The New York City real estate world has closely followed as brokerages here have downsized and shuttered offices. But just north of the city, in Westchester, the real estate industry has quietly seen a shift of its own.
Indeed, some say the brokerage world there has been irrevocably altered during the downturn as some firms have announced closures, and others have set up shop or merged with larger corporate entities, poaching agents along the way.
The biggest shake-up, of course, was Sotheby’s International Realty’s October decision to terminate its presence in the county altogether. Sotheby’s sold four of its offices — its three “golden triangle” offices in Scarsdale, Rye and Larchmont, as well as one in Chappaqua — to an affiliate, William Pitt Sotheby’s International Realty. In addition, it shut down a fifth office in Katonah, farther north in Westchester.
That follows Better Homes and Gardens Rand Realty, which has seven offices in Westchester with roughly 340 agents, joining the Realogy umbrella at the end of April.
According to Greg Rand, the head of the firm, he joined Realogy — the New Jersey-based parent company of Better Homes and Gardens Real Estate, Coldwell Banker, Century 21 Real Estate, the Corcoran Group and others — in part because he wanted to acquire Century 21 Wolff, a roughly 120-agent firm under the Realogy umbrella.
Around the same time as the Rand-Realogy move, William Raveis Real Estate bought up 34-year-old firm Realty 3 Real Estate in Rye, said Richard Haggerty, deputy executive officer of the Westchester Putnam Association of Realtors.
The main reason for the changes in Westchester — one of the wealthiest counties in the nation and home to the likes of Bill and Hillary Clinton, Martha Stewart and other high-profile figures — was, like elsewhere, the loss of real estate business. Overall sales in 2009 were down 12 percent over 2008 and sales volume for the year was the lowest it’s been since 1993, according to the Westchester Putnam Board of Realtors. That, compounded with price declines of around 20 percent from their peak, has led to tough times, according to Michele Flood, an associate broker with Coldwell Banker Country Properties in Rye.
“We’ve had to get very realistic when we price homes,” said Flood, one of the top-performing brokers in the county, according to the Westchester Putnam Multiple Listing Service. “We’ve had to be the bearer of bad news for sellers who think their homes are worth what they were two years ago.”
Michelle Coletti, a senior vice president and associate broker at Paddington Stone Realty based in White Plains, said the upheaval in the Westchester brokerage world is a marked result of the downturn.
“There has definitely been an obvious shift from tradition and a change in the overall culture of the market in Westchester,” she said.
To make matters worse, the industry is also dealing with a workforce that was bloated during the boom by people who didn’t have the skills to weather a down market, sources say.
“When the market was booming, [there was] a flood in terms of appraisers, brokers” joining the field, said Ronny McInerney, the owner of the Yonkers-based Domus Appraisals.
He said the fallout has been a waterlogged industry with newer, less experienced brokers, ill-equipped to handle a market rupture. “When we get to the point where we are now, there’s no place for them,” he said.
Coletti said she has seen “an overall agent population decrease since the market downturn.”
Many say the shake-up in the brokerage world in Westchester could usher in a new era that’s less reliant on big brand names like Houlihan Lawrence, which has one of the largest market shares in the county, and on franchise firms. Houlihan has approximately 675 agents and 19 offices in Westchester County alone.
In the Sotheby’s deal, William Pitt Sotheby’s (which has renamed its Westchester offices to Julia B. Fee Sotheby’s International Realty) was initially only planning to buy the golden triangle offices, but later opted to purchase the Chappaqua office as well.
Rand noted that the wavering on William Pitt’s part gave his firm, Better Homes and Gardens, an opening to start poaching Sotheby’s Chappaqua agents, who felt like they “just kinda got tossed out onto the street.”
“We began aggressively pursuing the Chappaqua [agents],” he said.
According to Rand, in the scant few weeks between the announcement that Sotheby’s would close its Chappaqua office and William Pitt’s decision to purchase it, about half of the approximately 25 Chappaqua agents moved to other firms. Three Chappaqua agents joined the Rand office in nearby Briarcliff Manor.
Paul Breunich, president and CEO of William Pitt, acknowledged that the firm “changed tacks midstream” because it originally only wanted to be in the southern portion of the county. In the end, he said, he retained about 10 agents from Sotheby’s Chappaqua office and scooped up about four or five from Katonah.
Gil Mercurio, CEO for Westchester Putnam Board of Realtors, said that while there have been a number of consolidations and closures by larger firms, they are still generally better equipped to weather down markets.
“Larger firms have the ability to cut back — they can close branch offices,” Mercurio noted.
Nonetheless, the overall brokerage workforce appears to be shrinking.
The Board of Realtors saw a 6 percent loss in membership last year and expects to lose another 4 percent this year, Mercurio said. “Those percentages aren’t crippling, but it impacts [the community],” Mercurio said.
Some Westchester real estate veterans said agents in the region are fed up with the franchise culture of the Westchester brokerage world.
The Guild of Independent Real Estate Professionals, a Westchester-based association for real estate industry members, has seen a steady stream of interest from new members since it began 18 months ago, according to member and 20-year real estate veteran in the area Lester Kravitz.
“We’re like a parachute for some of these agents who are displaced,” Kravitz said.
Kravitz said he became disillusioned with the franchise culture in the region after putting his office, Kravitz Realtors, under the Better Homes and Gardens name 15 years ago.
He said that more Westchester brokers have become equally disenchanted during this downturn.
“In this micro-market, it doesn’t seem that a franchise is necessary,” Kravitz said, referring to Westchester. “In my neck of the woods, every franchise gives up its franchise agreement as soon as the initial contract is up.”