THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Saturday, September 14, 1996 TAG: 9609130484
SECTION: REAL ESTATE WEEKLY PAGE: 04 EDITION: FINAL
TYPE: Cover Story
SOURCE: BY MARY ELLEN MILES, SPECIAL TO REAL ESTATE WEEKLY
LENGTH: 114 lines
When you're ready to buy or sell a house, how do you decide which realty company to use? Do you ask your friends whom they would recommend?
Do you browse through the phonebook yellow pages? Do you use the same company you last used or choose another company because it's not the one you used?
Do you pick a company off the first ``For Sale'' sign you happen to see?
Often public recognition of a company's name seems to be the deciding factor we use in selecting a realty firm.
Thus, franchise realty companies, since they operate nationally and internationally, believe they have the advantage of widespread name recognition.
Many franchise or nationally affiliated companies like Re/Max, Prudential, Coldwell Banker, ERA and Century 21 are actually independently owned and operated but gain advantages from being associated with recognizable trademarks.
Historically, members of the real estate community feared the idea of franchise companies. Large, multi-office companies came into vogue in the late 1950s and early 1960s, posing a danger to small locally owned firms.
With a vast number of employees, centralized training, and a powerful advertising budget, the larger companies seemed well positioned to attract clients.
``Gallery of Homes,'' introduced in 1950, is credited as being the first real estate franchise; however, ``Red Carpet,'' established in 1966 is considered the first really successful one. It sheltered an abundance of wilting companies under its broad umbrella and breathed life back into them.
Since then, the number of franchises has increased, cementing its hold as a thriving business practice.
One franchise, ERA, which stands for Electronic Realty Associates, was established in 1971, and was a pioneer of extensive fax machine use for referrals. The franchise today operates in every state as well as 16 other countries.
It was recently bought by HFS (Hospitality Franchise Services) Inc., which is the world's largest franchiser of hotels and residential real estate brokerage offices.
HFS also owns Century 21 and America On-line. Each ERA office is individually owned and operated; there are seven ERA offices in Hampton Roads.
Re/Max International (an abbreviation of ``Real Estate Maximum'') was founded in 1973 and its offices are independently owned. There are more than 2,000 agencies worldwide that employ over 34,000 sales associates. Locally, about 180 sales associates work for six Re/Max franchises.
ERA was the first national realty company to offer clients direct access to listing information through Prodigy; today, Internet access is available.
The Sellers' Security Plan, from which ERA's slogan, ``If we don't sell your house, ERA will buy it'' comes from, is ``what makes our phones ring,'' says Joseph Steingold, broker and owner of ERA Steingold Realty in Virginia Beach.
To take advantage of this offer, the sellers must list their house and also purchase their new house through ERA.
ERA was also one of the first companies offering the home warranty plans, says Steingold, which protect new home owners from certain household mechanical failures for a year after the house is purchased.
Such warranties, which have become increasingly popular in recent years, on listed houses increase the chances for a quick and prosperous sale, Steingold says. He believes the recognition factor is an additional advantage that franchises have over other companies.
``Statistics have shown that people are more likely to deal with a `name brand' franchise company,'' he says.
``One of the major advantages that franchises have over nonfranchises is our electronic referral network. If an ERA broker in California has a client who is transferring to Oceana, the broker will contact the referral network, which in turn refers it to one of the Tidewater franchises.''
A nonfranchise broker, says Steingold, would have to have a California contact in order to even know about the client.
ERA has different networks in its referral system that employees can elect to join, Steingold says, which is another franchise benefit.
For instance, many agents take advantage of the National Military Broker Network, which is an important group for such a large military area as we are. Members take classes every year or so and are eligible for a higher priority on a military transfer than non-members.
Another international franchise, Century 21, was also formed in 1971. Becky Claggett, managing broker at Century 21 Action-Plus, in Virginia Beach, says the company has the world's largest referral network.
Advertising and name recognition play very important roles in the company's success. Century 21 offices are independently owned and operated, allowing for hometown and international recognition, says Claggett. There are about 20 Century 21 offices in Tidewater.
Century 21 employees have national, local and regional training. Franchise guidelines, says Claggett, are ``conformity which the consumer recognizes.''
Another valuable resource for consumers, says Claggett, is America On-line's new real estate icon. This allows house hunters to access the city they're interested in and locate listed Century 21 properties and sales associates.
Non-franchise companies ``will always be here,'' says Claggett. ``But franchises enable people to open a realty office and have access to systems that are already in place.''
One can compare the logic of this with the fast food business, she says. For instance, ``it's why we'd buy a Taco Bell restaurant instead of opening up our own stand.''
Claggett's father worked at one of the area's first Century 21s in the 1970's. ``I remember at that time people thought the idea would never work,'' she says, because other companies had been established for 35 years or so.
``But it does work - just like people buy Crest toothpaste. I came to Century 21 not because I thought I couldn't make as much money somewhere else, but because the name brand brings instant trust, recognition and acceptance into the marketplace,'' she says. ILLUSTRATION: [Cover, Color photo]
IS BIGGER BETTER?
Photos by GARY C. KNAPP
A look at the brand-name realty firms in Hampton Roads.
KEYWORDS: REALTY COMPANY REAL ESTATE AGENCY by CNB