How should you choose the sales associate that will represent you in the sale of your current home and the purchase of your next?
The most common way is to gather referrals from friends, relatives and neighbors, then interview the agent over the telephone and choose the one who seems to best meet your needs.
Simple, right? Perhaps. But should the size of the firm the agent works for also play a part in your decision?
Today, the real estate industry is in the shakeout mode that many American industries went through in the early 1990s. Three of the top four largest franchises, including Century 21, Coldwell Banker and ERA, were purchased by HFS, which then merged with another company and became Cendant. In addition to these brokerage franchises, Cendant also owns other real estate companies including a large mortgage company and relocation companies.
In the past three years, these companies and other national franchises have swept through the country, purchasing small mom and pop shops as well as larger independent companies.
Those companies purchased have been forced to shed other real estate related service companies, like title and escrow companies, home inspection companies, and mortgage brokerage firms.
What you’re left with are small mom-and-pop shops, large independents, and franchise firms.
The mom-and-pop shops are usually one-location offices with anywhere from one to eight agents and a secretary or two. They usually are well-known within their communities but have little name recognition outside of them.
Large independent firms often have as many as 50 offices in various parts of a city or metro area. Such as firm has an identity and corporate message that it tries to thread through its branches, each of which may have dozens of agents.
National franchise operations are independent companies tied into a large national network. Some of the local offices are owned by the national franchise, and some are independently owned, but affiliated. Sometimes one person will own six Century 21 offices in an area, but the entity will act as though it is an extension of the national brand.
Most of the time the service you receive depends greatly on the individual agent who works for one of these companies. But size matters because the resources and services these firms offer vary greatly, and could help you choose between two great agents.
National companies like Coldwell Banker, Century 21, ERA, RE/MAX and Prudential, among others, have the combined resources to take full advantage of advertising and marketing opportunities in newspapers, on the radio and television and through the Internet. They spend millions of dollars on advertising, programs and development to increase brand name value. Each of these companies has a sizable Web presence, on both national franchise sites which are, in many cases, linked to local offices.
If you’re selling your home, your listing may appear on the local brokerage firm’s site, on the national site, on the Realtor.com site (which takes listings from many of the multiple listing services to which Realtors belong) and other sites with which their firm may have an affiliation.
Large independent firms with more than 25 offices may also have the financial wherewithal to tap into these opportunities for marketing properties, though their local advertising budget for radio and television may not be as great. Their web presence may be significant, but it may not be as innovative or as complete as the site of a national franchise firm.
The mom-and-pop shops can compete, but it generally won’t be through the size of their web site or advertising budget. Their inherent advantage is their small size. Few buyers or sellers slip through the cracks, and properties may get a bigger push simply because there are fewer of them to market.
If your agent belongs to a mom-and-pop shop but is savvy, your property will get listed on the web side by side with properties listed by larger independent or national firms. In a hot market, that may be enough to drive traffic through your home, and generate offers to purchase.
Will the mom-and-pop real estate shops survive the current shake-out process? If they innovate and use their smarts, they may be able to compete. If not, the next time you go to list property, you may only be able to choose between a national franchise company or a large independent that feels like one.