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network_puzzle_piecesIt’s 8:00 a.m. in a Ritz-Carlton meeting room in downtown Chicago as a baker’s dozen of real estate brokers representing $90 billion in annual home sales gather at the thrice-yearly board of directors meeting for the company they own and operate. This is arguably the single most powerful group of leaders in the industry. Yet curiously, the company that they collectively oversee and that has flourished over its 16-year history is often overlooked by real estate pundits and trend-spotters.

That company is Leading Real Estate Companies of the World®, or as it is colloquially known in the industry, LeadingRE. The company was established in 1997, when 50 of the largest companies from PHH/HFS/Cendant and the Genesis network decided to create an organization run by brokerages for brokerages, to be in charge of their own destiny rather than controlled by others. Shortly afterward, they acquired the RELO® network, which had roots dating back 50 years, and adopted that long-trademarked name. They then set about building a strong relocation and referral organization with quality independent brokers, performance standards, and a high degree of loyalty.

There were certainly challenges along the way, and it became obvious early on that the network needed to create a hybrid model with a diverse menu of products and services beyond relocation in order to ensure sustainable growth.

One of its first such initiatives was ironically triggered by Cendant’s acquisition of the Sotheby’s real estate network. To replace the Sotheby’s affiliation held by many of its members, they launched Luxury Portfolio International®, a marketing showcase for million-dollar-plus properties spearheaded by Paul Boomsma, a respected Chicago real estate marketing professional.

Around the same time, in 2005, the network decided to change its name. The RELO® brand was inconsistent with its expanded mission, so Leading Real Estate Companies of the World® was born, and the upward trajectory accelerated.

“Changing our name was a real paradigm shift for us in so many ways,” laughs LeadingRE President/CEO Pam O’Connor. “First of all, it was a mouthful. I remember our chairman at the time, Michael Saunders, commenting that it sounded ‘a little presumptuous.’ She was right. It was a rather bold statement about who we are, but it compelled us to live up to the name by being selective and focusing on quality.”

There were even some of the network’s legacy brokers who had a hard time grasping that it was about much more than referrals. Conversely, brokerages accustomed to a franchise model began migrating to LeadingRE, attracted by its growing list of resources and national connections and viewing it as an alternative to long-term contracts with high fees and other obligations.

“Our obligations in this organization tend to be to each other,” says Houlihan Lawrence’s Chris Meyers of Westchester County, N.Y. “LeadingRE has the feeling of a cooperative, with both the members and the organization bearing responsibility for high performance. If those standards aren’t met by either party, it’s an easy 90-day out. That speaks volumes about the value proposition of LeadingRE and Luxury Portfolio.”

Today, LeadingRE’s size and scope surpass those of any single franchise brand, with 500 independent companies, 4,600 offices and 140,000 sales associates in 35 countries, producing more than $235 billion in annual sales.

“Local and regional brands have experienced a resurgence in recent years,” says Boomsma, who serves as both LeadingRE COO and president of Luxury Portfolio International®. “This is largely due to the Internet and the ease with which strong local brokerages can be found online. Today’s younger consumers also like the authenticity, community involvement and accountability of local businesses rather than big-box corporate brands. That doesn’t mean that independent companies are superior to franchised ones,” he says, “but what it does signal is that being a national brand versus a local brand is no longer an inherent advantage. Today, many brokers would rather invest in building their own brand rather than someone else’s.”

LeadingRE’s value proposition focuses on four key areas—lead generation, brand enhancement, technology and professional development. Many of these services are included in the annual membership fee, with optional fees for “enterprise” versions of online programs like the Institute learning management system, the OUR WORLD network-wide “Facebook-for-Business” community and the extremely popular Luxury Portfolio International® property showcase. Luxury Portfolio features an award-winning global website, extensive marketing resources, and a robust back-office engine with reporting, analytics and CRM tools for agents.

The main financial engine for the network, however, is a share of referral fees for the 30,000 referrals exchanged by members annually, with a 42 percent conversion rate and an average price of $325,000.

“We practice ‘the art of the introduction’ in our network,” says O’Connor, “driving business to one another by providing a true service for clients who want a good agent in another location and thereby funding re-investment in new network programs.”

LeadingRE’s unique mix of services, national and global connections, and high value for fees charged have attracted a diverse mix of companies, ranging from the largest brokerages in the country like Long & Foster, Howard Hanna, Crye-Leike and others, to strong boutiques with top marketshare in their sub-markets or price points, such as Hilton & Hyland in Beverly Hills and Washington Fine Properties, averaging nearly $14 million in per-agent production in D.C.

“When our national franchise agreement came up for renewal in 2008, we faced a dilemma. Our company was known throughout our local market, but we still saw the value of maintaining a national presence,” comments Michael Scarafile, president of Carolina One, the market-dominant firm in Charleston, S.C. “LeadingRE replaced our franchise relationship and allowed us to grow our marketshare while connecting us to an unmatched national and international network of top companies and providing worldwide exposure for our listings and sellers.”

Glenn “Chip” Gardner, fourth generation of GARDNER REALTORS® based in New Orleans, echoes that sentiment. “When we chose to return to our independent heritage, the benefits of LeadingRE membership made it a much smoother transition from the franchise world. Being a charter member of the Realty Alliance, which has so many of its members in LeadingRE, we felt like we were right at home here. We respect the fact that LeadingRE provides us with excellent tools and services that we can customize to differentiate our company. LeadingRE allows us to continue our 70-year tradition of being ‘Home Grown, Locally Owned and Internationally Known!’”

These advantages have had universal appeal beyond American borders. The network is growing rapidly in Canada, Latin America and the Caribbean, and LeadingRE established a U.K. corporation and a London office two years ago. That European presence, headed by International VP Chris Dietz, is generating about 20 new firms a year in Europe and the Middle East, with plans for a similar expansion in Asia next.

In fact, members from 17 countries were among 2,000 professionals who recently participated in LeadingRE’s Conference Week at The Cosmopolitan of Las Vegas, which included SUMMIT events that were available—for the first time—to all member sales associates.

LeadingRE has come a long way in a relatively short period of time, comments the network’s new Chairman of the Board Rob Sibcy of Sibcy Cline in Cincinnati, who assumed the role at the conclusion of the conference in February, following the two-year tenure of William Watson of Jacksonville’s Watson Realty Corp.

“When we took the leap in 1997 and decided to create what ultimately became LeadingRE,” Sibcy says, “we were attempting something that many said couldn’t be done. We were asking strong independent brokers—competitors in many markets—to work together under one umbrella. Well, we’ve not only proven those skeptics wrong, but we’ve also surpassed even our own expectations. Every year, it just gets better and better.”

“We are in a very good place,” adds O’Connor. “Our brokers are experiencing stronger sales in the housing market, our members are more engaged, and interest from member candidates is greater than ever before. Expanding our conference to encompass more associates was a game-changer for us, fostering the same connection with them that we have with our brokerage management teams. LeadingRE’s mantra is ‘Helping to Make the Best Brokerages Better,’ and what that says about our organization is that it’s about our affiliates, not about us.”

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