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 thei
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.
