RISMEDIA, February 3, 2010—Real estate veterans Greg Rand and Kevin Levent have not only seen it all but survived it all…with flying colors, I might add—expanding, growing and gaining marketshare throughout all kinds of real estate cycles. In 2009, these two brokers made a bold statement at a bold time and switched from their longtime brand affiliations to Better Homes and Gardens Real Estate.
Why mess with a good thing?
To make sure they remain winners as the playing field changes. For Rand and Levent, there is no doubt in their minds that the real estate business has made a permanent shift and in order to stay relevant, so must they. In this exclusive interview, hear how Rand, managing partner of Better Homes and Gardens Real Estate Rand Realty in New York’s Hudson Valley, Levent, owner of Better Homes and Gardens Real Estate Metro Brokers in Atlanta, and Sherry Chris, brand president and CEO, Better Homes and Gardens Real Estate LLC, plan on ensuring success for the long haul.
Maria Patterson: First, as we start a new decade, what do you believe to be the biggest change in the industry over the last 10 years?
Greg Rand: The biggest change that has been happening over the past 10 years is that the public is expecting a lot more out of us than they have in the past. When the overall economy and consumer confidence are shattered and the housing market is at the center of that, people’s fears become the center of the conversation in the media. Yet nobody thinks of asking any of us in this industry about it. That tells me that the public perceives our product as being critical and important, but doesn’t perceive us as being critical and important. We need to step up and be taken seriously. At the end of the day, if the world doesn’t take us seriously then we have earned that poor reputation. We need to be more than we’ve ever been before.
Kevin Levent: The past 10 years have brought us to the realization that the consumer is driving the transaction more so than ever before. Sales were on the increase in the early part of the decade due to relaxed underwriting guidelines, and that allowed for a huge influx of agents into the industry. Our profession has suffered some because of it. The agent became viewed as not necessary to the transaction. A lot of those agents are now leaving the business and we need to get back in control and get in tune with consumers.
Sherry Chris: As 78 million Baby Boomers slow their buying of real estate, 73 million Echo Boomers are becoming active and driving the economy in general. This group looks at things differently and utilizes technology to its fullest extent. The Better Homes and Gardens Real Estate brand was founded to address this consumer-controlled real estate environment and add value to their real estate experience beyond what they can already find out for themselves on the Internet. That is the biggest change in the last decade.
MP: Both of your firms go back more than 15 years. Describe how the culture has changed over that time and how you’ve been able to adapt and stay current.
KL: At Better Homes and Gardens Real Estate Metro Brokers, we realized more than a decade ago that we need to become more involved in transactions with our agents and technology was going to become one of the items that drove agents back to us for help. Through that technology, we could be more in tune with their needs, get more involved with lead generation for them and get back involved with their daily transaction business. We view agents not as independent contractors but as interdependent with their broker. That’s a major culture shift that a lot of companies don’t look at. Those alignments between agent and brokerage will bring professionalism back and those companies will garner the lion’s share of the business in the future.
GR: Actually, we don’t want to see a culture change. We’ve grown substantially over the years but the culture that we began with was very family-oriented and very hands-on. The challenge, as the company has grown, is to maintain that original culture and present the best of both worlds—the juice of a corporate entity with all the resources and technology, but the hands-on nature of a family company, where you’re small enough to notice when an agent hasn’t been around for a couple of days. Making the change to Better Homes and Gardens Real Estate helped—its culture is all about the backyard barbeque and helped us shake off that sense that big and corporate is the way to be.
MP: So how do you maintain that family sense while continuing to grow?
GR: You have to remember whose birthday it is today and get out there in the field. We’ve pushed ourselves back out in the field to make sure we’re there on the local level and don’t turn into that corporate behemoth that we’ve exposed as being a mismatch for the real estate business.
SC: Both of these firms do an exceptional job showing that this is a people business based on relationships. I’ve seen Kevin with his chef hat on flipping burgers and loading yard signs in the trunk of his agents’ cars and I’ve seen the Rands hosting events and dressing up in costumes. That’s the level of involvement that helps sustain your business during tough times—that trust and attachment you’ve built with people.
MP: Better Homes and Gardens Real Estate refers to itself as a ‘Next Generation Brokerage.’ Why was this an important direction for you to head in?
KL: I think with the upheaval in the marketplace that has happened in the past 36 months, it was the perfect time to change to a new brand. It’s time to cultivate something new. Because of economic conditions, agents have a more realistic focus and have changed the way they prospect and get new buyers, and the way they handle sellers. The Better Homes and Gardens Real Estate brand is all about a consumer-focused and consumer-driven business. There’s not a more perfect time than today for that brand to hit the marketplace.
GR: We view Better Homes and Gardens as a media company that we’re partnered with. If you think back to the origins of the brand, it was really a brand that launched a thousand ships…from the HGTV network to Martha Stewart. The next incarnation of the brand is now on Main Street and Elm Street—it’s the embodiment of the idea of good living and taking care of family and communities. And the timing is so impeccable…and nobody planned it. Wall St. and Main St. are two very different places and when Wall St. and Main St. collided, Main St. suffered. The way we view it, Main St. needs a champion. This brand is a Main St., USA brand, which allows us to say we’re the people to help you in this community.
SC: Once in a lifetime, everything aligns in your favor and that’s what’s happened with this brand. Better Homes and Gardens launched in the early ’20s and evolved into a media brand that reaches 40 million consumers through signature cross-media platforms. We now are taking that brand to the consumer-controlled real estate industry. We offer tools that brokers and agents can take directly to consumers—tools that really fit with what everyone is looking for today.
KL: We were a Better Homes and Gardens Real Estate company in the ’90s and the opportunity to rejoin that brand was a very easy decision for me to make. It’s a great brand that gives our agents instant credibility in the home—it is the embodiment of trust. And this time around, it’s not only the name but everything that Realogy packed in and around the name, such as technology initiatives, a new fresh look and the ability to now leverage the media side of the brand. There’s no better name to have on a property. Period.
MP: In a year when many real estate firms suffered and/or closed shop, how were you able to grow your firms in 2009?
KL: Our growth strategy was to stay focused on the marketplace and study our competitors harder than ever before. We invited them into our company to see if they felt their future might be better with us. We merged in about a dozen companies of small and medium size, the smallest of which had eight agents and the largest, 125 agents. They saw the platforms, systems and processes that we utilized to help our agents gain more transaction business and realized that their companies could not afford to provide what we already had in place.
GR: We understood fully that the circumstances of 2009 were temporary and when we made the change in May to Better Homes and Gardens Real Estate and came out with a dramatic marketing campaign to rebrand the company, we were a beacon of confidence, optimism and financial strength when everyone we were competing with was ducking and bracing for impact. You can say until you’re blue in the face that the market is OK and now is the time to buy and people will not believe you. But when you demonstrate that you believe it by doing what we did, we gave the consumer a reason to believe us. We stole the spotlight in the marketplace and gave our agents confidence and gave the public confidence. They either thought, “the Rand people are insane” or “they know something we don’t know and there’s a recovery at hand.” There is no better time to make a big, audacious change than in a down market cycle. It’s counterintuitive, but it helped put us way out in front of our competition.
SC: In a market like this, growth takes owners who are risk takers. When both companies announced they were changing to Better Homes and Gardens Real Estate, they also announced it as part of a larger growth strategy for their firms. It takes courage in this market to do that.
MP: How did you manage expenses in order to fund investments in key growth areas?
GR: The most important thing we did was anticipate the market downturn a couple of years back. So, in 2005, we started sensing that things were changing and we stopped expanding. We had been opening two new offices a year. So that’s half a million dollars a year that we didn’t spend in ’05, ’06, ’07 or ’08. During that period of time, we relied on organic growth, which does wonderful things for your P & L. We took a million-and-a-half off of operating expenses and that put us in a place where we had a good war chest to work with.
KL: We have a similar story. We had been expanding since 1997 and in 2005 opened up four offices and relocated one. We were on a capital investment program to increase our footprint and marketshare. In 2006, once the contracts slowed down, we stopped our expansion. At the time, we had no debt—not even a copy machine leased—so when we went into the downturn, we were able to weather it with low liability. We made sure that in every department, every expense balanced with some sort of income. We only consolidated one office in the interim and acquired four.
MP: What are the most significant challenges ahead and what strategies are you putting in place to overcome them?
KL: Our biggest challenge in the near and far future is steeped in our mortgage industry and frozen credit marketplace. With the over-tightening of credit guidelines, the increasing down payment requirements and the near evaporation of money through less traditional channels, the homeownership rate is once again being reshaped—and not in a good way. Gains made in the last three decades are being erased. The Feds are keeping rates low and money flowing through Fannie and Freddie. What would the market look like if it were standing on its own? Since 95% of our sales require a mortgage, and we are dependant on a battered and scarred industry headed for even more regulation, I see a tough road ahead. Mortgage training for agents and consumer education is top priority if we expect to be successful.
GR: Training has been so focused on sales…which is important, but there’s no training that focuses on competence—actual real estate competence that goes beyond knowing the neighborhood and schools. I learned an enormous amount about real estate investing, but I learned it from a client—I learned none of it from the industry itself. Buyers in today’s market have access to all the data and they are so passionate about the process of buying a home that we’re now in danger of them knowing more than us. So the challenge is in training and learning what we really need to learn…and the tricky part is that we need to learn it before we can teach it.
MP: What is your vision for your brokerage five years from now and how will Better Homes and Gardens Real Estate help you realize that vision?
KL: It is our vision to double our website traffic. We are already the number one real estate website in metro Atlanta due to unique traffic. We are now advertising that we are the consumer-based website for all things having to do with the home. We want to become the go-to company for consumers involved in any kind of decision regarding their house.
GR: We want to be twice as big and three times as profitable. Better Homes and Gardens Real Estate has already helped us achieve this in a big way. As a company, we’re trying to be more important in our communities. Today (at press time), we’re launching homebuyertaxcredit.com, which is an independently branded site where consumers can figure out if they’re eligible for the home buyer tax credit. We want to kick the door down at the media level. We want people to stop asking economists and come to the people who know the market—brokers and Realtors. Better Homes and Gardens Real Estate is giving us a brand that is so clearly Main St., USA. That helps us attract talent and consumers who might be feeling skittish about the market.
MP: How does the real estate consumer of today and tomorrow need to be cultivated and serviced differently?
KL: Cultivation of the consumer can be completely handled through the tools Better Homes and Gardens Real Estate and Metro Brokers have in place. These tools give us what we need to be the sales consultant and not the salesperson so that we can become more of an expert in the field of real estate. Today, we’re just an advisor; we’re no longer the keeper of the information. We’re cultivating customers through electronic means and giving them what they want along the way is valuable.
SC: Truly, our role within the industry is shifting to that of a trusted advisor. Our brand is designed to provide value to the consumer search by partnering with the right companies to allow for content and a customer experience that is completely different than what they will get through traditional brands.
GR: I totally agree that we have to be relevant in the lives of consumers in between transactions. Better Homes and Gardens Real Estate gives us a lot of ways to do that. It’s a challenge to be relevant to people when they don’t think they need you. It is critical, in terms of elevating the role of real estate professionals in the world, that we become more useful to consumers.
For more information, visit www.bhgrealestate.com.