Formerly known as Cendant Corporation's Real Estate Division, Realogy Corporation (pronounced: Reel-uh-gee) is a leaner, meaner real estate machine.

Doing so well that it will debut today as a member of the S&P 500 Index, Realogy (H) is a spin-off, not an IPO, but Wall Street has high enough expectations that on Aug. 2, the day after "regular way" trading is expected to commence, Chairman & CEO Henry R. Silverman, Smith and Realogy's other executive officers will be on hand for the ceremonial ringing of the NYSE's opening bell.

"We don't need to raise money," says Realogy CEO Richard Smith. "It's a spin-off to shareholders. We're doing this to unlock shareholder value. The market creates a conglomerate discount, but we don't have a hedged portfolio. We have these divisions that are doing well, and we aren't getting credit from Wall Street, so the board's duty is to increase value for shareholders."

Realogy Corporation, according to the company, is the world's leading real estate franchisor with a diversified business model that also includes real estate brokerage, relocation and title services. Realogy's brands and business units include Century 21®, Coldwell Banker®, Coldwell Banker Commercial®, ERA®, Sotheby's International Realty®, NRT Incorporated, Cartus (formerly known as Cendant Mobility) and Title Resource Group.

The story for investors is that Realogy (H) is a chance for investors to bet on the housing market -- without buying a house. It's the only publicly-held company that totally and uniquely serves the residential real estate space.

Among some interesting facts in the Realogy prospectus:

• Realogy or one of its franchisees is involved in approximately one out of every four broker-related transactions

• Realogy and its franchisees earned $16 billion in brokerage commissions in 2005

• NRT Incorporated, Realogy's in-house brokerage firm, recorded $220 billion in sales volume in 2005, more than three and a half times the next largest brokerage

Despite that advantage, Smith says the company isn't interested in market share. "Give me profits over market share any day," he says.

Smith explains that the company is a brand manager. "We are blessed with strong brands that appeal to all ranges of buyers in the marketplace. On the NRT side, there is a lot of consolidation. About 80 percent of the industry is independent (not affiliated with a brand), so it's evolving like the '70s hotel business. Then most hotels were not affiliated with national brands, now they are affiliated with national brands, and boutique hotels are a small part. That's also happening in real estate. As consumers become more global, we think they will tend to migrate to brands they know and trust."

Agents are also finding out that all brokers aren't the same as many hop from brokerage to brokerage trying to find that perfect fit of high commission splits with state-of-the-art technology services and lots of broker advertising money.

"Boutiques are finding it harder to compete," observes Smith. "The media says all brokers are the same and the point is that agents are starting to get it that brokers are not all the same. They provide different levels of service, many don't weather the slowing of the marketplace well, and they can't make investments in the market. The consumer understands it, and deciding to list with one broker or another will come down to the listing presentations and who's better and offers more."

Cartus, the firm's relocation division, "blocks and tackles" for the franchisees and NRT, says Smith. Cartus assignments are generally referred to Realogy-affiliated brokers, generating referral fees for the company and commissions for the brokers.

Title services are a no-brainer. "Title Resource Group is an operating underwriter. It's heavily regulated at the state level and county level. They provide services to NRT, and there's a lot of upside. We've expanded to provide RESPA-compliant services to franchisees. You need it to close a real estate transaction, and those that have it have found it to be a great service to consumers and agents, and its profitable."

It's these intertwined businesses that makes Realogy strong -- approximately 50 percent of Realogy's EBITDA is a function of "successful cross selling through its value circle" -- franchising, relocation, brokerage, mortgage (now an affiliate called PHH Home Loans, LLC, and settlement.

What about spinning off just when the national picture of real estate is slowing? "We started building in 1995. We are longterm, and we continue to be very focused on long-term demographics as opposed to the short-term view. The growth of the last two years was not sustainable. Interest rates are growing 100-200 basis points, but we believe they will stay about where they are through 2025. The dynamics are favorable. This is a blip on the screen -- a normal market."

"This is not sexy -- it's hard work," Smith says. "In 1995, we were told the market would never get beyond 3 1/2 million existing homes sales, and everyone was wrong. There isn't a company this size and scale with a business that is based on a deeply inbred cultural need to own a home. Any business based on a cultural need has a powerful foundation."

Published: August 1, 2006

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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. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. For more articles by Blanche, click here.