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OFFICIAL MAGAZINE OF THE NATIONAL ASSOCIATION OF REALTORS®




For Brokers: Standouts
Growing Up as Sales Slow Down

Allison James Estates and Homes Inc.



The housing downturn has made one thing clear for sales associates who are toughing out the hard times: The more commission income they keep, the better their chances of financial survival.

That would seem to open the door to new recruits for any company that lets sales pros keep most or even all of their commissions.

James Crumbaugh thinks his 100 percent company, which he and three partners launched in January, lets associates keep more of their money than his competitors.

That’s because associates pay only a flat fee of $295 a month, regardless of the number or size of deals they close.

Crumbaugh, a 35-year veteran, co-owned six Prudential offices, with 200 sales associates, in Clearwater, Fla., before embarking on this path. He says he can keep the fee so low because his company, Allison James Estates and Homes Inc., is a virtual company, which means its brokers have no office costs. Also, because it launched in multiple states at the outset, it’s poised to reap economies of scale and enjoy the benefits of diversified markets.

The company name derives from Crumbaugh’s full name, which is James Allison Crumbaugh.

As of mid-April, Allison James was in 12 states; it was on track to be in 25 by the end of this year, says E. David Powell, partner and company CFO. Powell, a 25-year industry veteran, was Crumbaugh’s partner at Prudential. The other partners are Scott Chamberlin, the company president, and Edward Wotitzky, its legal counsel.

The 25 states the company’s targeting are those with the largest populations of real estate licensees, he says.

“You would have to be somewhat insane to start a brand new, national real estate company at the very bottom of the worst real estate market in 30 years,” says Crumbaugh. “Yet, I would venture to say there’s not another company [of comparable size] that’s added 100 net associates to its roster in the three months between January and April, 2008.”

The biggest chunk of those new associates are in California. The company has also set up shop in Arizona, Florida, Kentucky, Missouri, Nevada, North Carolina, Ohio, Oregon, Tennessee, Texas, and Washington. Powell says the partners are aiming to have 1,500 associates by year’s end.

The company targets veteran sales associates who bring their own clientele and established sales methods and handle their own costs, although any rookie who’s self-motivated could leverage the system for success, says Tammy Archibald, director of development.

“If they’re the type of person who’s not constantly waiting for others to tell them what to do, it’ll work just as well as a traditional brokerage,” says Archibald.

Back-End Management

What the company offers associates is a digital back-office platform for complete electronic transactions, online lead management and referral systems, an electronic forms storage warehouse, a consumer Web site, and multistate branding.

It also brings discounted pricing on marketing materials, signage, and other services, and it works with a global partner to lower the cost of temporary meeting space for associates who request it.

In the works are additional services like mortgage financing and title insurance, but those won’t launch until the company grows its ranks more, says Powell.

The company launched in six states in January and was able to add the additional six states in three months by taking a systematic approach: After it brings on board its broker for a given state, some two dozen part-time employees make more than 1,000 calls a day from the company’s Clearwater, Fla., headquarters to introduce the company to potential recruits there.

The main sales pitch is money: If you’re paying more than $3,500 a year to your broker, you’re paying too much.

“Money, money, money: That’s what it comes down to,” says Crumbaugh.

Reaching Out

Archibald says the company generates 200 leads of interested licensees for every 2,000 calls it makes. For each lead, it follows up with an e-mail and then another phone call by another company employee.

The company doesn’t expect those leads to convert right away. “They have deals to close and things to wrap up,” explains Crumbaugh.

For each state, the company hires a broker who’s compensated with a 10 percent cut of the fee income generated by the affiliated associates. Although some of the brokers continue to sell, their priorities are recruitment and document oversight. It’s the broker’s responsibility to ensure associates get the electronic transaction forms filled out, signed digitally, and filed in the company’s databases. “Most of the brokers want to phase out of selling and just concentrate on running the operation,” says Powell.

As its sales ranks grow in each state, the company will hire assistant brokers but, for now, brokers have their state to themselves, creating a financial incentive to recruit.

“It’s like an annuity for them,” says Crumbaugh of the 10 percent cut they get in fee income.

Crumbaugh thinks that annuity will grow in the months ahead, because the challenging market will draw recruits to the company. The results of the first three months bear that out, he says.

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