REAL ESTATE: Make Room for the Independents

Aurrice Duke | October 19, 2006

While most East End businesses are gearing down for the off-season, some in the real estate market are gearing up. After a rash of corporate consolidations, two longtime practitioners have decided to set up independent shops.

"We're the last of the Mohicans," said Tracy Parker, a Sag Harbor native and an agent at the newly opened Strough Real Estate Associates office there.

In recent years more than a dozen independent real estate firms have been merged into larger companies, the most recent being the acquisition of Allan M. Schneider and Associates by Realogy. This large conglomerate also owns Coldwell Banker, Century 21, ERA, Sotheby's International Realty, and, in the New York area, the Corcoran Group.

Scott Strough, the Sag Harbor agency's principal, opened a second office there late last month. It had been the site of an office for the Corcoran Group, which has another two offices in the village.

"When the [Sag Harbor] office space became available, it was really something we looked at," Mr. Strough said, explaining that all the full-time brokers at the office live in Sag Harbor. "We have the best location" in Sag Harbor, he said. "The welcoming from the town has been terrific and the local community has been very supportive."

The influx of larger firms has created more opportunities, some independent brokers here have said. "Clients are not dealing with corporate structure, which is important because real estate and the business perspective of real estate on the East End is a personal relationship," Mr. Strough said.

Mr. Strough got his start in real estate in 1986 working for the now-defunct Harbor Cove Agency in Sag Harbor. Eleven years later he opened his first shop on Main Street in Bridgehampton. "A number of people remember Scott from 20 years ago. He is an established entity," said Kathleen Zappola, the managing broker at the Sag Harbor office. "It's a big, big deal."

"It's a different relationship than dealing with layers of people you will never meet," Ms. Parker added.

Over the years, Mr. Strough has had offers to sell the agency, but he turned them down. "We're a small independent firm," he explained. "We are the last of the independent premier boutiques and we follow a business plan that is geared up to service on a local level."

"We appreciate working with the larger companies," he said. "I think it is very hard for a group to establish an agency. It's an extremely competitive environment."

Operating a real estate "business has become quite sophisticated and expensive," said Michael Daly, a 17-year real estate veteran who will launch RE/ MAX Beach Properties in Southampton on Monday.

Mr. Daly plans to open offices in East Hampton and Sag Harbor in 2007. He has a five-year renewable contract with RE/MAX and the right of first refusal for any additional offices in the townships of East Hampton and Southampton, he said.

"In the past, an agent would sit down at a desk and a phone," he said. "Today it's a desk, direct T1 [phone] line, fax on demand - every desk has its own computer or wireless interface."

Such advances have dealt a blow to less sophisticated firms. "There appear to be a number of smaller agencies that are waning because of how the industry has changed," Mr. Daly said. "It has become more technology-based and it's expensive to provide computers and the software required to stay at the top of the game today."

Mr. Daly's first foray into East End real estate was when he joined Prudential Douglas Elliman Real Estate in 1999. He became one of the company's top-selling agents and was promoted to a managing director. He later took a position with the Corcoran Group as vice president of East End operations.

The RE/MAX franchise network is a global real estate system of franchisee-owned and operated offices and their affiliated agents. It claims to be the largest real estate brand in the world and is the only major real estate network still owned and directed by its original founders.

Mr. Daly began speaking with RE/MAX over three years ago, but made the decision to establish a franchise only a few months ago. "After leaving Corcoran and getting married," he said, he and his wife "started exploring our options for how we were going to do business for the next phase of our lives."

"I had the option to go to any of the real estate brokerages on the East End, but I decided I wanted to be independent and work for myself," he explained. "I explored potential franchises and RE/MAX had the most potential and freshest approach to business."

According to Mr. Daly, RE/MAX is set up like other professional offices, such as a medical, law, or accounting practice where the partners share office expenses and are able to keep the lion's share of the income they produce. "We don't cater to inexperienced or low-producing agents," he said. "The people who come to work for RE/MAX are typically the best."

A study conducted by RE/MAX International and the National Association of Realtors concluded that RE/MAX agents "outproduce" average agents by a 3-to-1 ratio. Nationally, RE/MAX agents earn $145,000 on average per year, as compared to the $45,000 earned by agents affiliated with other companies, according to the study.

As part of the RE/MAX network, Mr. Daly has access to multiple training "modules," and networking resources are available to his agents. "Our agents will cater to the high end of the business," he said. "And my job will be to support them and make sure they have the tools."