2007 has been a busy, strange and wonderful year. Some of the events may have a long-term impact on the industry while many others will be little more than a footnote in history. To refresh your memory, the folks over at RISMedia came up with a few of the "big" stories (in no particular order) that come to mind:
The Break Up of Cendant and the Creation of Realogy
Now we know what the ballpark price tag could be if someone aspired to buy themselves a major chunk of the real estate brokerage industry. In a spin-off from Cendant, newly created Realogy was sold to Apollo Management LP for $8.5 billion. Realogy stock has ceased to trade on the New York Stock Exchange and the stockholders are to receive $30 in cash for each share of common stock that they hold.
The Collapse of the Sub Prime Market
If anything dominated 2007, it was the velocity with which the secondary mortgage market came to a grinding halt, and with it pulled down everyone heavily involved with sub prime lending. Few were spared with the 10th largest mortgage lender American Home Mortgage filing bankruptcy. Even the largest mortgage lender in the U.S., Countrywide, experienced major cash flow problems, which opened the door for Bank of America to enter with a $2 billion, bail out and a potential 16% ownership of the company.
DOJ releases study on Real Estate Brokerage
A new report by the U.S. Federal Trade Commission (FTC) and the U.S. Department of Justice (DOJ) states that they have decided to participate in the transformation of the industry by deciding that certain existing laws, rules and regulations need to be repealed. It is their feeling that as commission fees "do not vary in proportion to changing home prices," they are considered to be "relatively inflexible" and therefore have in real terms become too high. The FTC is recommending that state "legislators and industry regulators" should consider repealing existing laws, rules and regulations like minimum-service and anti-rebate provisions that limit choice and reduce the ability of new brokerage models to compete.
Revival of Better Homes and Gardens
Once a popular real estate franchise, this very well established brand disappeared off the brokerage radar after a sale by its former owner, Meredith Corporation, to GMAC in the 1997, with the requirement to phase the BH&G brand out. This time Realogy re-introduces the brand after signing a 50-year licensing agreement with Meredith.
Closing of Foxtons
Born in the Web 1.0 era, lasting through the crash and surviving with a name change from YHD to Foxtons, the discount real estate brokerage company filed for bankruptcy in October 2007 - listing $40.9 million in total liabilities and $488,000 in assets. For many this was an affirmation that the discount model isn't viable while many others see it more as just a precursor to a declining real estate market that will still claim the "lives" of many real estate companies, irrespective of the model.
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