RISMEDIA, April 5, 2010—In simpler times, the mantra for what really matters in residential real estate was “location, location, location.” It was a fundamental concept, summarizing and emphasizing the longtime No. 1 rule in real estate. In today’s tough times, however, many savvy brokerage owners have signed on to a new mantra: “Relationship, relationship, relationship,” underscoring the connectivity between the brokerage and its team of real estate services.
More often than not, brokerages that not only survived but succeeded in 2009 relied on their mortgage company for major contributions to their bottom lines. Among the strongest alliances in the industry are those between top Prudential Real Estate Affiliates and Wells Fargo Ventures.
“We clearly value the relationships our affiliates have with their partners,” says Earl Lee, president of Prudential Real Estate Affiliates Inc., a nationwide network of 1,700 offices and 50,000 sales agents. “The strength of the joint ventures is a win for everyone.”
Wells Fargo Ventures, a division of Wells Fargo Bank, N.A., is marking its 17th consecutive year as the nation’s top strategic alliance lender. In 2009, despite the challenging environment, two top Prudential alliances each funded $1 billion in mortgages. (Five Wells Fargo joint ventures each funded more than $1 billion). Prudential joint ventures also increased mortgage capture rate steadily in 2009, with some approaching 45% versus the industry average of 15%.
Lee and Joe Jackson, head of Wells Fargo Ventures, strongly agree that great results depend as much on the quality of the relationship as on economic conditions. “The test of the true character of your partners comes when times are tough,” Lee says. “But when you have alignment around core business principles, I see those businesses doing well, regardless of the climate.”
Jackson sees a continuation of controlled, profitable market share growth for joint ventures in 2010. “Even flying in headwinds, you can continue to gain altitude,” he says. “No matter the environment, the best solutions come from open and frank discussions. Smart people, given the same facts, will come to the same conclusion.”
Open, frank discussions also resonate with Dottie Herman, president and CEO of New York-based Prudential Douglas Elliman Real Estate, the fourth-largest independent real estate company in the United States and a leader in the Prudential Network.
“In choosing a business partner, I never just look at numbers,” Herman says. “I look at commonalities of goals.” For Herman, understanding what was important to her agents and what they needed in a mortgage relationship involved many conversations en route to the launch in September 2009 of the joint venture DE Capital Mortgage. “I believe that people support what they help create,” she says. “Wells Fargo hit the expectations. And they kept their word. We’re on the same wavelength about the joint venture’s goals.”
Staying on the same wavelength requires continuous conversation,” says Ron Peltier, chairman and CEO of HomeServices of America, Inc., a Berkshire Hathaway Affiliate. HomeServices operates in 21 states with 20 brands, including Prudential California Realty, Prudential Carolinas, Prudential First Realty and Prudential York, Simpson, Underwood Realty, and is the second-largest, full-service independent residential real estate brokerage firm in the United States, according to RISMedia’s 2010 Power Broker Report. HomeServices Lending is the national mortgage company of HomeServices of America and the largest Wells Fargo joint venture. “Mortgage is a complicated business,” Peltier says. “The way the financing goes, so goes the real estate experience. This is a recognized industry principle and explains why so much of our focus is on the mortgage relationship.”
Jon L. Cook, president and CEO of Prudential California Realty, the largest franchisee of the Prudential Real Estate Network and one of the top five brokerages in the nation, sees this principle in practice. “If there is a question about mortgage, the agent or the mortgage consultant can call me or our HomeServices Lending president or the Wells Fargo relationship manager,” Cook says. “We are all focused on making sure we are hitting our service targets.”
Evolving government regulations and new investor requirements for the mortgage industry have added complexities. Wells Fargo has been exceptionally proactive in this area, most recently delivering a comprehensive RESPA reform solution ahead of national implementation. Managing the details of the Home Valuation Code of Conduct (HVCC), the Home Ownership and Equity Protection Act (HOEPA) and the Housing and Economic Recovery Act (HERA) is a key component of the joint venture value proposition.
“Thanks to our partnership with Wells Fargo, we have been ahead of the curve and the industry on regulatory changes, positioning our team as leaders in the markets that we serve,” says Rei Mesa, president and CEO of Prudential Florida Realty, the sixth-largest company in the Prudential Real Estate Affiliates network, and the largest in the state of Florida. Florida Home Finance Group is the mortgage alliance between Prudential Florida Realty and Wells Fargo Ventures. Mesa says he has been excited to see his mortgage and title specialists become the in-house industry experts for Prudential Florida sales associates and customers.
Sheldon Detrick, CEO of Prudential Detrick Realty, which includes Prudential Alliance Realty in Oklahoma City, says responding to new regulatory requirements has been an important part of his job, too. Santa Fe Mortgage, jointly owned by Prudential Detrick and Wells Fargo Ventures, is marking its 12-year anniversary. “I like where we have been positioned—with the rest of the industry just catching up,” Detrick says, adding that he considers managing change proactively a competitive advantage.
Other qualities listed by Prudential broker/owners as key to successful partnerships, include stability, experience and expertise, shared decision-making, innovation, face-to-face connections and personal ownership of relationships.
Linda Sherrer, president and CEO of Prudential Network Realty of Jacksonville, Florida, is among the original 10 members of the National Advisory Council of Prudential Real Estate Affiliates, Inc. In her experience, stability and brand strength top the list of important characteristics. “Our former mortgage partner went out of business, and Wells Fargo stepped up and helped us transition,” she says. “The Wells Fargo brand and proven track record instilled confidence in our agents and clients. This was key to our selection of a mortgage partner, particularly during a time of great instability in the mortgage markets.”
Evidence of the good choice, says Prudential Network Realty Executive Vice President Christy Budnick, shows in Gibraltar Mortgage Group achieving 32% mortgage capture rate in 2009, their first year as a partner. “We have a proven track record with our partnerships—title and relocation—and knew that we could hit a home run with mortgage. We asked 300 agents to have trust in—and trust their paychecks to—the joint venture and I am proud to report that our people gave us that chance.”
Constant commitment to continuing to build capture rate—45% is Sherrer and Budnick’s target in 2010—has included a new advertising and social media campaign titled, “We’re Connected.”
“It’s fun and features ads and webisodes that are stream-of-consciousness,” Budnick says. “Most importantly, it reinforces our message that we are a team of real estate services.”
Building mortgage capture rate is a 2010 mantra across full-service brokerages, and Bill Chee, president and CEO of Prudential Locations, the largest locally owned and operated real estate company in Hawaii, has a well-established baseline. Prudential Locations’ in-house mortgage company, Wells Fargo Home Mortgage of Hawaii, has historically delivered capture rates in the high 30s, even reaching the mid 40s. Chee says one benefit of being in a long-term alliance has been teaming together to deliver new initiatives that help drive both mortgage and real estate business. For example, his team is part of an agent-based, short-sale pilot and a market-specific, first-time home buyer campaign.
“We appreciate opportunities to innovate—and respond to the climate,” Chee says. “What I like is that we’re together in the decision-making process, and are both committed to providing our clients with industry-leading options that best fit their needs, and delivery with the highest level of service.”
Shared decision-making is a “give-and-take deal,” says Marilyn Eiland, partner with Mark Woodroof at Houston-based Prudential Gary Greene, Realtors, ranked No. 9 in the Prudential Real Estate Services Network. “Not every day is sunshine and roses, and you have to compromise on some things,” she says. “But when we have a problem, we get a quick response, and we value seeing a partner working from the same basis.”
Eiland’s business partner, Woodroof, describes working from the same basis to surpass goals for on-time closings in the joint venture, Gibraltar Mortgage Services. “We had hit a bump in the road, so we got on the phone and talked together to identify opportunities for improvement,” he says. “Then we made a game plan. And we continue to talk to make sure we’re getting to where we all want to be.”
In-person conversations, of course, build on day-to-day phone and e-mail communications. This is a differentiator in the Wells Fargo joint venture model, with dedicated alliance relationship managers working routinely in-market with Prudential Affiliates. Craig C. Lewis, president and CEO of Prudential California Realty, serving the Northern California communities of Modesto, Manteca, Turlock, Ceres, Merced, Fresno, Tulare, Vacaville, Fairfield, Vallejo and Napa, indicated that face-to-face connections deepen a relationship.
“We’ve been able to say what needs to be said, and do what needs to be done,” Lewis says. “We view this almost from a board of directors perspective, and think about what is in the best interest of the business unit.”
The conversations, and resulting actions, have had a strong effect on Prudential California Realty’s home-financing alliance, Guarantee Pacific Mortgage. Capture rate is up 15% year-over-year, and it has increased more in the past six months than over all of last year. Lewis says he considers this a demonstration of taking personal ownership of the venture. “When agents hear me say, ‘I will take personal responsibility for this,’ it is a psychological shift. This mortgage company is a valuable relationship, and if I value it and take it on as my own, others see that.”
Changing language and changing attitudes have helped in initiatives to increase mortgage-team staffing, integration and capture rate with sales managers. Lewis says he is starting to see more one-on-one conversations and relationships being built at the agent level with this new attitude and approach.
Staffing and capture rate connect directly, as demonstrated by RWF Mortgage, the Joint Venture serving the Chicagoland Prudential Rubloff team. RWF launched in 2005 and has expanded with the November 2009 merger of Rubloff Residential Properties and Prudential Preferred Properties.
Michael Pierson, president and chairman of Prudential Rubloff, says, “We have been impressed with Wells Fargo’s aggressiveness in growing our mortgage presence. We have already added several highly qualified loan officers, and we are on the verge of adding several more in the very near future. In a very short time, we are making a significant expansion to what was already a strong mortgage loan operation.”
Adds Prudential Rubloff CEO Chris Eigel, “We truly have a joint venture. We work together well in determining goals for the branch offices and the loan officers and recognize that achieving acceptable levels of business is a mutual responsibility.” Shared initiatives in 2010 will include recruiting top-talent loan officers and agent training. Toward that end, plans are underway for in-branch, regional and company-wide educational sessions to help sales professionals succeed.
Prudential Tropical Realty co-owners Dewey Mitchell and Allen Crumbley appreciate the value of shared business philosophies—and strong branding. “Looking at Prudential and Wells Fargo on any level, you have two companies that are best-in-class,” Mitchell says. “And this extends to the joint venture level. Shared expectations and a common bond foster a successful partnership and enable our sales executives to deliver a higher level of service to their clients in a real estate environment that can sometimes be challenging.”
According to Crumbley, in 2010, Prudential Tropical consistently ranked in the top two real estate companies in the Tampa Bay area, and the joint venture Capstone Home Mortgage will continue to emphasize to agents how they can benefit from working with the in-house mortgage team. He regards “showing the value” as an ongoing process.
“Our sales executives are constantly reminded by our managers, as well as through visuals displayed throughout our offices, about the benefits of utilizing our on-site mortgage company. We encourage sales executives to position their home mortgage consultant as a member of their team when working with clients. It’s the same with any relationship—you have to keep working at it for it to be successful.”
One Prudential affiliate with a newly established joint venture offers a different view of the value agents place on an in-house mortgage company. C. Dan Joyner, founder and president of Prudential C. Dan Joyner Realtors, one of the leading real estate companies in Upstate South Carolina, remembers discussing the September 2009 launch of Carolina Mortgage with his team.
“Our agents were glad to be associated with brand recognition,” Joyner says. “We’ve had many calls over the past few months from agents saying, ‘We heard you’ve aligned with Wells Fargo. Do you have any openings?’”
Agent satisfaction also ranks high for Pete Slaugh, an owner of Prudential Homesale Services, one of the leading real estate companies serving South Central and Southeastern Pennsylvania. His team is currently in the process of joint venture implementation.
“What’s good for customers is good for agents, and the fact that Wells Fargo funded 24% of all mortgages in 2009 speaks volumes to agents,” Slaugh says. “We’ve been in this industry for a long time, and we understand our business. Why other brokers don’t involve themselves in additional services such as title, mortgage and homeowners’ insurance services, I don’t know.”