'Mom and pop' return; Home brokers think small
During the past decade, the real-estate brokerage industry has been slipping into a "bigness is better" syndrome. Big-name franchises, big Wall Street firms acquiring major broker operations, big multi- office broker firms that dominate their market -- these are key factors that have created the greatest changes ever in the real-estate brokerage industry.
The "mom and pop" broker firm that took great pride in offering personal service to home buyers and sellers in its own corner of the local market was becoming an endangered species, according to industry analysts.
Now, however, the pendulum is showing signs of swinging in the other direction.
The "silent majority" of small-and medium-sized independent broker firms are fighting back, even to the point of organizing their own association.
The new organization, sparked by a group of East Coast brokers, is a nonfranchise, nonprofit marketing association of independent brokers whose primary objective is to provide small- and medium-sized firms with the same basic advantages enjoyed by franchise members, but without the problems connected with franchise affiliation.
Those problems, most often cited by franchisees, are high fees and ineffective programs. More recent complaints have centered on stiff contract-renewal requirements -- still higher fees being the bottom-line problem , coupled with more control by the franchisor.
The new nonfranchise organization is structured to permit members to retain their complete independence in their local market, but offers "image enhancement" and group buying power for members.
The organization is called Certified Associates in Real Estate (CARE). Members must conform to certain standards of performance in serving clients and must be certified.
Certification is granted after an applying broker meets the parameters worked out by the CARE board of directors. When accepted for membership, the broker pays a small fee (compared with franchise fees) and attends an indoctrination seminar.
The aspect of the fledgling CARE organization that most distinguishes it from franchises is keyed to independence. Its members continue to render personal brokerage services in their communities, using their own established names and distinctive marketing approach.
No programs or products will become mandatory for members to use or sell to clients, such as a franchise-sponsored home warrantly plan. CARE members will continue to use their independent business judgment in deciding how to most effectively serve clients, according to a CARE spokesman.
James Bugg, a leading Washington, D.C., broker, is the executive director.
The new group now has 50 members and, according to Mr. Bugg, expects to be strongly represented in at least 50 major US markets within the next year.
The organization is being launched on a strong foundation and at a timely point in the evolution of the real-estate brokerage industry. In addition to many brokers who have long been outspoken against the intrusion of franchises within their field of business, there now is an increasing number of once pro-franchise brokers who have become disenchanted with the franchise concept.
This "broker opinion" trend was shown in a recent survey by the National Association of Realtors.
While franchises made big waves in the real-estate industry during the 1970s, the new wave in the '80s just might be organizations such as CARE. It's possible they could eclipse the appeal of all franchises within the next few years.
The loc al broker is a long way from giving up the ship.