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The Changing Face of Real Estate Franchise Brands

By
Services for Real Estate Pros with New York Times Bestselling Author & International Speaker

There is always a debate going on in the real estate industry about which company is the largest. As some don't disclose financials and others use different measuring criteria (offices, agents, sales volume, profitability, brand recognition, etc.) we have many potential "winners".

This article is however not about who is #1 or #2 but rather what has happened to real estate franchise brands over the course of the last 20 years, and does that information in any way provide us with a trend line that may afford likely scenario's going forward.

To start off, we need to look at the most prominent brands 20 years ago; 1989. I revisited many "old" publications of those years, the REAL Trends Report and the leading Real Estate Report of the time; the Roulac Report by Deloitte, Haskins and  Sells (1988). Combining all that intel I have compiled a list of what were, in probable order, the most likely candidates for the most prominent Residential Real Estate Franchise brand of 1989.

  1. Century 21
  2. Coldwell Banker
  3. ERA
  4. RE/MAX
  5. Realty World
  6. Merrill Lynch
  7. Red Carpet
  8. Help-U-Sell
  9. Gallery of Homes
  10. Better Homes and Gardens

I have followed the same criteria and researched the REAL Trends Report again and the leading Real Estate Report of today, my Swanepoel TRENDS Report. The most likely candidates for the most prominent Residential Real Estate Franchise brands of 2009 are:

  1. RE/MAX
  2. Coldwell Banker
  3. Century 21
  4. Keller Williams Realty
  5. Prudential Real Estate
  6. ERA
  7. Realty Executives
  8. Sotheby's International Realty
  9. GMAC Real Estate
  10. EXIT Realty

Analysis:

So here is where the interesting part comes in. Although not based on any scientific hard facts, the following has occurred during the past 20 years:

  • 40% have remained a Top 10 national real estate brand (C21, CB, ERA & RE/MAX).
  • 20% exchanged their brand for a new brand and were still able to hold on; remaining a Top 10 brand (Merrill Lynch became Prudential and BH&G became GMAC Real Estate).
  • 10% dropped off the Top 10 list but still operate as a national franchise (Realty World).
  • 30% fell on even more difficult times and went through different types of trouble including bankruptcy. (Gallery of Homes, Help-U-Sell and Red Carpet). It is interesting that one  or two of the brands are staging a comeback.
  • 10% of the brands on the 2009 list had improved their rankings (Realty Executives).
  • 30% of the brands on the 2009 list were not even in real estate franchising back in 1989 (Keller Williams Realty, Sotheby's International Realty and EXIT Realty).

Probing Questions:

There are of course many different deductions that can be made using above information resulting in hours of interesting discussion. Due to the brevity of this article I am going to list just five observations that I think are worth consideration:

  1. Will the three brands that have dominated for the past 20+ years maintain their stronghold; RE/MAX, Coldwell Banker and Century 21?
  2. Will newcomer Keller Williams Realty that surged into the top 5 be able to continue its rise and unseat one of the top 3 established brands? If yes, who will be the one to loose its top 3 ranking?
  3. Twenty year plus top 5 brand ERA has for the first time dropped out of the top 5. Is this a sign that they will continue a downward slide; ultimately out of the top 10?
  4. Brand changers (Merrill Lynch became Prudential and BH&G became GMAC Real Estate) have shown that brands are not always that important as both survived and held on to similar top 10 rankings in 20 years. GMAC is however scheduled for another name change within the next year. Will they still be able to hold on to their top 10 ranking after a second name change?
  5. Will companies such as Realty World, Red Carpet and Help-U-Sell that dropped off the top 10 and are staging a comeback be able to regain their former top 10 status? 

Closing comments:  

There and numerous new franchise brands bubbling under the radar such as Weichert Realty, Assist-to-Sell, ZipRealty and even Better Homes & Gardens (not same company as before but the same brand) that could very well be a top 10 real estate brand within the next five years.

Although this exercise was more one of fun rather than trying to predict the future, it does show us that even in the "big picture" of large national brands the world is ever changing and that anything can happen.

Love to hear your thoughts on the value of real estate brands for a brokerage and/or agent.

As always you can also follow me on www.Twitter.com/Swanepoel and www.Facebook.com/Swanepoel

Comments (33)

Stefan Swanepoel
New York Times Bestselling Author & International Speaker - Ladera Ranch, CA

@Troy, now that’s an interesting observation. Thanks.

There has of course always been a huge debate about real estate being local (and buyers being global). There is no question that locally the value of many real estate brands rest squarely on the shoulders of the agent that represents the brand.

Although real estate companies (and by implication therefore real estate agents) essentially all do the same thing I can with confidence tell you that all companies (and all agents) are not all the same - not in consumer awareness, not in quality of service, not in level of training or professionalism, etc. Most have a very distinct different perception, philosophy, positioning, etc.

That's one of the things I love about real estate brokers and agents - the industry is very eclectic and unique.

Jun 30, 2009 01:54 PM
Anonymous
Miguel Berger

Is always fun to read about franchises and how many of them are number "1".  I as the owner of an independent company that started in 2001 (just before 911) can tell you that agents are tired of the fees and are looking for the most support and the most creative company to work for.  Proof is my company is number 10 in our market, as yes we have all the franchise companies here.  Bottom line is about name recognition within the industry and your ability to recruit agents.

Jun 30, 2009 02:01 PM
#15
Tim Rogers
Coaches Corner Radio...The Real Estate Guy - State College, PA

Keller Williams rank is based on total number of agents in the system.  I thing ReMax ranks #1 in revenue oer agent which is a more telling statistic.

This was a fun post.

Thanks,

Tim

Jun 30, 2009 02:31 PM
Lane Bailey
Century 21 Results Realty - Suwanee, GA
Realtor & Car Guy

Cool post.  I have been with a biggie (C21) and am now with a more local, niche brokerage.  There is some culture from the brand, but so much more is the culture from the individual broker.

Jun 30, 2009 03:46 PM
Mike Bowler Sr.
Coldwell Banker Hubbell Briarwood - Lansing, MI
CRB, GRI, ePRO, RECS, SRES

Great data that proves if you work and live  your brand you last. I now have 25 years with the same brand (Coldwell Banker) of my 31 years in the business. The successful agents out there are from many brands and I am very impressed with the up-coming young, energetic, and very tech savvy BHGRE. RE?MAX has also made great progress over the past 10 years. Because I have blue in my blood, I believeCB is the leader in our industry when it comes to innovation and technology. They were slow getting there. I am fascinated with all brands and the real estate business in general. The winners of the future will be the companies that grasp the changes, have fire in their hearts, and continue to give great service to the consumers. Thank you Stefan for contributing to the education and knowledge of our industry. "Expect the Best" Mike

Mike Bowler Sr. ePRO, CRB, GRI, SRES
Coldwell Banker Hubbell Briarwood
1020 S. Creyts Road, Lansing, MI 48917
Phone: 517-492-3400 Fax: 888-832-6203
email: Mike@MikeBowler.com 
Website for Clients: MikeBowler.com
Search Listings

Jul 01, 2009 01:43 AM
Jim Crawford
Long & Foster - Fredericksburg, VA
Jim Crawford Broker Associate Fredericksburg VA

It will be interesting to see who survives this current downturn.  I know there are going to be some major casualties.  No one is going to exit this market unscathed.  I was with Merrill Lynch and excellent company in the late 1980's.

Jul 01, 2009 02:19 AM
Anonymous
alan Stasson broker/owner Remax Affiliates Ne Ne
I believe the only thing that counts to any real estate agent is the amount of sales per agent. The agents decide the success of the company.
Jul 01, 2009 02:41 AM
#20
Stefan Swanepoel
New York Times Bestselling Author & International Speaker - Ladera Ranch, CA

@Mike - thanks for the compliment and great post on your own blog today.

 

Jul 01, 2009 03:10 AM
Stefan Swanepoel
New York Times Bestselling Author & International Speaker - Ladera Ranch, CA

@Jim - I agree, will be interesting, that's one of the reasons I wrote the article as I wanted people to remember that we "lost" big national brands before, and will again!

Jul 01, 2009 03:11 AM
Anonymous
George Spenser

30% of the brands on the 2009 list were not even in real estate franchising back in 1989 (Keller Williams Realty, Sotheby's International Realty and EXIT Realty).

Established in 1983, Keller Williams doesn't have the longevity of some of the other big franchise players, but they're growth has been steady. Along with their newer status, this franchise brings new ideas to the business of real estate, especially in the compensation and training of agents.

 

I think that is more than 20 years ago

from kw web site

Jul 01, 2009 06:00 AM
#23
Mike Grumbles
Gray Fox Realty - Franklin, TN
The Relocation Engineer in Franklin TN

Interesting also that 40% of the 2009 big ten brands are all part of a conglomerate that the US NEWS posted earlier this year in a blog that would not survive 2009 (See blog at http://tinyurl.com/dhwags). How does that play into the next 5 years for real estate brands?    Stefan also mentioned in a Facebook post last week about the loss of a large ERA franchise and the future of that brand.  Interesting in our local market is the onslaught of 100% copy-cat brokerages opening.  Is that the same for the rest of the USA?  Interesting analysis is that in comparisons in this market the 100% copy-cat brokerages attract agents, but not the volume of listings or closings.  This attraction of agents should show strong increases in per person productivity for all the other brands.

I do concur with the previous comments:  The brands that have a good model and respect their agents, trains them and provide tools for them to be productive will prevail and maintain top 10 status.   Agents do need the help of a good brokerage and a good brand, there is value in that and career-minded agents understand that.

Keep digging up these topics for us to comment on Stefan.

Jul 01, 2009 06:09 AM
Anonymous
Brett Boettge

Leadership, transparency and proportionate value sum this up. There will come a time where agents demand proportionate value for the commissions they share with their company. I'm convinced agents don't care whether they are on a 50/50 split or 100% as long as the value is there. What agents will have to do is picture getting 100% of the commissions from day 1 in cash and then lay down $100 bills on their brokers desk until it feels fair....that will determine the economic model of the future.  The next piece is transparency in every aspect of the company from financials to it's leadership. Finally, from RE/MAX to Century 21 it will take engaged & innovative leadership from the ground up to maintain or increase their position on that list over the next 5 years. It will be interesting to see how it all plays out.

Jul 01, 2009 06:18 AM
#25
Anonymous
Matt Francis

Although the data was enough to cause conversation, I would love to see what the actual criteria was and then I would love to see some actual data.   I was really hoping to take some market information away that would be of value, all I have is half the picture but enough to cause an argument.

Jul 08, 2009 01:07 PM
#26
Ryan Shaughnessy
PREA Signature Realty - www.preasignaturerealty.com - Saint Louis, MO
Broker/Attorney - Your Lafayette Square Real Estate Partner

I have a natural distrust for surveys.  In our market, three of the top five agencies are independent and not national franchised brokerages at all.  It would be interesting what changes have happened between independent brokerage and franchised brokerages in terms of market share.  My belief is that you are seeing and will continue to see an increase in small, local brokerages.

Jul 19, 2009 11:00 AM
Brad Cooper
Realty World Inc. - Costa Mesa, CA

Being the Director of Franchise Development for Realty World, I know that you will see us in the top 10% of that list.  We are finding the need for the independent offices as well as the larger franchised offices, to find a new system where they are not being swallowed up with huge fees and large overhead.  We have taken action to revitalize the real estate system with our new Smart Model which is keeping more money in the brokers and agents pocket.  But more importantly, its providing them with the marketing systems, tools, and education they need to be successful. 

Brad Cooper
brad@rwacorp.com

Aug 05, 2009 08:19 AM
Stefan Swanepoel
New York Times Bestselling Author & International Speaker - Ladera Ranch, CA

@Matt - Unfortunately there is no real and actual data as almost all real estate companies are private and many are not willing to disclose financials - and when they do it is impossible to get an apples with apples comparison.

Aug 11, 2009 05:47 AM
Randy Landis
Living in the Pacific - Tupelo, MS
Life is Good in the Tropic Shade!

All in all, the real estate business model is actually fairly simple and resides in a rather homogenous culture, cyclic in nature. Salespeople are what drives the engine that powers THE company, with no emphasis on local brand or franchise brand). Great compensation anchors great salespeople. Volume and listings create branding (which is all locally preceived) and attracts more agents and talent. Great company motivational and training systems creates great agents. Agents drive the business!

The real question is the model of the future.  I believe great agents, along with leadership, will be the ones that dictate which models will survive and thrive into the future. I believe it will be all about compensation.

I began my career with C21, then purchased and operated a Help-U-Sell franchise for five years, which gave me some great insight into the extremes of the industry.  My own research led me to increased compensation models, quickly narrowing down to a difference between "profit sharing" and "revenue sharing" models. With the loss of profitability over the last several years, "revenue sharing" made much more sense to me, so I purchased an EXiT franchise.  I have not been dissapointed.

I think Stefan can attest to the genius of this model and of our leader, Steve Morris, leaving very little room for any argument.

Dec 08, 2009 02:40 AM
Tony Anderson
Century 21 Community Realty - Clarkesville, GA
Serving Habersham Banks White & Stephens Counties

I think about 5 of the Brands Logo's you listed in blog will not be around in 10 years.

Sep 01, 2010 03:52 AM
Yanira Guzman
IRealty Group - Clifton, NJ

Very Interesting post!

Sep 05, 2010 05:26 PM
Anonymous
Jack Simpson

It is interesting to see how much has changed the last 20 years in the real estate business. I am surprised to see that 40% of have remained in the top 10 over this time span. I am in the midst of getting into the franchise business, and I can only hope that I have the same success of some of these real estate franchises. With so many options in this franchise directory I am having a hard time choosing which to start.

Oct 11, 2010 03:40 AM
#34