Changes in the brokerage scene
News has been circulating the last couple of days about changes in the Phoenix real estate brokerage scene, though the vast majority of the changes have never seen the light of day in the local newspaper.
Sometime over the past two weeks a smallish Century 21 franchise, Century 21 Camelview, shut its doors. Several agents made their way to my old firm, Century 21 Arizona Foothills. Arizona Foothills, meanwhile, announced this past weekend that it will be closing its Arrowhead Ranch office effective March 31.
2nd most productive office
That Arrowhead office was the second-most productive office in the Century 21 chain in Maricopa County last year (with admittedly limited help from me.) But the lease rates were high and the property owner was demanding a five-year lease, which Floyd Scott, Foothills’ owner, wasn’t willing to sign.
Today news comes that Homesmart last week acquired another local brokerage, Dan Schwartz Realty, giving Homesmart more than 3,300 agents. What slice of the market the company now will have, I’m not sure. I’ll try to run the numbers sometime soon.
We often talk about the need for real estate agents to prove their value to the general public. But real estate brokerages are finding themselves needing to prove their value to their agents to an equal degree.
Ron Copus’ departure
The worst past of Foothills’ closing of the Arrowhead office is the departure of Ron Copus, the one-time broker at Tradin’ Places before it was acquired by Foothills. Ron was my mentor and the mentor for many successful agents. There were many who remained at Foothills after the buyout only because of Ron and Mary Sand, the training director.
Loyalty to the Foothills’ brand never has run deep. And with the closing of this branch, there now are several agents looking elsewhere because without a local location, there are limits to the value the company offers. There’s a vibrant corporate relocation program there but agents soon learn that the 3/4 of one percent they may earn is little reward for a great deal of work.
Expenses passed to agents
More and more expenses have been passed to the agents. And there are substantial splits taken out of every closing check, sometimes with only the flimsiest of justifications. (Like an additional 5% fee for daring to accept a referral from a sister Century 21 franchise, payable directly to the company’s relocation department for doing absolutely zero work on the file.)
Dan Schwartz agents are used to a minimum of infrastructure so the change there likely will be less dramatic, outside of the usual need to order new signs, business cards and marketing paraphernalia. And since Homesmart is a company with 100 percent splits, the value question likely will not be asked as often.
Two types of communities
As I wrote on my own blog there seem to be two types of companies – mom and pop, and the monoliths. Century 21 Metro Alliance was a monolith whose days appear numbered, what with the owners filing for bankruptcy and rumors of downsizing office space from a scarcely 1-year-old location. Homesmart appears to be a monolith that’s thriving.
Smaller shops with a handful of agents often can be more successful comparatively due to the lack of overhead. Jay and Francy Thompson, for example, started Thompsons Realty after leaving Century 21 Aware and haven’t missed a beat. Others prominent in the real estate blogging world for their alleged marketing prowess have zero active listings in the MLS and remarkably few over the past 16 months or so.
Strange times, indeed.