Archive | July, 2010

Merger vaults Pru-Rubloff in residential broker ranking

21 Jul
(Crain’s) — A merger has propelled Prudential Rubloff Properties into the ranks of the region’s biggest residential brokerages, while the downturn in the high-end housing market has punished firms like Koenig & Strey Real Living.

Prudential’s sales volume climbed 25% last year compared with the combined Prudential and Rubloff tallies of 2008, pushing the firm ahead of rival @properties, the once red-hot firm that has shown signs of cooling as closings and sales volume slid for the second consecutive year, according to data from REAL Trends Inc., a publication and consulting firm based in Castle Rock, Colo.

Koenig & Strey, which has been stung by broker defections, continued its steep decline as the firm’s sales volume fell by almost 40% from 2008 to $1.72 billion after dropping 27% the previous year, according to REAL Trends data.

Long-suffering brokerages could be in for more hard times if the economy doesn’t pick up and the housing market weakens.

“It’ll be interesting to see what happens in the next 12 months if the market doesn’t improve,” says David Hanna, managing director at Chicago-based brokerage Realty Executives Source One. “Someone is going to have to swallow hard, take a loss and go to Plan B.”

REAL Trends ranks Chicago-area brokerages by the firms’ self-reported transactions and sales volume — the value of homes sold. Typically, there isn’t much movement at the top of the list, but the housing market’s woes have shaken up the industry.

The 2009 rankings showed the continued dominance of Coldwell Banker NRT, part of Parsippany, N.J.-based corporate giant Realogy Corp. The top-ranking firm’s sales volume of $5.56 billion, down 18% from 2008, was nearly double the volume of No. 2 Baird & Warner Inc. of Chicago, which reported sales down 9% to $3.1 billion, according to REAL Trends.

Joliet-based Coldwell Banker Honig-Bell and Prudential were the only top-ranking firms for which both closings and sales volume increase last year. Both were acquirers: Coldwell Banker Honig-Bell bought Primus Realty Co., which had six offices in Aurora and other far western suburbs, while Prudential Preferred Properties in September snapped up Chicago-based Rubloff Residential.

In another acquisition last year, a unit of billionaire Warren Buffett’s investment firm Berkshire Hathaway Inc., Minneapolis-based HomeServices of America Inc., acquired Koenig & Strey GMAC Real Estate, ending months of speculation about who would buy the brokerage. It had been rumored that Koenig & Strey was in play ever since its previous parent company, GMAC Home Services LLC, was acquired in late 2008 by Canada-based Brookfield Residential Property Services.

Most area brokerages experienced modest declines last year, though none as sharp as Koenig’s. The company’s number of transactions plunged 27% from 2008 to 3,778 as sales volume declined 36% to $1.72 billion. The firm, which ranked No. 4 in transactions in 2008, fell to No. 6 last year, according to REAL Trends, which prefers to rank firms by closings vs. sales volume.

“We’re positioned at the high end of the market and the high-end market took a beating last year,” says a Koenig spokesman. “That hit us especially hard.”

He also adds that Koenig’s figures don’t include 176 previously undisclosed sales last year at Trump International Hotel & Tower, some $230 million worth of deals.

REAL Trends’ top-ranking Chicago-area brokerages by transactions in 2009 were:

• Coldwell Banker NRT — 17,442, relatively flat compared to 2008.
Baird & Warner Inc. — 12,763, up 11% compared to 2008.

• @properties — 5,205, down 6% compared to 2008.
• Prudential Rubloff — 4,267, up 25% compared to 2008.

• Coldwell Banker Honig-Bell — 3,866, up 30% compared to 2008.
• Koenig & Strey — 3,788, down 27% compared to 2008.

In REAL Trends’ sales volume rankings, Prudential leapfrogged @properties to take the No. 3 spot and Koenig tumbled to No. 5. But @properties co-founder Michael Golden disputes the new rankings, because he says the Multiple Listing Service shows Prudential deals totaled about $500 million less than REAL Trends reports.

Not every deal a firm completes appears on the MLS, especially if the transaction was negotiated between agents at the same firm, or if a brokerage completed deals as a sales representative for a new development. Still, Mr. Golden is skeptical the firm could have completed such a large volume of these off-market transactions.

“I don’t know where you would find that much of a discrepancy.” he says.

REAL Trends’ owner Steve Murray says he’s satisfied with the rankings, which he asked Prudential Rubloff to verify because of Mr. Golden’s concerns. Prudential CEO Chris Eigel didn’t return messages seeking comment about the matter.

According to MLS data, @properties ranked third in sales volume last year while Koenig was fourth and Prudential was fifth.

REAL Trends’ top-ranking area brokerages in 2009 by sales volume were:

• Coldwell Banker NRT — $5.56 billion, down 18% compared to 2008.
• Baird & Warner — $3.1 billion, down 9% compared to 2008.

• Prudential Rubloff — $1.996 billion, up 13% compared to 2008.
• @properties — $1.78 billion, down 5% compared to 2008.

• Koenig & Strey — $1.72 billion, down 36% compared to 2008.
• Coldwell Banker Honig-Bell — $612 million, up 10% compared to 2008.


House Extends Home Buyer Tax Credit Closing Deadline

1 Jul

The House of Representatives introduced and passed a proposal to extend the original June 30 closing deadline for home buyers who want to get up to $8,000 in tax credits.

The Home Buyers Assistance Act of 2010 would push the deadline to midnight September 30, 2010 on contracts that were signed by the midnight April 30 deadline. The vote was 409 to 5, with 18 not voting.

First-time buyer Juan Martinez of Hicksville had prayed for such a reprieve. “That’s awesome,” said Martinez, whose chosen home in Hempstead Village is ready to close except for one thing—a delay in up to $110,000 in down payment assistance grants. He added, “It’s like a roller-coaster ride until the bill is signed. I’d rather not get too excited about it.”

The bill will now be forwarded to the Senate, where the Democrat-controlled chamber had attached the same proposal to versions of the jobs and economic stimulus bill, which failed twice this month due to lack of support from Republicans expressing concern about the deficit.

The National Association of Realtors estimated that up to 180,000 people would bust the existing deadline, including almost 9,200 in New York State. A spokesman for the trade group said the proposal might not have to go through the usual House-Senate talks over bill differences.

“We think this has a good chance, but I don’t want to build up too many hopes,” spokesman Lucien Salvant said with a laugh, “because anything can happen in the hallway between the House and Senate.”

Veronique Bailey, a Brooklyn, N.Y. resident and teacher, had signed a contract for a six-bedroom Amityville, N.Y. house in September, but was delayed by, among other things, permit and code problems in her chosen home. “It makes you vulnerable and it’s not in your control.”

Even with an extension, some home closing deals might fall apart. Some contracts say the deals must close by the end of June 30. That gives sellers a chance to walk away.

But financial consultant Greg Rende of Massapequa, N.Y. has no worries, even though he’s busting the deadline. The developer of a new Amityville condo complex has not finished his unit, he said, but Rende got a backup clause in the contract. “If we weren’t closed by June 30 and the builder was not ready,” Rende said, “he would have to pay me the $8,000 I don’t get for the first-time home buyer credit.”

In normal times, two months to close would be doable. But these are not normal times, and Rende thinks Congress did not consider how swamped lenders and lawyers would be.