Prudential to become Berkshire Hathaway

When you think about real estate, you probably thinkof those firms whose names you know, like Century 21, and Coldwell Banker and Re/Max, that's because they spend more money promoting themselves and their brand name than almost any of the independents do. And yet 41 percent of Realtors are not affiliated with these “big brands”, but instead work with an independent agency. Some of the agents prefer the independents because as a rule they are smaller, sometimes “mom and pop” shops, and because they normally don't charge the fees and expenses that the franchises do.

The Great Recession brought hard times to all the agencies, the difficult market conditions, including high unemployment, restrictive lending, and a long-suffering economy, forced many brokerages into scaling back offices and agents. Re/Max, for one, has seen a net loss of 700 offices in the past two years. As a matter of fact, most national franchise brands have been contracting in response to lackluster real estate market conditions--one notable exception is Keller Williams, which has continued to see a net growth in agents and numbers of offices.

This week the new Berkshire Hathaway Home Services brand was unveiled by HSF Associates at the annual Prudential Real Estate Sales Convention, signaling another defining moment in residential real estate. Warren Buffett wasn't there, but from the stage of Caesars Palace in Las Vegas, Prudential real estate agents and brokers got a first-hand look at the brand’s new visual identity, soon enough you'll see Berkshire Hathaway on every Main Street across the US. Late last year, they purchased a majority interest in the affiliate networks of Prudential Real Estate, and had formed HSF Affiliates LLC, which will operate the existing franchise network, and presumably introduce the Berkshire Hathaway name change.

Do you think the franchises are smallish business? Think again, franchises are big business, and they bring a “national brand” awareness to even the smallest real estate firms. But more than just a familiar brand, they are providing a renewed focus on agent productivity, retention and training. Indeed, today’s market challenges are giving many franchises an edge in their recruiting and inspiring others to forge new partnerships as they look to chart a stable future.

Last year ERA Real Estate announced its affiliation with New Orleans–based Latter & Blum. L&B retains its identity as a strong local brand established 95 years ago but now has access to ERA’s resources and national network through a new program called ERA Powered.

In another notable strategic pairing, the fast-growing Casa Latino franchise, which specializes in the Hispanic market, announced that it would become part of Nextage Realty International. Although the new company will still serve its targeted multicultural clients, the move is designed to give franchisees broader growth opportunities.

And even private mom and pop brokerages that desire to stay independent are joining large networks of affiliated companies like the Chicago-based Leading Real Estate Cos. of the World. In that kind of arrangement, they can obtain many of the same benefits that brokers and salespeople at franchises have. These can include everything from lead generation programs, branding, and marketing materials to blogging platforms, training, and professional development opportunities. Leading RE’s 580 companies together were responsible for $225 billion in sales last year, a higher volume than any single national franchise brand.

Smaller franchise companies like Flat Rate Realty, which has 50 agents operating in 17 offices, differentiate themselves with incentives like buyer’s rebates. These rebates can be worth as much as 50 percent of the buyer agent’s commissions--which have increased business by 25 percent over the past two years.

As a long time Realtor, I have worked for both Indies and Franchises—both have their high points and their low points. I can tell you the franchises generally provide a management framework for the owners. For the agents they offer leads (from their other franchisees), sales training, advertising and signage, and high tech websites and texts. What they offer the owners is financial tracking, agent retention and management discipline. The franchises monitor the business, keep track of the agents and frown on wasting time. Whereas the mom and pop shops are usually less restrictive and more understanding of a day off to go fishing...

Dane Hahn is a real estate professional serving Sarasota and Charlotte Counties. He can be reached at 941-681-0312 or by email at dane.hahn@gmail.com. See him on the web at www.danesellsflorida.com.