RISMedia
  • News
  • Premier
  • Publications
  • Events
  • Education
  • Newsmakers
  • Power Broker
No Result
View All Result
  • Agents
  • Brokers
  • Teams
  • Marketing
  • Coaching
  • Technology
  • More
    • Headliners New
    • Luxury
    • Best Practices
    • Consumer
    • National
    • Our Editors
Join Premier
Sign In
RISMedia
  • News
  • Premier
  • Publications
  • Events
  • Education
  • Newsmakers
  • Power Broker
No Result
View All Result
RISMedia
No Result
View All Result

You Can’t Take It with You: How Brokers Should Prepare for Their Exits, and Why Most Still Don’t

Home Best Practices
By John Caulfield
September 25, 2014
Reading Time: 8 mins read

exit_strategyTheir assumptions about the value of their business and ability to find buyers or management replacements can be overly optimistic. At 71, Ed Krafchow still has some unfinished business.

He’s led Better Homes and Gardens Mason-McDuffie Real Estate in Pleasanton, Calif., since 1991 and helped propel its expansion to 30 offices and more than $3 billion in annual sales. He’s been recognized and awarded for a lifetime of achievement in real estate. But where other executives his age are wearing out their fishing reels and putters in retirement, Krafchow has no intention of fading into the sunset.

“My ‘plan’ is to leave with a toe tag on,” Krafchow states. “I love what I’m doing and have every intention of doing it until I can’t or don’t want to.” But that doesn’t mean he hasn’t made contingency arrangements in the event, “I drive off the road one day.” He’s appointed the brokerage’s CFO Robert Wolf as executor of his estate, and Wolf would run the operations in Krafchow’s absence.

Krafchow is like many senior real estate brokers who seemingly aren’t as obsessed with succession planning or exit strategies as owners in other industries. Rachel Owens, a principal with Succession Strategies in Santa Ana, Calif., says she rarely approaches brokers as clients because their “plan” usually doesn’t extend beyond selling their businesses eventually.

“Most brokers run their companies in the moment, not as a business,” observes Jose Perez, founder and president of Atlanta-based broker consultancy PCMS Consulting. He’s not surprised that brokers in their 70s “aren’t even thinking of leaving.”

“We all believe we’re going to live forever,” says Dick Schlott, the 70-something chairman and CEO of Gloria Nilson and Co. Real Estate in Red Bank, N.J., a business he acquired five-and-a-half years ago. Schlott doesn’t have a succession plan in place, although his COO currently runs the day-to-day operations. “I know many guys my age or older who are still active. They may not be showing houses anymore, but this business doesn’t necessarily have an end to it.”

But experts who specialize in succession strategies think brokers need to re-examine their insouciant attitude about the future because, they say, it’s based on uncertain assumptions that unanticipated events—to say nothing of a still-unpredictable real estate market—have a way of upending.

“When I hear people say they are going to die at their desks, they aren’t being reasonable, and isn’t reasonableness a requirement in any real estate transaction?” asks Wayne Rivers, co-founder and president of Raleigh, N.C.-based Family Business Institute. He admonishes brokers who leave succession and exit plans to the last minute, because they are doing a disservice to their agents and employees. “They aren’t being stewards of their professional resources.”

Business and Life Inseparable
REALTORS®, in general, are getting older, according to National Association of REALTORS® membership data. And brokers in particular see themselves as irreplaceable. But other factors enter into their desire to linger as business owners. “For many people, real estate is a second career that they come to later in life,” explains Rainy Hake, executive vice president of Saratoga, Calif.-based Alain Pinel REALTORS®, whose co-founder (in 1990) and longtime president Paul Hulme still goes to the office six days a week.

Hake also points out that real estate “is not a nine-to-five job” and is often intertwined with the broker’s personal life.

That profile of a senior broker corresponds with one of the three types of business owners described by Dr. Joseph Astrachan, executive director of the Cox Family Enterprise Center at Kennesaw State University in Georgia. There are professionally oriented owners who “are always looking to make continuous improvements,” he says. Owners at the opposite end of the spectrum can’t see beyond the present. And then there are owners, says Astrachan, whose companies are their identities, and who, perhaps inadvertently, “sabotage” attempts at succession planning.

Astrachan thinks most real estate brokers probably fall into this third category. And by putting a succession or exit strategy on hold, brokers could be “trying to balance their needs with their families and their employees,” but run the risk of “screwing it up for everyone.”

Three Options Examined
Talk to brokers and you’ll hear the same assumptions about the future: that eventually they will sell their book of business at or near their asking price; or that they will find the ideal person to fill their shoes; or that a family member is patiently waiting in the wings to take over the business.

Page 1 of 3
123Next
ShareTweetShare
Susanne Dwyer

Susanne Dwyer

Related Posts

Will Open Houses Become Obsolete?
Agents

Will Open Houses Become Obsolete?

May 26, 2022
Downward Trend in Pending Home Sales Persists in April Under Mortgage Rate Surge
Agents

Downward Trend in Pending Home Sales Persists in April Under Mortgage Rate Surge

May 26, 2022
Mortgage Rates Continue to Decrease
Agents

Mortgage Rates Continue to Decrease

May 26, 2022
Majority of Homeowners Would Rather Make Home Improvements Than Sell
Agents

Majority of Homeowners Would Rather Make Home Improvements Than Sell

May 26, 2022
52% of Home Renovations Take Longer Than Planned
Agents

52% of Home Renovations Take Longer Than Planned

May 26, 2022
Becoming the Broker of Choice
Agents

Becoming the Broker of Choice

May 26, 2022

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Tip of the Day

Why You Need a Real Estate CRM

Discover how a real estate client relationship management tool can get you organized and maximize your lead generation, so you... Learn more.

Business Tip of the Day provided by
REGISTER NOW

Recent Posts

  • Will Open Houses Become Obsolete?
  • Downward Trend in Pending Home Sales Persists in April Under Mortgage Rate Surge
  • Mortgage Rates Continue to Decrease

Categories

  • Spotlights
  • Best Practices
  • Advice
  • Marketing
  • Technology
  • Social Media

The Most Important Real Estate News & Events

Click below to receive the latest real estate news and events directly to your inbox.

Sign Up
By signing up, you agree to our TOS and Privacy Policy.

About Blog Our Products Our Team Contact Advertise/Sponsor Media Kit Email Whitelist Terms & Policies

© 2022 RISMedia. All Rights Reserved. Design by Real Estate Webmasters.

No Result
View All Result
  • Home
  • Premier
  • News
    • Agents
    • Brokers
    • Teams
    • Consumer
    • Marketing
    • Coaching
    • Technology
    • Headliners New
    • Luxury
    • Best Practices
    • National
    • Our Editors
  • Publications
    • Real Estate Magazine
    • Past Issues
    • Custom Covers
  • Events
    • Upcoming Events
    • Podcasts
    • Event Coverage
  • Education
    • Get Licensed
    • REALTOR® Courses
    • Continuing Education
    • Luxury Designation
    • Real Estate Tools
  • Newsmakers
    • 2022 Newsmakers
    • 2021 Newsmakers
    • 2020 Newsmakers
    • 2019 Newsmakers
  • Power Broker
    • 2022 Power Broker
    • 2021 Power Broker
    • 2020 Power Broker
    • 2019 Power Broker
  • Join Premier
  • Sign In

© 2022 RISMedia. All Rights Reserved. Design by Real Estate Webmasters.