How the Corporate Food Chain Gobbled Up the Hamptons Brokerages
Winter was cold but sales were sizzling. Buyers came in with vastly big bucks and sellers walked away with scads of cash.
But these were not the usual big, posh estates along Further or Gin Lanes that were being traded. In fact these were not even listed. This time it was the real estate agencies selling themselves.
Yes, selling themselves. It was all quite discreet. No advertising, no open houses, no fancy brochures. But lots of behind-the-scenes hustling. With some style, say more like high-class courtesans than common streetwalkers, the agencies nevertheless offered themselves up to the high rollers.
Money talks, big corporate cash convincingly so. And the profligate corporate guys with deep pockets went on a spending spree and procured whatever they fancied.
Sotheby’s International Realty, Cook Pony Farm and Dayton-Halstead all wound up in the corporate custody of the huge, cash-rich Cendant Corporation. Dunemere was acquired by Brown Harris Stevens, so logical a fit that it surprised no one. With last year’s acquisition of Douglas Elliman by Prudential Long Island, that left only Schneider standing alone among the larger agencies.
What does this feeding frenzy mean for the market here? For now, the effects are being felt mostly by the real estate professionals, the agents and managers and clerical staff who must deal with absentee owners and myriads of paperwork.
Clients won’t notice the change for a while. No cheesy, polyester jacketed sales staff and big-brand, canned spiels yet. Most clients should remain happy.
If it is true that the real estate business, like politics, is local, then small, personal, owner-operated agencies might benefit also. They’ll get customers, at least the ones who still recognize local names and who prefer roots in the community to a generic, conglomerate style. So there is opportunity here for all—the big and the small.
We are currently at a high tide moment, and the past has been swept away. Real estate brokerage in the Hamptons has swiftly entered, or rather been boldly sold into, a standardized business mold, methodically organized from the top down. Fasten your seatbelts.
Virtually real estate brokerage in the Hamptons is now controlled by large corporations. Who they are and what they are doing is a puzzler to everyone and that includes the brokers and agents in the trenches. Here for the first time is a summary of who is doing what, where and why. Qualify the “why.” Not even the corporations and their executives seem to know.
Cendant Corporation
Largest U.S. travel and real estate services company.
Owns Avis and Budget car rentals, Days Inn, Super 8, Ramada and Travelodge motel chains, and is world’s largest franchisor of real estate brokerages
Chief Executive Henry Silverman, who summers in Southampton, is the current poster boy for excessive pay packages. Earned at least $23 million in 2003, with a company stake estimated at $178 million. But in April, as a result of a shareholder lawsuit, the extravagant compensation was severely cut back. But don’t cry for Henry Silverman.
Prior to buying Sotheby’s, Henry Silverman bought both his Southampton and Palm Beach estates through the local brokerages. He gives new meaning to the term “repeat customer.”
NRT (Now Really Tremendous?)
956 offices
8,000 employees
55,500 sales associates
$167 billion in closed sales in 2003
Owns:
Coldwell Banker
Century 21
ERA
The Corcoran Group
NRT acquired Corcoran with 11 New York offices and 600 salespeople in 2001 for $70 million (supposedly after being rejected by Bellmarc and Douglas Elliman)
Acquired Cook Pony Farm with 10 East End offices and 160 agents in October 2003
Acquired Dayton-Halstead with 3 Hamptons offices and 44 agents in March 2004, then folded both agencies into the Corcoran group.
In the itty-bitty bosom of brokerage: Barbara Corcoran’s autobiography is titled If you don’t have big breasts, put ribbons on your pigtails. Inquiring minds want to know
.
Redundant realty
Q. Why in the world would Cendant buy Dayton-Halstead, which competes with former Cook Pony Farm offices in three towns, and change the name of all of them to Corcoran? And then leave the local staffs to sort it all out?
A. First, it seems Diane Saatchi, who offered the Dayton-Halstead business to Cendant, did a persuasive sales job. Second, in their competitive fever with Prudential Douglas Elliman, Cendant is out to win, at any cost—and they can afford any cost. As a result of the corporate tumult at least one high level Cook manager, Andrew Hart, has already bailed out.
But the results are impressive: Corcoran is now in NYC, Palm Beach and eastern Long Island, has 23 offices, 1,100 sales associates, and sales volume of about $5 billion.
NRT acquired Sotheby’s International Realty from Sotheby’s Holdings in February 2004 for $100 million. Cendant got 15 company owned offices, 147 broker affiliates, and the tremendously important franchising rights to the Sotheby’s name under a licensing agreement. The European and international realty business were not in the deal—but they will all keep the same public name.
Paging Miss Piggy:
In the same week and at the same price that Cendant’s NRT division bought Sotheby’s, Disney acquired the Muppets. We’re not drawing any parallels, but we are waiting to see who gets the most laughs. After all, NRT’s rather oddball mission statement talks about promoting a “fun environment” and the “passionate delivery of truly remarkable service.” Sounds like a job for Kermit.
Terra Holdings
Owned by a group including Arthur Zeckendorf of Amagansett.
Acquired Brown Harris Stevens in 2002 for $80 million from the late Edward S. Gordon’s Insignia Group, which had bought it in 1999 for $65 million.
Parent company also of Halstead Property, and Halstead/FeatheredNest, the largest residential rental firm in Manhattan.
A month ago, in a hostile takeover bid, Terra bought from a family member an important minority interest in William B. May, the city’s fourth largest residential brokerage.
Acquired majority interest in Dunemere Associates, a high-end agency with 5 East End offices and 100 sales associates, changed name to Brown Harris Stevens.
Excuse me?
If you are looking for the Corcoran office in East Hampton, Bridgehampton or Sag Harbor, take your choice. There are two in each village, and no one, including the people who work there, is quite sure how they differ from or relate to one another.
The Sotheby’s International Realty office in London shares a name with the one in New York, but nothing else. Different owners, management and referral policies. If you want to write a letter to the boss to compliment or complain, be sure to do a search first on the corporate parentage.