It’s a decision that’s made every day, sometimes subconsciously: whether to grocery shop at a small family-owned market or a huge superstore; whether to find that dying breed of solo physician or use an HMO (that decision may be made for you depending on your health coverage); and whether to go with an independent real estate agent or firm or a multistate operation.
Because of the real estate industry’s increasing consolidation, it has become harder to find small independent agencies, but hardly impossible. If that’s the route you favor, persist.
The tougher decision may be to determine which size firm is right for you–a sole proprietor, a larger but still Chicago-based firm that has multiple offices in the city and suburbs, or the giant national corporation or franchise with in-house departments for mortgages, relocation, marketing. Each type, according to real estate experts and homeowners, offers advantages and disadvantages.
What it really boils down to is twofold. First, consider your needs and personality and whether you feel more comfortable with an individual, a boutique or a corporation. Second, be sure you’re in sync with the agent at the firm you choose and know how good–attentive, available and professional–he or she is because everyone, no matter the size of their firm, has access to the same listings through MLS directories and the Internet.
“It’s really an issue that affects the agents more than the clients. Firms are getting bigger because there’s no margin unless you buy and trade on volume and because the cost of technology is so high you have to have many offices to share costs,” says Reed Hagee Mitchell, whose two-office firm, founded by her grandfather and great uncle in 1904, was acquired by Koenig & Strey, which has 11 offices.
Nevertheless, the size of the firm will affect certain aspects of the buying and selling process so it should be factored in, along with other criteria. Following are some influences:
– Name recognition. Certainly, the larger the firm, the more likely it is to have deeper pockets to advertise and promote its name, which gives some homeowners greater comfort in the same way that they prefer buying jeans from a Gap store rather than from a mom-and-pop shop that only offers brand X.
It may be more important, however, to use a firm with such cachet when you’re a seller and want to reach a larger pool of buyers beyond your immediate boundaries. “The largest companies bring national and international exposure, which is particularly important when it comes to relocation,” says Elizabeth Ballis, who used to have her own company, Dayton Realty, but merged with Prudential Preferred Properties, a Chicago firm, which, in turn, merged with Minneapolis-based Burnet Realty to create The Prudential Burnet Realty. “I definitely lost listings as a small independent because I didn’t have the national exposure I now do.”
It was for the same reason that Thomas Smith switched from an independent firm in Woodstock to a RE/MAX franchise eight years ago. “A lot of clients were migrating here from the Northwest suburbs and sellers told me they wanted national exposure on TV and radio.”
More important than national or international exposure, however, is strong name recognition within a community, according to Bruce Johnson-Reid of Jameson Realty. “With 45 to 50 agents, we’re large enough to cover all the neighborhoods and price ranges yet we’re small enough to be sure our agents are the best,” he says. “I think the top Chicago agents have generally come from Chicago companies that know the area and what good service means.”
Yet, at the same time, consumers should not be fooled into thinking that name recognition is equivalent to fabulous service. Sometimes it is, sometimes it isn’t.
– Office buzz. There’s definitely more chatting around the water cooler and on “caravans” to tour new listings when more agents are present. This can benefit buyers and sellers in markets when inventory is tight. “I have more opportunities to hear about properties, sometimes before they come on the market,” Ballis says.
Greater communication also helps the learning curve, according to Jennifer Ames, who had been with Kahn Realty, which had seven offices, but who is now with Coldwell Banker/Kahn, which numbers 13 offices and whose number of agents shot to 600 from 325. “We learn from each other–at weekly sales meetings where we discuss properties and trends,” she says.
– Bells and whistles. It’s far more likely that the bigger firms can afford the extras that you may feel essential to speed the process of buying or selling–slick marketing brochures and magazines with professional photographs, radio and TV ads, catered open-house lunches, full-page newspaper display ads, staff who put up and take down signs or manage company Web sites.
But don’t think that agents with smaller-size firms or midsize Chicago offices never offer such perks. Many do when they deem it worthwhile, typically for higher-end listings. “I advertise my listings every week or every other week, though they’re 2- to 3-inch ads or classifieds rather than display ads,” says Jan Smith of J.A. Smith & Associates, who has a small staff. “I distribute flyers with pictures to brokers and hold open lunch houses for which I’ve made the desserts.”
The major downside in this case falls on the agent in the form of a pared bottom line, the agents say. On the upside: agents in smaller firms are more likely to develop a highly focused ad or marketing campaign rather than a generic one cranked out by a corporate office in some distant city.
Some questions to pose to any agent: What kind of marketing and advertising support will you give me? Where will it appear and how often? How large or small will it be and will pictures be included? How often will it be changed?
And always bear in mind that there’s no universal agreement on whether marketing and advertising produce a buyer or seller. “Ninety percent of sales come from the MLS,” says Nancy Nagy of Sudler & Co., which is now owned, along with another Near North firm, Beliard, Gordon & Partners, by the same group of investors. The two firms number a total of 120 agents.
– Availability and backup. Many firms have begun to insist that agents, whether with a small, medium or large office, be more available to clients by working full time. What’s typically different about the larger firms is that they can afford to have an office manager who answers agents’ phones when they’re not present and hook up customers with another agent in case of an emergency.
Larger firms are also better able to afford a support staff to be sure all the i’s are dotted and t’s crossed on contracts to ensure a smooth closing, be up-to-date on the latest real estate legislation and be computer and Web-site savvy, all with the goal of allowing the agents to do what they do best–help buy and sell.
But don’t think that just because a solo agent or one with a small firm doesn’t employ a staff and only has voice mail, he or she is less thorough or accessible. “It’s never more than an hour that someone can’t reach me,” says Ellen Benninghoven, who has successfully run her firm for more than 25 years with a support staff of zero.
Some agents with smaller firms work out ingenious arrangements. Benninghoven belongs to a group of 10 solo brokers who meet monthly to help one another. Jane Domurot, who also works on her own, shares her office with another solo practioner. They cover for each other when one is sick or on vacation.
The main goal is to offer a full menu of services, whether you’re on your own or aren’t, says Susan Fares of Baird & Warner, which has 31 Chicago offices with 1,000 agents.
– Flexibility. Agents with smaller firms say they’re able to move faster–lower a commission to get a deal done, decide what kind of marketing strategy to deploy for a particular listing or to show a home at the last minute. “All of us live in the area so we can swing by a client’s home and pick up changes in a contract or show it,” says Andre Shields, one of four owners of Brush Hill in Hinsdale, which has 20 agents and focuses on that suburb.
Thomas Smith agrees that he has given up some independence by buying a RE/MAX franchise, but he says that doesn’t affect his clients. He thinks the advantages of having full-time agents who receive 100 percent of their commissions for their sales outweigh disadvantages. RE/MAX agents cover their operating costs.
– Narrower focus. Because of a leaner staff, most smaller firms follow Brush Hill’s strategy and focus on a narrower geographic area, price range and type of housing. This can work for or against the client, depending on whether they know where they want to live. If so, they need to do more legwork to find an agent with the right speciality.
Shields of Brush Hill views such specialization as a plus for her clients. “We serve them so well because we all live no more than two miles from the office. We know where the stores are in the area, what the state pays per student in the school system and how many National Merit Scholars it has,” she says. When she doesn’t have the right information or the right listing, she’s quick to refer prospective clients to other firms.
And Benninghoven prefers to specialize in single-family homes, townhouses and condominiums in the city. “I’m not one to sell a high-rise apartment in the Mag Mile but I could,” she says.
Agents with large firms beg to differ and say somebody in their office has the expertise desired without having to search for a referral. “We’re selling Lincoln Park, the Gold Coast, Ravenswood, Bucktown and are the biggest representatives of conversions and new products. We also sell expensive properties and ones in emerging neighborhoods,” says Johnson-Reid.
– Trends. The larger firms with offices in other states are more likely to hear sooner about national trends that could ultimately affect the Chicago market. Currently, range pricing has taken hold in California. “Houses may be put on for between $400,000 and $600,000 rather than at a single price,” said Mitchell.
But how critical is that to every buyer or seller’s needs? “It’s helpful, and we certainly hear about them more at a bigger firm, where we’ve got more minding the store and listening to what’s going on in the industry,” Ballis says.
