The 2004 Power Broker Report

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Ranking the nation?s top guns in real estate
Sure, it?s easy to attribute the phenomenon of the 2003 real estate market to those memorably low interest rates. This year?s top-ranking firms, however, are those who realize that profitability requires a lot more than favorable market conditions.

RISMedia?s 16th annual Power Broker Report & Survey looks at the details behind the data?the formulas and strategies that ready the power broker for success no matter where the interest rate may land. Here, we rank the Top 500 companies from the 2004 Power Broker Report and get their take on what?s in store for the year at hand. Confronting a myriad of issues?from RESPA reform to affordable housing?it?s full speed ahead for today?s power brokers. Stay tuned for an unforgettable ride.

2003: Exceeding All Expectations

By Maria Patterson

This time last year, the prospects of war and an ailing economy set the stage for a rough road ahead in the real estate business. But bucking expectations, interest rates stayed very low. The rates set the real estate market on fire, both in terms of home buying and selling and refinance activity. And it shows in the results of National Relocation & Real Estate?s 2004 Power Broker Report & Survey.

According to survey results, the top ranking 500 firms combined to create a total of 3,000,519 transactions in 2003, closing $740,866,047,743 in total sales volume. The number of sales associates at these firms reached 261,567 while the total number of offices reached 5,951.

This year?s power brokers agree that low interest rates alone were not enough to guarantee success.

?2003 was nothing short of phenomenal,? says Ron Peltier, president and CEO of HomeServices of America and chairman and CEO of Edina Realty. ?We were certainly buoyed by very advantageous interest rates, but still, you have to execute. We had all these wonderful opportunities, but those opportunities mean nothing if you don?t have the ability to seize and execute.?

While Peltier reports that interest rates were directly responsible for the spike in refinance activity, he believes that other factors were integral to increased home sales. ?The tremendous surge in general transaction business is due to people placing high priority in the homeownership experience,? says Peltier, ?both as an investment and, emotionally, as a place to call home.?

Achieving the No. 1 rank in the Power Broker Report & Survey for a seventh consecutive year, NRT, Incorporated reports a growth in sales volume from $149 billion in 2002 to $167 billion in 2003. NRT president and CEO, Bob Becker, emphasizes, however, that ?Growth can be measured in many ways? and expresses a sentiment echoed by many of this year?s power brokers: that behind every hard-earned dollar is a valuable team player.

According to Becker, NRT?s sales growth in 2003 was ?due to a lot of hard work by a talented team of people across all of our local operating companies.

Will history repeat itself in 2004?

Probably not, but that doesn?t mean there?s anything but healthy, albeit cautious, optimism toward the 2004 real estate market amongst this year?s power brokers.

Most power brokers are confident that low interest rates will persevere for much of the year. ?The Federal Reserve has to be very careful about impacting election results,? says Harley Rouda Jr., CEO and managing partner of Ohio-based Real Living. ?Once the election is over, the Federal Reserve will feel a little more commitment in one direction or another. The likelihood is that the interest rate will edge up higher.?

Jim Weichert, president of Weichert Realtors, sees many factors, in addition to interest rates, contributing to a successful year ahead. ?Stock market gains, a recovering economy, rising household incomes, the increasing numbers of immigrants purchasing homes and the likely continuation of affordable interest rates all point to another robust year for real estate,? says Weichert. ?The supply/demand ratio continues to tilt toward sellers, so we expect healthy price appreciation, although more in line with historic norms rather than the dizzying gains of recent years.?

What?s more, what the real estate industry has on its side this year, as opposed to last, is a recovering economy and, more importantly a rise in consumer confidence. This year?s power brokers expect that these two factors just might combine to balance out the effects of marginally higher interest rates, paving the way for another banner year in real estate.

What does stand to change substantially for this year, however, is the great refi frenzy of last year. While the interest rates are still low enough to make home buying attractive, it?s unlikely that we?ll come close to matching the level of refinance activity experienced in 2003.

The watchful eye of the power broker spotlights many issues that will affect the year ahead, underscoring an increasingly competitive marketplace and downward pressure on commissions. In fact, this year?s survey results reflect that the majority of respondents?76%?view broker profitability as a number-one concern for the future.

?The information-age consumer has more options and a higher standard of what justifies a professional commission,? says Terry Morris, president of GMAC Real Estate, Company Owned Operations. ?We see it as our responsibility to ensure that consumers value the knowledge, services and tools of our sales partners enough to reward them with their business and a professional commission.?

Portrait of a Power Broker

A look at what it really takes from those who?ve made it

Power brokers do not live by sales volume and transaction sides alone. Success for this elite group means much more than being in the black. We went straight to the source to find out the personality traits, trade secrets and insider?s advice on what it really takes to be a power broker.

Michael Saunders, president, Michael Saunders & Co.: ?If you don?t have passion, get off the train. I think you have to have eternal energy and courage to be an independent. You have to have an unstoppable drive and give credit to those who have helped you along the way.?

Dan Forsman, president, Prudential Atlanta: ?Don?t be light years ahead of the competition. Try to be 15 minutes early instead.?

Dottie Herman, CEO, Prudential Douglas Elliman: ?I was willing to take risks. You have to be able to execute and believe in what you?re doing. It?s still a people business. You have to meet people face to face.?

Larry Flick, CEO, Prudential Fox and Roach Realtors: ?You need to be able to look into the future and anticipate trends and adjust your strategy to insulate yourself from bad stuff and take advantage of the good stuff. You have to have a passion about your business and really enjoy it. You also have to have a strong leadership team and be blessed with some fine talent. It?s not anything I can do on my own. If you surround yourself with the right people and mentor and grow them, everything takes care of itself.?

George Pittman, president, Ammons Pittman/GMAC Real Estate: ?Probably the two words that most come to mind are integrity and optimism. We?re not perfect, but if we find out that we messed up, we take whatever steps we need to correct the situation. You also have to be an optimist. You have to believe that it?s going to get better tomorrow.?

Cameron Merage, president, First Team Real Estate: ?To be a power broker today takes a different skill set than it did 30 years ago. Today?s cost-intensive environment requires you to be on top of your trade. You have to have passion; you have to be creative and be able to solve problems. You have to have vision. You have to know where you?re going and how to get there.?

Tom Kunz, CEO, Century 21 Award: ?It?s 100-percent about relationships; it?s all about communication and focus on the end result.?

Diane Turton, president, Diane Turton, Realtors: Taking a hands-on approach. ?I was in the trenches listing and selling. I?m with [my agents] helping them make the money.?


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