Wendy Cole is the managing editor of REALTOR® Magazine. She can be contacted at firstname.lastname@example.org.
Top 100 Companies: A Time for Sprinting Uphill
Last year presented a rocky course for some of the country's largest brokerages. Pulling ahead of the pack required endurance and innovation.
July 1, 2009
Glimmers of hope could not arrive soon enough for America’s largest real estate businesses. REALTOR® magazine’s Top 100 Companies weathered a year of unprecedented economic turmoil in 2008. The collapse of venerable Wall Street institutions coupled with the credit meltdown rattled even the most stable markets.
Existing-home sales fell 13.1 percent in 2008 compared with the year earlier, according to the NATIONAL ASSOCIATION OF REALTORS®, and median prices dropped 9.5 percent as foreclosures and short sales began to dominate many markets.
These challenging conditions required brokerages to adopt new mind-sets and action plans. While total sales volume dropped nearly 20 percent on average for the companies on this year’s list, there were several brokerages that have notably risen to the current reality, defying the painful trends.
View stats on 2009's Top 100 Companies:
A Steep Climb
At Hunt Real Estate ERA of Williamsville, N.Y., for example, total transactions rose a whopping 29.8 percent in 2008—a year when sides for the Top 100 fell an average of 14.7 percent. Chairman and CEO Peter Hunt saw the downturn as a prime time to seek out the biggest acquisitions in his company’s history; he bought two companies last year, adding 11 offices and 380 agents to its fold.
Hunt’s boldness was inspired by an unlikely source—his high school cross-country coach. As economic conditions worsened, Hunt began thinking more about his coach’s advice to "sprint uphill." The strategy seemed to make as much sense for his business as it did for his old running team. The thinking behind the idea goes like this: When running downhill, gravity helps everyone. It’s easy to accelerate, and competitive positions rarely change. You could even be a bit lazy and not fall behind.
The more grueling uphill stretches, on the other hand, give you the best chance to pull ahead of the competition. "When everyone else is tired or stressed, you dig deeper, run a little faster," Hunt says. Indeed, Hunt’s ranking among the Top 100 Companies improved vastly to No. 15 in 2008 from No. 35 in 2007. It also moved up 43 notches in sales volume, to No. 41.
In addition to acquiring companies, Hunt is investing in technology and specialized training for sales associates and managers. "We’re going to continue to spend in the areas that bring us the greatest returns," he says.
Hunt wasn’t the only broker whose company maintained a healthy pace in 2008. At RE/MAX Results in Eden Prairie, Minn., a company culture that emphasizes individual production helped the brokerage notch a chart-topping 22.4 sides per salesperson. The numbers are especially impressive when you consider that companies on the Top 100 list averaged just nine deals per practitioner last year.
"It’s hogwash to say that economic conditions automatically reduce levels of production," says RE/MAX Results President John Collopy, whose company is No. 23 on the transaction sides list. "We’ve always focused on productivity. It’s always been the most important number in evaluating success, not how many associates or offices we have."
His company’s approach: Hire experienced salespeople and create an environment where they can do business "with as few obstructions as possible."
Still on Top
While the behemoth NRT LLC of Parsippany, N.J., holds onto the No. 1 berths for both sides and sales volume, 2008 was hardly a banner year. Its parent company Realogy Corp. reported a $1.9 billion loss, and bankruptcy rumors were rampant. Realogy President and CEO Richard A. Smith has called such talk "completely false and without merit," describing it further as "the unwarranted wishful thinking of our competitors."
Still, NRT underwent significant shrinkage. The company closed 104 offices and shed 5,200 sales positions. "We lost about 10 percent of our sales associates, but 90 percent of them were in our third and fourth quartile of productivity," says NRT President and CEO Bruce Zipf. Going forward, he says the company will intensify its recruiting, retention, and development efforts to boost individual sales levels. This marketplace is forcing us to step back, rethink, and retool how we operate."