Undaunted, Independents Compete Successfully

March 1, 1997

They have bankrolls to spend on advertising and marketing. They have buying power that can make even their wealthiest rivals envious.

Name recognition? They have that, too. Market share? In some regions they're the leaders.

Without a doubt, large franchises wield considerable influence in the real estate marketplace. But they don't intimidate Joseph T. Aveni.

''I have as good name recognition as they do in my market,'' says Aveni, chairman of the board and CEO of Cleveland-based Realty One, which has 48 offices and 1,800 sales associates. ''I've had opportunities to join a franchise. I don't see the value in it. I think there's room for everybody.''

Franchises in the industry aren't to be ignored, but Aveni says independent real estate companies can compete against the biggest players and fare just as well. For some, however, it may be more of a struggle.

''The large independents can provide computer technology and training the same as a franchise. I focus on what I'm doing, and I try to provide my salespeople with the best environment. I think they'll be good competition,'' he says of franchises, ''but a well-managed independent will be able to perform very well in the marketplace.''

Aveni cites technology, with its expense, as a key reason some small to midsize independent real estate companies fail. With profit margins steadily falling and the cost of doing business on the rise, Aveni says, it's no wonder many companies join franchises or leave the industry altogether.

''There's no question there's an evolution taking place in the industry. You're seeing smaller companies not being able to compete unless they're a niche player'' advertising to a particular market, he says. ''The reason has to do only with technology. It's very expensive, and the cost is forcing consolidation.

''I don't feel it's been harder'' to compete against franchises, Aveni says. ''I'm a large company, and I can provide my salespeople with everything a franchise can--and in a lot of ways better. People in the Midwest do business differently than in California. Maybe the franchises don't have that kind of flexibility.''

Patricia W. Neal, CRS®, president of Pat Neal Associates, a five salesperson office in Huntington Beach, Calif., says keeping up with technology--she upgrades their computer system and its capacity about every three months--has allowed her to compete ''efficiently'' against the larger independents and cash-infused franchises.

''In the California market, people go with the salesperson,'' she says. ''It's nice to have the big name for the advertising and the bulk buying. But I think the small company that has a niche in a market is just as able to compete against the giants as anyone else. We see it all the time.''

Carole Fleck is a former senior editor for REALTOR® Magazine.

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