Consolidation is the process of combining separate parts, companies or items into a single, unified and stronger whole. Whether that will hold true for residential real estate companies, however, is still to be determined. But what’s for certain is that consolidation has become a huge factor and talking point within the industry.
Thousands of agents nationwide, with little or even no warning, are suddenly working for a different national brand. During just five months this year, Compass acquired Anywhere Real Estate, Real acquired REMAX and eXp acquired NextHome.
Each deal was acclaimed by the participant C-suiters, with strength in numbers the common thread.
- “Today marks a monumental step towards our mission to empower real estate professionals with everything they need to grow their business and better serve their clients,” said Compass Founder & CEO Robert Reffkin.
- “This acquisition is an important step on our journey to build a technology platform that empowers real estate professionals and improves the consumer experience,” said Real CEO Tamir Poleg.
- “The industry has reached a tipping point, a one-size-fits-all model no longer works,” said Leo Pareja, CEO of eXp Realty. “We’re building a platform that supports multiple models, because every agent and consumer deserves choice.”
For Jeffrey Decatur, an agent with REMAX Capital in upstate New York, his consolidation viewpoints have been shaped by experience.
“Over the years I have been part of two acquisitions or mergers,” he says. “I was totally against the first acquisition. The firm I was at was a non-franchise local mom-and-pop, but large. They had 14 offices. I loved my non-corporate environment and the differences that it gave me. I prided myself on the fact that I wasn’t at a big box.
“But truth be told, it was the best thing that ever happened to me professionally. It opened my eyes to the bigger world of real estate, and exposed me to people who really made it a business. Here I am 32 years in and I am going through another acquisition with Real REMAX. I will say I am comfortable and complacent where I am. I immediately had the feeling that I didn’t want change. Then I remember how the first one affected me, so I am purposefully being open minded and looking for more opportunities and positive change. I have been telling those in my franchise to hang tight and see what happens, to give it a while and don’t make a quick decision based on emotion. Wait and live the facts.”
More broadly, the positives and negatives of consolidation aren’t hard to decipher. On the plus ledger are an improved tech stack for the smaller company, more market share to expand the geographic footprint and the ability to more easily bundle title, mortgage and escrow services into a single transaction for clients.
Subtractions may include culture issues with the two companies having to get on the same page, leadership disruptions as the acquiring company takes the helm and the potential squeezing of hyperlocal agencies as they’re gobbled up.
“As consolidation continues to reshape the real (estate) industry, more brokerages are operating within increasingly large, publicly held conglomerates,” notes Gerard Liguori, broker/owner of Premier Estate Properties in South Florida. “Yet greater corporate scale may cause individual brand identities to become diluted, while marketing can follow an increasingly standardized approach, and clients’ needs are lost within layers of corporate management structure.
“As a privately held boutique firm, we have the ability to provide direct broker involvement, a distinguished brand and reputation and bespoke international marketing, as well as concierge-level service personalized to each client. Every decision is specialized, every marketing campaign is customized, and every client receives the personalized attention that only a true boutique firm with global exposure can provide.”
Longtime agent Pam Rosser Thistle, with Berkshire Hathaway HomeServices Fox & Roach, Realtors® in Philadelphia, sees the nuance.
“I don’t think consolidation is a positive trend, but is happening in many industries to stay profitable,” she says. “Whenever there is a merger, people lose jobs. And the combined company has less personality. It’s more generic. It also makes it harder for mom-and-pop businesses to survive. Small independent businesses used to be the lifeblood of America.
“In real estate, there is a positive perspective. Brokerages are the umbrella for thousands of entrepreneurs. In a sense, thousands of small businesses. Agents are 1099’s running our own operations, using the structure of the brokerage and following industry rules. So a well-resourced brokerage supports small businesses, in a different form.”
Competing against the bigs
Independent brokerage leaders who previously spoke to RISMedia also had varied opinions on how takeovers could affect the staff and working conditions of the acquired.
Michael Nourmand, leader of the 50-year-old Nourmand & Associates, said he believed the real estate landscape of the future will continue to support boutique firms and provide them with a greater advantage over big box.
“There’s definitely a market for both, just like…there’s a market for chains and a market for boutique shops,” he said. “Boots-on-the-ground has an advantage. You know the market, you know the people, you’re there. We’ve recruited on value and relationships, and some of the Wall Street firms have recruited on money.”
In Florida, Keyes Company President Christina Pappas warned that some things get lost in translation when big buys small.
“National brands, and the private equity capital behind much of the consolidation, are buying scale and making moves built to appeal to Wall Street,” she said. “When a brokerage gets acquired or grows beyond critical mass, agents feel it.”
