Growing against the oddsReal estate brokerages expanded differently during recession
In the face of a recession and anemic housing market, two schools of thought have led to notable growth in the Lancaster County real estate business.
Manor Township-based Prudential Homesale Services Group, on one hand, has expanded its Central Pennsylvania footprint since the downturn through broker acquisitions across the region and a new partnership in Maryland.
The firm now is 25 offices strong, spanning 13 counties, with more than 1,100 agents and is projecting a 2012 closed sales volume of more than $2 billion and 10,000-plus transactions, said Doug Rebert, the company's managing director.
The other side of the coin includes Weichert, Realtors-Engle & Hambright in Manheim Township, a privately-owned independent franchise that has grown organically. Since becoming a franchise in December 2004, the firm has grown from 11 agents to 91 through recruitment and training programs and niche services.
Lancaster's oldest real estate firm is poised for significant growth again this year with the housing market potentially on the mend, said Terry Wiley, the franchise's broker and owner.
Manheim Township-based Keystone Custom Homes Inc., the No. 1 company on the Business Journal's 2011 list of homebuilders, reported 131 new home sales this year, as of March 1, said President Larry Wisdom. Through the first two months of 2011, Keystone sold 56 homes across its ever-expanding territory that now includes six new communities in the greater Harrisburg market.
The Lancaster County Association of Realtors also reported a 22.6 percent jump in homes under contract in January compared to January 2011.
In January, Weichert settled into a recently renovated 10,000-square-foot space at 1810 Oregon Pike, moving from East Lampeter Township.
Now comfortably in its new digs, the company is expecting to build on its success during the recession.
"The majority of our growth came during the downturn," said Jason Burkholder, the company's sales manager and associate broker.
Company officials attribute that to the creation of several niche divisions to better meet the needs of underserved markets, including Spanish-language and senior real estate divisions, as well as foreclosure and short-sale services.
About 14 months ago, Weichert partnered with Miami-based Best Beach Title, a leading title insurance and short-sale firm. Weichert now handles a lot of short-sale business from other real estate companies in the area because its partnership has helped expedite the process for customers, Burkholder said.
Unlike other real estate companies, Weichert uses open house events as a major way of generating traffic to listings, Wiley said.
Open house traffic was up 32 percent through February compared to the first two months of 2011, Burkholder said.
"Increases in open house traffic usually will translate to more pending activity in the following quarter," he said.
As for agency growth, Weichert tends to focus on finding agents that best fit the company's culture, Burkholder said.
"We do cultivate a specific culture here," he said. "The industry traditionally has been isolated and it's every man for himself. We go out of the way to foster a sense of teamwork. There is a lot of opportunity for our agents to work together and help each other."
Weichert emphasizes training and also has a mentor program to improve its team-oriented customer-centric environment. Improving its online presence by focusing on what customers are looking for in a listing — good photographs and video tours — is equally important.
In addition, the firm highlights its live call center and price trend analysis program on listings. The pricing tool gives customers a better sense of where the market is going, not where it's been, officials said.
"We're a big office with a small office feel," Wiley said. "If you take care of the customer, the money is going to follow."
With the larger space and optimism about the market, he said he believes his franchise will grow by 20 agents this year.
"I think 125 to 135 will probably be as big as we'll grow," he said.
Last month, Prudential partnered with Baltimore's Yerman Witman Gaines & Conklin Realty, which was renamed Prudential Homesale YWGC Realty.
With southern Pennsylvania, namely the areas off Interstate 83, continuing to be a hotbed of activity for former suburban Baltimore residents seeking lower housing prices and property taxes, Prudential jumped at the opportunity to expand into a new market, Rebert said.
"This helps us service our clientele even better," he said. "Homes we have for sale will now have greater visibility in the commuter Baltimore markets."
In 2008, Prudential had 19 offices and about 900 agents. During the recession, the company made six acquisitions, including deals in Berks County, the Carlisle area, Chambersburg, Elizabethtown, Schuylkill County and York.
With the exception of Chambersburg, office personnel involved in the deals were consolidated into existing Prudential offices, Rebert said.
"We have consistently grown market share," he said, citing 36 percent of the York market last year, up from 28 percent in 2008.
Rebert said he sees further company growth in Central Pennsylvania, especially in Cumberland and Dauphin counties.
"Our size has given us the opportunity to have dollars to invest in programs that have given home sellers greater exposure," he said, including the firm's search engine optimization program tied to listings.
Prudential also has a hotline program called Info 24/7 where interested buyers can access property information on any listing in the market from the curb using their mobile phone.
"As a larger company, we have the resources to invest in the technological needs of our market," Rebert said. "It is a core value of our company that growth will lead us to further success, so we focus on it perhaps more than other companies."
The company already has seen written contracts this year jump 34 percent in the first two months compared to the same year-ago period, Rebert said.
"There is pent-up demand. With these low interest rates, people are moving forward now," he said.
Warm winter weather and a growing consumer confidence level also are helping the market, he said.
Prudential expects most of the housing markets in Central Pennsylvania to improve by at least 10 percent this year.
Central Pennsylvania real estate growth
Manor Township-based Prudential Homesale Services Group and Weichert, Realtors - Engle & Hambright, in Manheim Township, are among the largest residential real estate firms in Lancaster County, said the Lancaster Association of Realtors.
Prudential primarily has grown in numbers through acquisitions, including a recent expansion into suburban Baltimore. Formerly known as Engle & Hambright Real Estate, Weichert has not pursued any office deals. The company became a Weichert franchise in late 2004 and had just 11 agents at the time.
Meanwhile, Pittsburgh-based Howard Hanna Real Estate Services is planning to expand its footprint in Central Pennsylvania. It is the fourth-largest firm in the country and No. 1 in Pennsylvania, according to Colorado-based real estate consulting firm Real Trends.
Howard Hanna is eyeing the Lancaster and York markets for potential acquisitions, with hopes of adding another 100 agents in 2012, said Iva Fiorina, the company's vice president and regional manager. The company grew by 65 agents last year through purchases and office expansions, she said.
The Allegheny County firm has added about 1,000 agents over the last five to seven years.
Howard Hanna has five local offices, including two in Cumberland County and three in Dauphin County.
"It's part of who we are," Fiorina said. "We hope to grow through acquisitions."
Marketing incentives to assist agents and customers are what set Howard Hanna apart, she said. The company offers a 100 percent money-back guarantee program.
Being family-owned also makes Howard Hanna appealing to the smaller independents that see the benefits of a full-service company, she said.
Prudential Homesale Services Group
Number of offices: 25 (including new Maryland offices)
Number of agents: 1,128 (including new Maryland agents)
2011 closed sales volume: $1.51 billion (excluding new Maryland offices)
2011 closed transactions: 8,865 (excluding new Maryland offices)
Weichert, Realtors - Engle & Hambright
Number of offices: 1 (Manheim Township)
Number of agents: 91
2011 closed sales volume: n/a
2011 closed transactions: n/a
Howard Hanna Real Estate Services
Number of offices: 134 (5 in Central Pa.)
Number of agents: About 3,500 (about 130 in Central Pa.)
2011 closed sales volume: $5.77 billion
2011 closed transactions: 34,292
Source: Data provided by company officials
Decline in Pennsylvania Realtors
As the housing market goes, so does the number of Realtors, according to data provided by the Pennsylvania Association of Realtors.
Members in 2007 (statewide): About 36,000
Members as of January 2012: About 29,000
Agent membership has declined about 3.5 percent annually since 2007
2007 home sales (statewide): 74,323 (from multiple listing systems that report)
2011 home sales: 52,409
Sources: Pennsylvania Association of Realtors; Lancaster County Association of Realtors