn't want to work for a large corporation where they feel they don't matter as individuals. Could some of these agents be a little too high maintenance, or perhaps high split for Coldwell Banker? Says NRT's spokesperson, "We have 45,000 agents now. NRT has looked to grow strategically in existing and new markets. Yes, we've had these big headline acquisitions, but we have continued with the smaller tuck-in acquisitions of premier boutiques. They are in a lot of different categories. "There is no one answer to that nationally or at the regional level. New agents, new hires or experienced sales associates are all important. Some of that breakage is, in the long run, good to improve overall quality." Published: January 16, 2003 Use of this article without permission is a violation of federal copyright laws. 
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Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68.
