RISMEDIA, November 18, 2010—The last few years have been tough for many brokers across the United States. While some merely try to survive in this economy, many have found ways to thrive. Mergers and acquisitions have become quite common as a result of brokers trying to maintain profitability and grow market share. The latest headline-grabbing move was by BH&G in Northern California.
To learn more about how to thrive in this economy, I recently sat down with the President and CEO of William Pitt Sotheby’s International Realty, Paul E. Breunich. Over the last year, the company has acquired several operations and expanded William Pitt Sotheby’s International Realty into new regions with the addition of Julia B. Fee Sotheby’s International Realty and Litchfield Hills Sotheby’s International Realty.
Here, Breunich shares how smart decisions, mergers and investments pay in growth dividends.
Pierre Calzadilla: Why do you think your mergers have been so successful?
Paul Breunich: Over the years, many franchises approached us to join them. But none fit our culture, identity and goals until Sotheby’s International Realty came into the picture in 2004. The Sotheby’s brand has been known over 260 years for serving an excellent clientele and has amazing name recognition. I felt this was a great match for William Pitt, and over the past five years, the Sotheby’s International Realty brand has really allowed us to take a larger leadership role in our marketplace.
In October 2009, we had the opportunity to acquire the Westchester County, NY and Litchfield County, CT, operations from Sotheby’s International Realty, Inc. Instead of introducing an unknown brand into those regions, we renamed the Westchester operation Julia B. Fee Sotheby’s International Realty, reintroducing a coveted 50-year old brand to the Westchester County market. In Litchfield County, CT, we branded those offices as Litchfield Hills Sotheby’s International Realty, paying homage to the unique nature of that region.
We increased the size our of company by 60% and have seen that the integration of these three local heritages combined with the Sotheby’s International Realty brand has been received very well and is a key part of our success.
PC: How did the recent downturn affect you?
PB: This is the most challenging market I have ever been involved in. Contributing to this has been home sales decreasing by 30-40% two years in a row and the tightened mortgage market. It was a marketplace that could not support the overhead infrastructure the industry had built up in the heyday. We reduced expenses smartly, and invested to grow. We think we have done this successfully. You can’t cut expenditures without reinvesting for growth.
We want to make sure that our agents are the best informed and viewed by their clients as purveyors of real estate market data. We want the agent to be empowered with market metrics that connects to consumers. We invested in the top players. Sites like Trulia have been able to get a lot of brand awareness in the NY Metro and have in turn increased leads and ROI that is justified. Our clients demand results and our agents want support when they are selling very affluent properties. And our online marketing efforts have delivered those results.
Our overall reduction has been 15-20% with a huge shift from print to digital. Yet, we are still print heavy and recognize that many of our clients expect to see their homes in a magazine or newspaper, however predominantly we are seeing the buyer coming from the Web.
PC: Have you found that the luxury market is slower to move online? And if so, is it the agents or the consumers?
PB: Without a doubt more consumers are demanding to be online and our affluent clientele appear to be actually more tech savvy. But print is a piece of the luxury space that you can’t escape from yet. However, with Trulia, we are seeing the high-end market—around $2M+ properties—have a huge amount of leads and consumer engagement. The transition is definitely an evolution, not a revolution, but the high-end consumer is definitely migrating online.
PC: What role do you think an online presence plays in your business?
PB: The online space offers great tools for leads, brand awareness and exclusivity. We have exclusive partnerships for markets with partners like the New York Times and Trulia. We have strategic partnerships with brands that best complement our Sotheby’s affiliation. Sites that deliver the product, and partners like Trulia, Wells Fargo, WSJ, etc. are ones that we value. We are very particular about who we partner with.
PC: What criteria are you using to determine who makes a good match as a marketing partner?
PB: It is pretty simple; Integrity, quality service, reputation and reaction time for consumer and client needs. We are going to be here 50 years from now and we want to partner with companies that care about that too.
PC: How many years do you think it will take before brokers like yourself are 75/25 online?
PB: If we go back to 2005 and see how Realtor.com dominated the space then, and compare that to where we are now, I think that over the next 3-5 years, mobile, iPad, etc., we should all be there. Technology is redefining the industry and the exponential increase in communication is forcing the industry to redefine the value proposition that we offer.
PC: Thanks Paul for that insight. No matter how you cut it, the next few years will be exciting. With 2011 fast approaching, the clock is ticking for an economic recovery. In the meantime, we need to continue to discover ways to thrive—not survive—in this market and beyond. The shifting toward efficiencies in marketing, management and infrastructure will lead the way to profitability before the economy will.
Pierre A. Calzadilla is manager of industry relations at Trulia.com.
For more information, visit www.trulia.com.