In 2018, Chicago’s @properties defended its home turf from national competitors with a massive billboard cautioning locals not to “ask for directions from a tourist.” But now the firm itself has found the allure of national growth hard to resist.
The residential brokerage is plotting its own expansion by franchising its brand, the company said Tuesday. “Our goal is to become the fastest-growing brand in the country,” said co-CEO Thad Wong. “We won’t bite off more than we can chew, but we have a big mouth.”
With $10.8 billion in sales last year, @properties was No. 10 on Real Trends’ list of top brokerage firms. Founded in 2010 by Wong and Michael Golden, the firm touts its in-house tech tools — dubbed [email protected] — as a key to growing to 3,000 agents across 34 offices over the past decade.
Wong said @properties is looking to build a “significant” presence on both coasts and is targeting franchise opportunities in major markets and surrounding areas.
Wong said he believes the opportunity to grow is massive, and not just with independent firms seeking to plug into a successful brand. “There’s a lot of franchises with existing brands that are looking for something different,” he said. “We feel we can offer a new value proposition to franchisees, so they can experience the same organic growth and retention we’ve developed in Chicagoland.”
To lead the franchisee business, @properties hired Chris Lim as president, head of growth. Lim co-founded Climb Real Estate, a tech-focused firm in San Francisco that Realogy acquired in 2016. (Realogy folded Climb into its Coldwell Banker brand this year.)
According to its financial disclosure document, @properties plans to sell franchises in California, Hawaii, Illinois, Indiana, Minnesota, New York and Washington.
The firm’s franchise disclosure document estimated total startup costs for franchisees would range from $95,000 to $295,000, including office buildout, marketing, training and insurance. The initial franchise fee is $35,000. Franchisees will pay a monthly tech fee of $50 per agent and royalties of 6 percent of gross revenue. They’ll also pay up to 1 percent of gross revenue each month into an advertising fund.
Nationwide, residential firms are being squeezed by slim margins and increased competition.
For the most part, the big are getting bigger: Compass, which was valued at $6.4 billion after a SoftBank-led round in 2019, has targeted 20 percent market share in 20 major U.S. cities this year. (It’s not there yet.) Brokerage giant Realogy, which has some $3 billion in corporate debt, has been slashing costs. The Corcoran Group started franchising its brand in second-home markets two years ago.
Since 2018, @properties has been on an expansion tear following an investment by private equity firm Quad-C. The Virginia firm took an undisclosed stake in @properties.
In 2018, @properties acquired a stake in Ansley Atlanta Real Estate, a 250-agent firm with $1.5 billion in sales. This past May it bought a stake in Charlottesville, Va.–based Nest Realty, a firm with 15 company- and franchise-owned locations. @properties also owns Proper Title and Proper Rate.
Wong said the deals with Ansley and Nest were strategic: With Ansley, @properties fine-tuned the rollout of its technology in a new market. Nest gave it valuable franchise experience.
In addition to tech, training and marketing support, Wong said @properties will provide liquidity to franchise owners to help them grow through acquisition. “We don’t have limited capital,” he said.