Jenny Norman?

Harry Norman Realtors is absorbing Jenny Pruitt & Associates, creating one of the largest residential real estate firms in Atlanta with 1,474 agents.

The two agencies are owned by HomeServices of America, an affiliate of Warren Buffett’s Berkshire Hathaway. Last year, they merged office operations. The latest merger puts all agents under the Harry Norman brand. Dan Parmer will be CEO and Martha Hayhurst will be president.

Thousands of local real estate agents have left the business because of slumping home sales, but Hayhurst said that is not why the merger occurred. “This alliance just seemed the right way to make the firm stronger,” she said.

Parmer said the new Harry Norman will be the largest residential real estate company in Atlanta in terms of sales volume.

Harry Norman was started 79 years ago and grew to more than 1,000 agents. Jenny Pruitt began 20 years ago and employed about 340 agents before the merger.

HomeServices acquired Harry Norman in 2006 and Jenny Pruitt in 2001. Founder Jenny Pruitt left to help start Atlanta Fine Homes.

Buffett and other investors own Berkshire Hathaway, a holding company of 50 firms, including MidAmerican Energy Holdings Co., which owns HomeServices. HomeServices owns several real estate firms throughout the country.

SOURCE: AJC

ERA - True Trailblazer or Copy Cat?

Recently, RIS Media posted their "cover story." A story about ERA, a relatively new real estate company that has similiar principles as Keller Williams. I won't go into the details of the pandering article, you can read it here. However, I will highlight ERA's points here.

What they're offering:

• to sell you back the leads they generate off their marketing (ala Remax, ZipRealty, Ect)
• borrowed training models (borrowed from tired and old to tried and true)
• online training
• Global Brand Recognition - (it's in 45 countries, but I'm not sure it's recognized)
• Local Marketing Tools - I've not seen this locally.
• TeamERA.com - Online intranet site that puts everything in one place.
• Traditional Commission Structure - 70/30 plus franchise fee
• Some form or recruitng bonus

A quick glance at TeamEra.com reveals a sophmoric flash presentation that tells you that what has become mandatory for the big Real Estate companies (an intranet) is adequate at ERA.

What ERA has assembled is a wedding day for most Realtors, with alot borrowed, something blue and a little bit of something new. However, after the honeymoon, it'll be interesting to see if ERA can KEEP their agents over the years with these lackluster offerrings.

Real Estate Roller Coaster?

It's a bit off topic for this blog, but I thought it was a super cool video.



Shows what has happened to the real estate market since the late 1800's. We haven't dived as far as you might think!

Help-U-Sell Adds Board Member

RISMEDIA, May 3, 2007-Help-U-Sell Real Estate, a set-fee services company, has announced that Patrick Stone has joined the company's Board of Directors.

Stone has over 32 years of experience in the real estate industry, most recently as vice chairman of the board of directors for Metrocities Mortgage. Prior to that, he enjoyed a lengthy career as president and chief operating officer of Fidelity National Financial, where he was credited for growing the company into the number one title company in the country.

"To add a person with Patrick's breadth of real estate experience and proven leadership will be a tremendous advantage for Help-U-Sell," said Steve Ozonian, Chairman of the Board. "We are excited that Patrick has agreed to join our Board of Directors and expect that he will play a key role in moving the company forward."

"Help-U-Sell is clearly at the tipping point in the real estate industry," said Stone. "Transparency in the real estate transaction is as important as ever, and Help-U-Sell's set-fee model and focus on the consumer experience is the wave of the future, and I'm excited to be a part of it."

An alumni of Oregon State University, Stone is on the Oregon State University Foundation Board of Trustees, serves as Chairman of the Board of Trustees of the Santa Barbara Museum of Art, is Chairman of The Stone Group, an Austin, Texas-based commercial brokerage and development company, and is an audit committee member for Direct Relief International, a non-profit organization based in Santa Barbara, California.

Help-U-Sell Real Estate reports having nearly 1,000 offices in 46 states, and operations in South Africa, and the Philippines. The company was recently rated the number two "new" real estate franchise model by the 2006 Swanepoel Trends Report. For more information, visit www.helpusell.com.

REMAX GREATER ATLANTA TO ACQUIRE REMAX HORIZONS

RISMEDIA, May 2, 2007-RE/MAX® Greater Atlanta announces its agreement to acquire RE/MAX Horizons. Their three offices, located in Gainesville, Buford, and Braselton, all reside in Hall County and house approximately 120 RE/MAX® professionals.

"We are extremely delighted to enter one of Georgia's fastest growing counties," said Steve Graham, President and CEO of RE/MAX Greater Atlanta. "[RE/MAX] Horizons agents' dedication to real estate excellent is a perfect fit for our organization and I believe the transition will be quite seamless."

Hall county, with access to the popular Lake Lanier and the foothills of the Blue Ridge Mountains, has seen a near 25% increase in population since the year 2000. RE/MAX Greater Atlanta sold more than 16,700 homes in 2006 equating to nearly $4.4 billion dollars in sales. Honored as the nation's 18th largest real estate brokerage by RISMedia's 2007 Power Broker Report, RE/MAX® Greater Atlanta will comprise 15 offices and more than 1,300 agents once the acquisition is complete.

For more information, visit www.remax-greateratlantaga.com.

Is your company supporting your business…or are you supporting their business?

As I do more and more research on the different Brokerages it amazes me that no matter how much a company is more cutting edge in their methods, they still are doing business the traditional way. That is, they spend money, AGENT'S money, promoting THEIR brand and generating THEIR own leads ... which in turn are sold back to the agent or given to the top producers.

Let's examine their business model.

Recruit new agents - Take 50% from their sales and hopefully they will become good. If they get big, they will be rewarded with new business opportunities that were generated off of their split. They'll get perks, such as parking spaces, offices and key opportunities.

Worst case scenario, the prospect doesn't pan out and the company gets some free advertising while they were working.

Last time I checked, 100% of my clients wanted to work with me, not my Broker or my brand. When I switch companies, my clients come with me.

So who am I talking about? Let's call some of them out:

• Remax - Still on a traditional split - never caps, or if it does it's coupled with exorbinant "desk" fees. Recently they developed LEADSTREET where they generate leads and sell them back to the agents. They also came out with REMAX University. Sounds very familiar with another University.
• Coldwell Banker - This is a company that is owned by Cedant. In any case, the split is the same traditional one, 70/30 for most agents with no cap in site. All branding must be CB and not the SMITH TEAM.
• C-21 - Again, owned by Cedant. C-21 is becoming the red-headed step child of brokerages. On one page you'll see a recruting ad, proclaiming how successful people will be by joining. On the opposing page, there's an undermining ad of "SAVE OUR COMMISSION" explaing C-21 Flat Fee franchises. To me this is the bottom of the barrel for a company.
• Prudential - Works the traditional system as well. They would love for their agents to buy into their other products and sell them as well. Overall, they view agents as employees.
• ERA, Exit & GMAC - These companies are copying the KW model but getting it all wrong. Instead of actually sharing profits, they dip into agents pockets -- forever. At GMAC, people who recruit you will receive 1 to 2% of your total earning. This does not go levels deep and never caps out. ERA and Exit have similiar reward models.

In some cases, these brokerages will offer lockboxes, signs and other resources. The downside is that all of these items keep you dependent on them and, oh yeah, "would you like some JOHN SMITH with your Coldwell Banker sign?"

So who's not doing this?

• Keller Williams - Doesn't spend a dime on brand building or recruiting. Each agent caps out at a predetermined number, in Atlanta it's 18K. After that it's strictly 100%. This renews itself every year. This also creates equality and quality control. No agent is worth more than the 18K so unethical agents will be "dehired." That's unimaginable when brokerages would hire monkeys if allowed. It's more about YOU the agent. KW spends their money on training agents how to do the business. If you've ever met a KW agent, then you know it's about being professional and having a career worth having.
• Solid Source (Local) - A Per Transaction based company. Their "Christian" foundation makes them an interesting study.
• Flat Fee/100% Companies - They offer no training or support but you keep everything. Typically you can do what you want as well, even as far as creating a sub brand.

This was pretty down and dirty but it should give you some insight. What has your Broker done for you lately? My guess if they aren't teaching you how to fish, their causing you to be dependent on them. If that's the case, ask yourself this, "what happens when the market shifts and it's no long profitable for them to provide these things at this price?" Prices go up, ethics go down and you'll be looking elsewhere.

At the end of the day, when you look at your business, are you supporting YOUR brand of Real Estate or your BROKERS?

Keller Williams Profit Share Model Demystified

In my last post I had a few things wrong. Namely, everything. I recently sat down with Aaron Kaufman the leading recruiter for Keller Willliams and discussed what KW is about in great detail.

Aaron was adamant about not talking about Profit Share. His philosophy is that when he talks with prospective recruits that it's not about the money. After spending time with him I would tend to agree with this, that profit share is the gravy for joining KW and not the reason.

However, this is the internet and people want to know. So here goes the profit share model again:

Let's Say Bob sells a $1,000,000 home and nets a $30,000 commission. For the sake of being easy, lets also say Bob is on a 70/30 split with KW (keep in mind that it caps out at $18K - so he's half way to capping). So he's giving $9,000 to the market center. Now let's say after all is said and done for the month that the Market center that Bob is in makes a $40,000 profit out of a GROSS of $90K. Now that (the $40K profit) gets split up between the owner and the agents (yes, the agents!). Now you take the $20K and you take Bob's contribution (10% of the overall gross), you'll get $2,000. Now for the fun part.

Now, using our previously incorrect post as an example, John (Bob's recruiter) would receive a whopping $1,000.

Levels 1 thru 7 are as follow: 1. 50% 2.10% 3. & 4. 5% 5. 7.5% 6. 10% 7.12.5%

Now that I've posted this I hope you see how valuable this system is. The genius is that if your with KW you're paying out the 18K to the market center to use all the resources. It's a bonus that you'd get anything back. As you'll see in upcoming posts, that this system will actually promote equality and comraderie.

It's becoming more obvious that the jaded opinions I had of KW were false and that beneath each "business" idea that seems to take away from the agent, it's actually another tool to be harnessed by a savvy business person.

Next Time: The Pyramid Scheme of Keller Williams!

Keller Williams Profit Share Model -

I recently discovered the inner workings of the profit share model that KW implements that makes it incredibly transparent. It doesn't take away from the company, but to me, personally, it eliminates it as a reason to join. Basically, it goes from the Steak to the Gravy.

Here's how it works:

Let's say, my name is BOB and JOHN recruits me. Also lets say my split and cap for the market center is $15,000. What was the big AHA for me is that after this $15K is paid, BOB is no longer sending profit share to JOHN. In a really easy math scenario, if John gets 100% of the money, he would only get $15K. Now that may seem like an obvious thing, but they way they present it to you will make more money in a more profitable Market Center. Now I'm guessing that if you have a market center that is not profitable, they dip more heavily into the $15K each agent pays.

Just for information, let's see how the chain works as well:

JOHN recruited
BOB recruited
SUSAN recruited
STEVE recruited
BETTY recruited
JUAN recruited
TANISHA 7th Level

So JOHN will get X% from BOB & TANISHA, 1/2X% from JUAN & SUSAN & 1/4X% from STEVE & BETTY.

X is determined by your % of profitability to the Market Center and I suppose how profitable your Center was.

Previously, I had assumed that other profit sources directly tied to agent actions such as MLS fees (that get redistributed) would have added to the profit share. Instead, it's directly tied and only tied to the $15K.

It's a bit disapointing that it's not deeper than that, but again, KW has so many great things that people will join for, so getting a little back is perfect. In the end, the profit share model ends up being another MLM if it has stand on its own merits.

LOCAL: Remax/ CENTER

I got this in the mail and thought I would post it.

You get REMAX name in return for:

Plan A: $725 / MO 95/5 Split
Plan B: $258 / MO 70/30 Capped at $9000
Plan C: $67 / MO 70/30 Capped at $15,000

Includes MLS, E&O and Website.

Re/Max Center seems to want to compete with the more progressive models such as Keller Williams, ERA and Exit have moved to. This IS the model for Real Estate now, maintain some of the good elements of a traditional brokerage but also giving licenscees the oppportunity to choose.

Professonals?

Another flat fee company out there is known as Realty Professionals. Very much like Chapman Hall and other flat fee type companies. It's a no service, no support, all the commission company. This is a great business model overall and really assists in the helping agents lower their commissions and pass the savings along the consumer. The difference between Realty Professionals and Chapman Hall or any rather, the difference between Chapman Hall and all other flat fee companies is that Realty Professionals charges a transaction fee. So in exchange for less of a monthly burden you only have to pay when you perform.

With many of these types of brokerages out there, it's no wonder why they are not doing anything in the market overall. One of the reasons why Remax, Coldwell and others have experienced agents is because they simply can afford it. If you can't pay the bills you'll likely end up at one of these flat fee companies. Now whether you get what you pay for is up to you. I could make a case against it at Remax. So the question still remains, are the agents at Realty Professionals, professionals? If you take professional to mean, competent, then YES. However, if you take professional to imply that an agent is taking the business seriously and sees it as a career, then I would have to say, No. There are exceptions to every rule, there are top agents world over that are in unheard of brokerages, so don't take that as a hard and fast rule.

In any case, Realty Professionals offers a nice, relaxed enviroment. The big draw of this particular company is the laid back broker, Jim Burchette. Every agent I've encountered has had nothing but nice things to say.

Again, as with Chapman Hall, you get a low risk, relaxed enviroment with no training, no support or leads or anything. In comparison, RP has more offices than CH, but at a higher cost.

Summary:

What you get with Realty Professionals

• $200 A month / $250 a transaction
• more office locations than most flat fee companies
• no training
• no frills

LONE WOLF

In the local market of Atlanta, we have several flat fee type brokerages. This post will talk specifically about one of the best "deals" of these type of broker houses. I'll cover Homewise, Zip and others in another post. However, none of them come close to the "deal" or the growth of this one franchise, Chapman Hall.

Chapman Hall has an insanely simple setup. I speak from experience because I held my license there for some time. At $125 or so a month, this fee is the only thing that CH takes from you. That's almost on par with what traditional brokerages take as a E&O, MLS fees ect. This 125 covers it all. They do take the FMLS fee, but ever broker does that as well. Just in case you didn't read it, that's 100% commission, for 125.

Chapman Hall Realtors is to Realtors as Flat Fee MLS listings are to FSBOs. You get a great deal, but unless you can do it all on your own then you might be in a bit over your head. No training, no marketing, no real staff or support even. John Hallman is more than accomodating and great broker, but managing several hundred agents at once can be a daunting task.

Basically, what it amounts to is a great way to run a business inside a business. It sounds really good in theory and there are several great agents at CH. However, if you look closely, many of them are plateauing as I did. There's simply no competition, no comraderie, no office, no listings... ect. The majority of all the agents end up as lone wolf agents that have little to no market presence (individually), despite the overall large market presence of Chapman Hall in certain areas.

In Summary

What you get with Chapman Hall

• The single best financial deal in town
• No Support
• No Training
• No Frills
• Insert a question here, Answer: No

What's In A Name?

What would be an article about the different brokers without covering the biggest one of all. Re/Max. Remax has been around forever and their business model has not changed much in all these years. The basic model is to acquire new agents into franchisee offices and give them the option of paying office/desk fees that amount to about $12,000 or so a year or a split on commissions that potentially could be much more than that. This is in addition to maintaining the regular monthly fees of E/O insurance, MLS membership ect.

With Remax you are getting a name, much like if you opened a resturaunt and signed up for McDonalds you would get instant name recognition. Remax isn't known for training their agents or having high standards. By default, the cost of joining Remax is what keeps younger and/or newbie agents from joining.

In my market area, Atlanta, Remax has a few major players, such as Kay Kim, Mark Spain and the Zac Team but their market share is giving way to agents with a more flexible business model.

Summary:

What You Get with Remax

• Instant Name Recognition
• High Desk Fees
• Not much effort in Teamwork
• Training is dependent on individual franchises