John Aaroe on accepting the first offer and why he doesn’t do his own deals
John Aaroe, a veteran of the Los Angeles real estate business, is the owner of the John Aaroe Group, a seven-year-old residential brokerage with nine locations, including those in Beverly Hills, Brentwood, Sherman Oaks and on the Sunset Strip.
The firm has a reputation for representing high-profile executives and celebrities, including Chris Hemsworth. Among its most high-profile listings is a $135 million Beverly Hills mansion, which is reportedly owned by Lebanese-British business mogul Gilbert Chagoury.
The Real Deal sat down with Aaroe to talk about his long career, his celebrity clientele and why he no longer does his own transactions. Read on for a closer look.
You’ve had a long and complicated career in real estate. Can you give us the rundown?
I graduated from USC in 1975 and went into real estate the same year. Eventually, I became the general sales manager for a company called Jon Douglas Company. I started the second luxury division in the nation for them way back in the 1990s. I broke away in 1993 and started Aaroe & Associates, which then merged into the largest Prudential franchise in America, Prudential California Realty. We held the franchise rights from Santa Barbara to the Mexican border. We had 102 offices and about 38,000 transactions a year at the peak of the market. We then sold that to Berkshire Hathaway and I stayed on for five years. Then, I started the John Aaroe Group in 2009.
It sounds like you like to be your own boss.
I have the DNA to be an entrepreneur and don’t play as well in the corporate world. I love making decisions quickly and on the spot. I definitely am a little bit of a contrarian.
You must have seen a lot…
I’ve been in the business for 40 years. There isn’t a storm I haven’t sailed through during that time. Whether it’s the prime rate being 18.5 percent and lending rates being 22 percent to an absorption rate of 65 years at the luxury end of the market in the early 1990s. Everything that’s thrown at me, I’ve been through it once before.
You have a lot of connections but don’t do any of your own deals. Why’s that?
I’m one of very few company owners that believe it’s highly inappropriate to compete against my own agents. I have a philosophical issue with it. I have an advantage on my business card that they don’t have on theirs and to use that advantage against them is inappropriate. I am committed to just running the company full time. I haven’t done a deal myself since 1993.
Don’t you miss doing your own deals?
I miss it every day. There’s an adrenaline rush you get as a broker when someone says, ‘You have a deal.’ I find other ways to get that rush in other ways now by opening offices and recruiting but there’s still nothing like bringing a buyer and seller together.
On that note, you’ve been in expansion mode. How many offices do you have now?
We just opened in Downtown Los Angeles and Baldwin Hills and we’re opening in Studio City in a couple of weeks. That will bring us to nine offices and we’re hoping even to open a couple more this year. We’ve done about $2.3 billion in sales and as of today we have 430 agents.
That’s pretty impressive growth. Do you have a big money partner?
I’m so pleased to say we’re not owned by anyone from Wall Street. The company is fully owned and capitalized by myself and a partner.
Who are your biggest earners?
Our number one agent is Sally Forster Jones, who did $300 million worth of business in 2015. Right behind Sally is Aaron Kirman, who’s at the $300 million level as well. They’re iconic powerhouses in the community. Aaron came from Hilton & Hyland in 2013 and Sally came from Coldwell Banker in 2014.
Coldwell has lost a lot of good people recently. What do you think is going on there?
It’s very difficult having a large company – there’s a philosophy that one size has to fit all. The larger companies almost have to put a blanket of policy around how they operate. I’m blessed because I can walk into a location and make a decision within the hour as to whether I want to open there or not.
Where did you grow up?
I grew up in part in Hancock Park and then in Palm Springs. I got into the business because it seemed like a way to not have a glass ceiling in life, to be able to put more effort forward and get more in return. This is one of the only businesses where, if you’re willing to work an extra hour every day and a bit harder than the people around you, you’ll do well.
Back when you were a broker, who were some of the more interesting clients you worked with?
I worked with Cher for years. I represented Lionel Richie, Phil Collins, Neil Simon. I had quite a celebrity clientele. I make it a policy not to really share stories about them. What I will say is that Cher is one of the most delightful, loyal and genuine people I’ve had the privilege to know.
How’s the market now?
I think this market has changed. I think it’s moved to a very healthy place where a lot of the emotion that was in the market over the last two or three years has begun to subside. It wasn’t sustainable to have the market increase at 15 and 20 percent a year. I think we’ll have a more even level of appreciation in 2016.
Are you having to manage a lot of seller expectations now that the market has shifted?
There’s an expression we’ve used in this business for a long time that it’s time to use again: Often, you’re first offer is your best offer. We’ve come out of a three to five-year cycle where people just waited for multiple offers to come in. Right now, you take the first one that comes in because there just aren’t as many people out there willing to overbid.
Where do you live?
I live up at Coldwater Canyon near Mulholland. I’ve lived in the hills for the last 30 years. As much as I love the city, and I get my energy from coming down the hill in the morning, I love going back up the hill at night and looking over the city.
What’s your favorite place to eat?
The Ivy. I think it personifies the California lifestyle. Sitting outside at the Ivy, with the energy that goes with that, is just amazing.