When Rayni Williams, one-half of the power duo at the Williams & Williams Estates Group in Beverly Hills, began selling homes with her husband Branden Williams in 2006, she had trouble convincing her clients to put down big money for what she felt were imperfect abodes.
“Many of the speculators were men and not thinking with a woman’s [point of view],” she recalled. “There wasn’t proper lighting for makeup mirrors, or the skylights in the closets weren’t protecting expensive clothing. We were seeing little finite details like this and getting frustrated, because we only had a certain amount of product to sell, but we had a surplus of buyers with needs.”
Realizing there was a void in the market, the husband-and-wife team took matters into their own hands. The couple decided they would buy a house in the same area they were selling in — the tony Trousdale Estates — and remodel it. What started as a renovation turned into a four-year redevelopment, an initial foray into what became a new line of business for the high-powered brokers.
The development side of the residential real estate business is now calling other top brokers beside the Williamses. While the scope of such endeavors can vary greatly, brokers said their deal-making expertise has helped them broaden their horizons, perhaps by engaging in a passion project, or even bolstered their own bottom lines.
“Stanley House” built by the Williamses (Credit: Redfin)
Kurt Rappaport, co-founder of the Westside Estate Agency, is among the select group of brokers juggling sales and development. He is currently building a three-acre residential compound in Brentwood Park, in addition to opening a private club in West Hollywood and revitalizing a commercial property in Beverly Hills.
“I think the key to any field is ownership,” Rappaport said. “When you’re the owner of a property, you bear the risk, but also the reward. It’s just something I knew instinctively.”
Dabbling in development
Rappaport got involved in development, which he prefers to call the “ownership side” of the real estate business, early in his career. He claims that both jobs are “just different facets of the same thing,” and contends that being a broker has helped his development projects by putting him “in the forefront of the most interesting properties and deals.”
“Some of the best deals I’ve made are deals that have been on the market for a long time and no one wanted them,” he said. “Knowing the timing and having the vision have been key components to making great deals.” (Rappaport recently bought one of his own listings for the Brentwood estate he is amassing.)
Dario Svidler, a commercial broker at Compass who also develops apartments and small lot-homes, agrees that both sides of the businesses “complement each other.”
“It’s important for sellers to know that I’m not just trying to sell them a property — I’m on the front lines,” he said. “I’m trying to explain to them the process of building in one area over another because I’ve done it.”
Unlike brokers lured by the profits they see developers making on their deals, Svidler got into brokerage after getting his feet wet in development. Coming from a construction family — Svidler Construction is based in Woodland Hills — Svidler grew up around builders and often worked on the back-end or financial side of the business. Svidler said he got into brokerage because he was attracted to the transactional aspect of buying and selling land for his family.
“It just kind pulled me in that direction,” he said. “Most people romanticize the construction project, but for me, construction moves really slow.”
Today, Svidler mostly works independently of his family, developing mid-tier residential projects in North Hollywood.
The nature of the real estate business allows brokers to balance their building pursuits.
On the development side, an individual might only need a weekly status call or an early 8 a.m. visit to a construction site to make sure that a project is running smoothly. Doing deals, on the other hand, offers a bit more flexibility, as such work can be done remotely or after-hours.
Still, balancing both jobs can still result in a tug of war, one that has to be delicately maintained so as not to upset the boss, such as the owner of a brokerage.
Michael Nourmand, president of the family-run Nourmand & Associates, said he has dabbled with a few residential projects, having worked on a pair of house flips in 2014 and 2015. In the end, however, Nourmand decided it would be more profitable for him to stick with his brokerage duties.
“It is very time consuming in general,” he said. “There’s a fair amount of stress and you’re also tying up capital. I looked and thought, ‘Am I making more money brokering deals or am I making more money doing development?’”
Potential risks
Agents who dabble in building and brokerage can run into additional liability issues as the matter of dual agency arises. Dual agency — which is illegal in some states — occurs when an agent represents both sides on a deal.
Another concern is in the actual product an agent may be selling under the brokerage banner, said Jeff Hyland, co-founder of Hilton & Hyland.
“What happens if the agent didn’t do a good job or hired the wrong subcontractor and [upset clients] look to the brokerage firm because the brokerage has deep pockets?” Hyland asked. “You have to be very sensitive to what you’re doing because these things don’t expire when the escrow closes. A lot could go wrong there.”
While Nourmand is “O.K. with agents doing [development deals],” as president of a brokerage himself, his “biggest concern is from a liability standpoint.” As a precaution, Nourman has made it a rule that agents who are representing themselves as owners are also not allowed to represent a potential home buyer.
Rappaport said he never “co-mingles” his businesses, and always prioritizes the client if his brokerage and development operations were ever to conflict.
Williams echoed that sentiment, noting that she “always puts client needs” first.
After taking four years to complete their first project in Trousdale, one that she and her husband kept for personal use, Williams said the duo has learned to build homes “with less emotion” and “more calculated moves.” In the last eight years, the Williamses have worked on a handful of other ground-up projects, including a $33 million home designed in part by Lenny Kravitz.
They are now building another ground-up development, which Williams said will be a “grand slam based on size, view and style.”
For many brokers, including the Williamses, building seems to be in their plans for the foreseeable future.
“I couldn’t do one without the other,” Williams said. “If I just look at myself as a realtor, it might be unfulfilling, but I look at myself as an adviser with a design and realtor background. I like to sell and build.”