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FEATURE Selling real estate is a local business—but why stop at one market?
Boundary breakers BY ROBERT FREEDMAN
From Russ Alexander’s vantage point 30,000 feet above the Mojave Desert, the ground is featureless and offers little allure. It’s a far cry from Newport Beach, Calif., where the 27-year veteran sales associate lives and operates a thriving real estate practice. Still, he flies over the desert twice a month and spends half his time in Mojave’s famous oasis, Las Vegas, where he leads a second life: He lives and runs a busy practice there, too.
Alexander is one of a growing number of real estate practitioners who find it cost-effective to defy traditional market boundaries and sell real estate in different markets or greatly expanded single-market areas. A confluence of technological and industry changes is helping to lower geographic barriers. Those changes include
- Wireless communication that creates access to information from remote locations
- Real estate license reciprocity agreements that let practitioners move easily between states, and
- Regional MLSs that make it cost- and time-effective to operate in multiple market areas.
The changes give practitioners flexibility to move their practice to where the business is, rather than wait for business to come to their market.
Market conditions spurred Alexander, GRI, an associate with Realty Executives, to expand his business geographically. In the early 1990s, California was mired in recession, so he set up shop in booming Las Vegas.
In the mid-1990s, when the California economy came roaring back, he returned to the coast—but kept his Vegas home and practice. “I didn’t want to give up everything I had built,” he says. “I love Newport Beach and built my practice there because it’s where I want to live. It’s strictly business that brought me to Las Vegas.”
It’s good business, too. For the last two years Alexander, with the help of an assistant, has been closing about 40 transactions a year in Las Vegas, where the typical home sells for $150,000 to $400,000.
Alexander’s volume in Newport Beach is much smaller—about 12 transactions a year. But each house there sells for between $1.5 million and $5 million.
A partner, just a call away
Working a dual or expanded single market is an exercise in logistics that many might find daunting. It helps to have a personal assistant or partner in each location to be your eyes and ears when you’re away.
“Most of what I do I can handle over the phone, no matter where I am. But it’s important to have a partner who can show properties when I’m not there,” says Carol Paris, CIPS, CRB, an associate with Coldwell Banker Pacific Properties in Honolulu.
Five years ago, Paris merged her 40-person Northern Virginia real estate company, Carol Paris Brown Inc., with Long & Foster Real Estate and launched a new real estate business in Hawaii, where she plans to retire. With the help of a partner, she still maintains a Long & Foster office and returns to Northern Virginia at least quarterly to stay in touch with her business.
Her volume in Northern Virginia is not what it once was. Last year with her partner and a relocation director she closed about $12 million, compared with the $20 million she had closed with an assistant in 1996, her last full year there. But the amount is enough to make the office worthwhile as she builds up her sales in Hawaii, she says.
Crossing borders
Even before you worry about staying in touch with your clients and your markets, you must address the licensing issue. That’s getting easier as more states enter into reciprocal agreements, though widespread reciprocity still has a long way to go, say practitioners.
Gerald Kuehner, an associate with Weichert, REALTORS®, in West Milford, N.J., credits relatively smooth licensing requirements between New York and New Jersey for making it attractive for him to work a huge, 300-mile swath of ground between West Milford and Warwick, N.Y.
“Some people working in this area shy away from dual licenses because of ongoing education requirements in New York, which New Jersey doesn’t have,” says Kuehner. “But besides that issue, it’s really pretty easy to be licensed in both states.”
That’s because once you take the classes and earn your license in either New York or New Jersey, you don’t need to take additional classes. You need only pass the exam in the other state to earn your license there.
Kuehner closes about 60 percent of his sales on the New Jersey side of his market area, but it’s in the spreading New York suburbs that he really benefits from the two licenses. That’s because New York City workers are more willing than ever to venture outside the city in search of affordable housing. “Warwick, West Milford—they’re like the new frontier,” he says. “I can show places close to New York City, or I can take buyers all the way up to areas that are more than an hour and a half away from the city.”
Since expanding into New York, Kuehner has steadily increased his business there and in his home state. In the first few months of 2002, he closed $2.3 million in New York, almost half of the $5.5 million that he closed in the state in 2000 and 2001 combined. In New Jersey, he closed $4 million during the first part of 2002 and a total of $7 million in 2000 and 2001.
Head off the competition
For practitioners working a market area bisected by a state line, having both licenses means you’re less likely to lose clients to others.
“Most people get their business from their sphere of influence, which isn’t necessarily geographic,” says Alan W. Brylawski Jr., a broker with Realty Executives/Alan, REALTORS®, in Silver Spring, Md. “So why refer away your business just because your customers want to look in an area’s outer reaches?”
Brylawski and many of the 50 associates in his office, located in a Washington, D.C., suburb, maintain licenses in Maryland, Virginia, and D.C., so they can compete throughout the region.
As in New York and New Jersey, it isn’t hard to get licensed in the two states and the District, even though they don’t share full license reciprocity. If you complete the 60-hour pre-license coursework requirement in either of the states or the District, you can get licensed in all three by passing each jurisdiction’s license law exam and jumping through a few administrative hoops.
The market share advantage to holding multiple licenses is clear, says Dottie Crago, CRB, GRI, vice president of Weichert, REALTORS®, in Bethesda, Md. “Buyers coming in from out of town want associates who know all three areas, so they can get a complete tour of the region and narrow down where they want to live,” she says.
Even buyers who live in the region often prefer to work with a salesperson who’s equally comfortable operating in Montgomery County, Md., Northern Virginia, and the District. “Many upper-income buyers don’t want to limit their shopping to Potomac,” says Crago, referring to a neighborhood in Montgomery County, Md., that borders the Potomac River. “They may want to cross the river and look in McLean,” an upscale Virginia suburb.
Regional MLSs enable multiarea expertise
Straddling state lines in the nation’s capital and elsewhere has become practical in the last 5–10 years thanks to the advent of regional MLSs. These mega-systems allow users to plug into an entire region without joining several MLSs, each with its own cost and technology.
In the D.C. area, the number of practitioners working regionwide jumped about six years ago after the launch of Multiple Regional Information Systems (MRIS), an MLS serving 13 REALTOR® boards in the area. Now practitioners who belong to any one of the boards can access listings from each of them for one MLS fee.
“The regional system makes it all possible,” says Brylawski. “And the wealth of information in the MLS—demographics, school performance—is enough to make anyone an expert on specific areas without having to physically walk the streets.”
There are now dozens of regional MLSs around the country. Several, like MRIS, cover more than one state. Other multistate MLSs include Heartland MLS, which serves markets in Kansas and Missouri, and Georgia MLS, which serves markets in Georgia and Florida.
Mobile tech expands your reach
Having a broad-reaching MLS helps many practitioners grow their geographical sphere, but personal technology is a critical factor, too.
“Technology enables you to work your markets fairly easily,” says Alexander, who recently made a switch to RE/MAX Real Estate Services in his Newport Beach office. “All of my listings go on the Internet and include virtual tours. I work from my home offices, where I have online access to the MLSs, so staying in constant contact with my clients isn’t an issue.”
In the field, the technology enables you and your clients to roam ever-larger areas in search of houses.
“With my laptop, I have every listing in the area at any time available to me,” says Kuehner, who downloads the day’s listings onto his computer every morning. “If I’m with a client in West Milford, N.J., I can say, ‘Why don’t we drive to Warwick, N.Y.?’ From my car I can pull up the listings in that area.”
Technology was instrumental in almost half a dozen long-distance home sales that Liliane Rowe, CIPS, CRS, handled several years ago when she moved her practice from California to Colorado. Rowe, a broker-associate with ERA Shields Real Estate, in Colorado Springs, traveled between the two states to close the deals while getting her new practice in Colorado up and running.
“You couldn’t have done that without technology,” says Rowe, who started her career in Colorado in 1980, moved to California in 1986 to catch the state’s growth boom, and then returned to Colorado in the 1990s when that market came roaring back.
Rowe now refers clients relocating to California to colleagues there, rather than fly back and forth between the two states. But she’s prepared to handle those long-distance sales herself again if the economics are there. “For me to go to California, the property would probably have to be in the $500,000 range,” she says.
Experience counts
Not everyone is cut out for a split or megamarket. Rookie sales associates are better off cutting their teeth in a smaller area, because it takes experience to operate comfortably in markets with different closing requirements and disclosure rules, say practitioners. “When you write a contract on vacant land on the central coast of California, for instance, you need to know about the concerns of the U.S. Environmental Protection Agency there and get the appropriate reports,” says Rowe. “There are a lot more inspections and required reports in California than in Colorado, and your liability on seller disclosure forms is different in the two states.”
So, which experienced practitioners are best positioned to benefit from working multiple markets? Those whose markets are facing a slowdown can take their experience into markets where business is still booming.
Other prime candidates are those moving to another area to retire or follow a relocating spouse. Meg Specht is seriously considering such a strategy. A year and a half ago, the sales associate with Fox & Roach, REALTORS®, in Malvern, Pa., had a growing practice selling homes in golf communities in Ponte Vedra Beach, Fla., the home of the PGA Tour. She relocated to Pennsylvania with her husband but kept her Florida license. Eventually, she hopes to do more than handle referrals between the two markets.
If she succeeds, Specht will join the growing ranks of practitioners who aren’t letting geography stand in the way of their sales success. Realtormag online For more information on license reciprocity and to see which states will give you reciprocity, visit the Current Links at REALTOR.org/realtormag.
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