The red-hot residential market in Los Angeles has brought skyrocketing prices and shrinking inventory over the past 12 months.
The median sale price for a home in Los Angeles county hit $708,500 in February, according to DQNews data reported by the Los Angeles Times, a 14.3 percent increase from a year ago.
Both issues have led the area’s top brokerages to go even bigger, adding more agents in a push to keep the record sales going.
Analyzing data from the California Department of Real Estate as of March 1, The Real Deal ranked Los Angeles’ biggest residential brokerages in terms of agent headcount, checking for licensed salespeople and associate brokers with registered primary addresses in Los Angeles.
Compass took the number one spot, with 2,401 salespeople in Los Angeles, followed by Coldwell Banker with 2,031 salespeople and eXp with 1,740.
Each of the brokerages listed operate with differing strategies, but all appear to have capitalized on the hot market by adhering to real estate’s basic principle of building businesses through personal relationships.
Compass, which launched its first Los Angeles office only six years ago, has rapidly grown its presence in Southern California through both recruitment and a string of acquisitions, including Pacific Union International in 2018 and WSA Real Estate in 2019. Most recently, the brokerage picked up veteran South Bay luxury agent Jen Caskey and her six-person team from eXp.
Jamie Duran, president of Coldwell Banker Realty in Southern California, which ranked second on the list, said the key to a brokerage’s success is its relationships with its agents, as good agent relationships pave the way to attracting the best people.
Coldwell Banker’s agent-recruiting program uses MLS records and internal research teams to identify high performers in the market, as well as others who are lagging and in need of the support and tools of a larger brokerage.
“The more quality agents we attract, the more business they bring,“ Duran said. “If they’re doing well, we are confident that they can do even better with us.”
Sometimes the firm adds to its workforce en masse. In February, an acquisition brought 240 agents of the brokerage’s former affiliate, Long Beach Coastal Alliance, into the fold of the larger local operating company, Coldwell Banker Realty of Southern California.
In 2021, its sales volume in Los Angeles increased 40 percent to over $13 billion. Among the firm’s star agents is Jade Mills, who recently sold a $73 million home on 901 Alpine Street in Beverly Hills and is the listing agent for a $99.5 million home in Malibu, where supermodel Cindy Crawford once lived.
Pinnacle Estates Properties, based in the San Fernando Valley, also has been adding agents — a self-perpetuating cycle, said founder and CEO Dana Potter.
“The growth doesn’t stem from going on a recruiting binge,” Potter said. “It has been a result of hiring great agents — [other] great agents want to be around them.”
Potter, who estimated that 50 to 75 salespeople start working with his company annually, takes a keen interest in agents’ development. It’s a carryover from his days as a high school football coach, when he had a hand in developing future NFL Hall of Famer John Elway, then a star quarterback at Granada Hills High School in the late 1970s.
“Kids can’t see what they will become,” Potter said. “Don’t look at what they did at a previous company. Interview them, find out how much integrity and desire they have. Off that, you can get a great program to build their confidence.”
The year started off with a splash, when Pinnacle’s Dave Walter and Jeff Chertow shared the listing for a Malibu home that closed in January for $42 million.
Sotheby’s International Realty kicked off 2022 by welcoming 100 agents when it absorbed affiliate Wish Sotheby’s International Realty in January.
That move followed a record-breaking year, boosted by deals such as the August 2021 auction sale of Villa Firenze in the Beverly Park enclave, where Sotheby’s agent Richard Klug represented the buyer. Villa Firenze sold for $51 million, a short-lived record for an auction sale until The One megamansion in Bel Air went for $126 million in March (page 48).
“Our industry goes through a lot of ups and downs and mergers, and the [Sotheby’s] brand really stands for stability, which is part of the reason I’m here,” said Michael Williamson, the firm’s regional manager for Southern California.
The stability pitch is key to attracting and retaining agents, he said, who like to know that the company will keep supporting them in a changing market — something that has taken on added importance as agents find they have to meet new challenges.
Before the current crunch on housing inventory, for example, most clients preferred to look for places in the area’s most popular neighborhoods, such as West Hollywood and Beverly Hills. But in the past few years, agents have had to develop encyclopedic knowledge of other enclaves such as Mount Washington and Eagle Rock.
Familiarity with technology is also crucial, Williamson said. Virtual home tours that became standard during the pandemic are here to stay, and the increased use of digital connections overall means the pace of agents’ jobs has greatly accelerated.
“Agents are under the gun,” Williamson said. “You need to be able to get a buyer to see a property as soon as possible. It’s always been a 24-hour-a-day job. Now it’s a 25- and 26-hour day.”
Pressure has notably increased in the luxury market, where Williamson estimated almost 20 percent of listings are off-market or unannounced. News of the potentially lucrative deals is mainly spread by word of mouth.
Corcoran Global Living is a relative newcomer to Los Angeles, having launched in the San Francisco and Reno-Lake Tahoe areas in February 2020, just before the pandemic.
Founder and CEO Michael Mahon said that the company grew during the pandemic because it gave its agents the technology and support needed to work through stay-at-home restrictions. For example, Corcoran agents worked with proptech firm Asteroom to produce virtual tours of homes, and the brokerage can facilitate cryptocurrency sales.
In November 2020, GCL catapulted into Southern California by teaming up with two Los Angeles–based brokerages — one led by Peter Lorimer and the other by Tom Swanson and Sherry Sada. Mahon said CGL grew quickly because of its structure, which allows top-performing agents to become equity partners.
Newly licensed hires are put through what Mahon called a rigorous, year-long mentorship, which requires six hours of programming each day for the first two weeks, and an hour a week after that.
CGL anticipates opening new offices in southern Los Angeles County this year, and Mahon believes there will be a lot of business.
“As we get further into the year, we’re anticipating some certain challenges with rising interest rates, but it won’t likely affect sales volume, with a number of sellers looking to sell properties,” he said. “We may see the market coming into full balance.”
For inquiries about how to obtain the underlying data set referenced in this story, email research@therealdeal.com.