The Changing Face of Real Estate Franchise Brands?
By Stefan Swanepoel
There is always a debate going on in the real estate industry about which company is the largest. As some don’t disclose financials and others use different measuring criteria (offices, agents, sales volume, profitability, brand recognition, etc.) we have many potential “winners”.
This article is however not about who is #1 or #2 but rather what has happened to real estate franchise brands over the course of the last 20 years, and does that information in any way provide us with a trend line that may afford likely scenario’s going forward.
To start off, we need to look at the most prominent brands 20 years ago; 1989. I revisited many “old” publications of those years, the REAL Trends Report and the leading Real Estate Report of the time; the Roulac Report by Deloitte, Haskins and Sells (1988). Combining all that intel I have compiled a list of what were, in probable order, the most likely candidates for the most prominent Residential Real Estate Franchise brand of 1989.
- Century 21
- Coldwell Banker
- Realty World
- Merrill Lynch
- Red Carpet
- Gallery of Homes
- Better Homes and Gardens
I have followed the same criteria and researched the REAL Trends Report again and the leading Real Estate Report of today, my Swanepoel TRENDS Report. The most likely candidates for the most prominent Residential Real Estate Franchise brands of 2009 are:
- Coldwell Banker
- Century 21
- Keller Williams Realty
- Prudential Real Estate
- Realty Executives
- Sotheby’s International Realty
- GMAC Real Estate
- EXIT Realty
So here is where the interesting part comes in. Although not based on any scientific hard facts, the following has occurred during the past 20 years:
- 40% have remained a Top 10 national real estate brand (C21, CB, ERA & RE/MAX).
- 20% exchanged their brand for a new brand and were still able to hold on; remaining a Top 10 brand (Merrill Lynch became Prudential and BH&G became GMAC Real Estate).
- 10% dropped off the Top 10 list but still operate as a national franchise (Realty World).
- 30% fell on even more difficult times and went through different types of trouble including bankruptcy. (Gallery of Homes, Help-U-Sell and Red Carpet). It is interesting that one or two of the brands are staging a comeback.
- 10% of the brands on the 2009 list had improved their rankings (Realty Executives).
- 30% of the brands on the 2009 list were not even in real estate franchising back in 1989 (Keller Williams Realty, Sotheby’s International Realty and EXIT Realty).
There are of course many different deductions that can be made using above information resulting in hours of interesting discussion. Due to the brevity of this article I am going to list just five observations that I think are worth consideration:
- Will the three brands that have dominated for the past 20+ years maintain their stronghold; RE/MAX, Coldwell Banker and Century 21?
- Will newcomer Keller Williams Realty that surged into the top 5 be able to continue its rise and unseat one of the top 3 established brands? If yes, who will be the one to loose its top 3 ranking?
- Twenty year plus top 5 brand ERA has for the first time dropped out of the top 5. Is this a sign that they will continue a downward slide; ultimately out of the top 10?
- Brand changers (Merrill Lynch became Prudential and BH&G became GMAC Real Estate) have shown that brands are not always that important as both survived and held on to similar top 10 rankings in 20 years. GMAC is however scheduled for another name change within the next year. Will they still be able to hold on to their top 10 ranking after a second name change?
- Will companies such as Realty World, Red Carpet and Help-U-Sell that dropped off the top 10 and are staging a comeback be able to regain their former top 10 status?
There and numerous new franchise brands bubbling under the radar such as Weichert Realty, Assist-to-Sell, ZipRealty and even Better Homes & Gardens (not same company as before but the same brand) that could very well be a top 10 real estate brand within the next five years.
Although this exercise was more one of fun rather than trying to predict the future, it does show us that even in the “big picture” of large national brands the world is ever changing and that anything can happen.