Two Greater Boston residential real estate rivals are joining forces and while both companies anticipate a smooth transition, the merger will certainly disrupt the marketplace. Even competitors see the move creating potential opportunities.
Coldwell Banker Residential Services announced on July 20 that it had purchased the assets of Hammond Residential Real Estate Group LLC in Chestnut Hill. Hammond has roughly 300 agents in 16 offices in Greater Boston and a strong reputation for experienced agents and high-quality customer service.
“Hammond brings an essence and gravitas that a lot of other brands don’t have,” said Merit McIntyre, president of Coldwell Banker Residential Brokerage in New England.
Both sides declined to discuss the terms of the deal. One thing they both made clear is that the separately-owned Hammond franchise offices in Belmont and Cambridge were not included in the sale.
McIntyre said his firm had “some interest” in acquiring the two remaining Hammond offices in Belmont and Cambridge, owned by Tod Beaty, but they were primarily focused on the offices owned by Saul Cohen.
Beaty and RE/MAX Leading Edge broker/owner Linda O’Koniewski told Banker & Tradesman on July 20 that the two were joining forces in what O’Koniewski called a partnership, not an acquisition. Since that time, industry insiders report rumors that those plans have changed; both Beaty and O’Koniewski declined multiple requests to comment on their proposed merger and those rumors.
Beaty’s plans could create confusion for consumers and pose an interesting problem for Coldwell Banker. If he continues to use the Hammond name or doesn’t complete the proposed merger, Coldwell Banker could be left competing against a company that is virtually identical to the one they acquired. Because Cohen and Beaty both operate under the Hammond name with the same logo and look, many agents and most consumers don’t know they are entirely separate companies.
Cohen said his decision to sell is completely independent of Beaty’s plans. He said he’s been courted by many companies over the years, and decided to sell now to Coldwell Banker because they made him a very reasonable offer and they have the technology and international outreach Hammond lacked.
“Hammond Residential enjoys a preeminent position in our market, but the industry is changing,” Cohen said. “I had to look out a decade in the future and it was very clear to me that the nature of the industry has changed. Very deep and broad resources were going to be increasingly more important for the success of the agents and the company. They [Coldwell Banker] certainly have an international brand with the broad and deep resources to develop the necessary technology.”
Change Creates Opportunity
Larry Rideout, CEO and co-owner of Gibson Sotheby’s International Realty, said he was not surprised – or intimidated – by the news of two of his bigger competitors joining forces.
“It’s one of those things where when you grow a company and you have a certain stature, somebody is going to want to acquire you,” he said.
Mergers like this one can be a great time to poach top producers from both companies, according to Rideout.
“Change creates opportunities,” he said. “When something like this happens, some agents might want to leave either company. Everyone is wondering what they’re going to do. There’s usually a 60-day feeling-out process, then agents start making inquiries with other brands, and we’re not shy about making phone calls, either.”
McIntyre agreed. “We’ve already had inquiries from agents in Arlington and Cambridge,” he said.
Cohen, who cofounded Hammond with Joe Hare in 1991, sold it to GMAC in 2000 and bought it back in 2009, said he would be staying on with Coldwell Banker through the transition and beyond as chairman of Coldwell Banker New England, but since he is well past the typical retirement age, he’s not sure how long he will stick around.
“Right now my real focus is on a successful transition,” he said. “That will take the best part of six months. Thereafter, one has to face the facts at age 84. Everyone has long known I don’t intend to stick around until I need help finding my car in the parking lot.”
Hare, who currently serves as executive vice president of Hammond and has chosen to take a less active role in the company for the last two years, said he will serve a similar role with Coldwell Banker.
“Basically, I have been a consultant to Saul and the Hammond management group these last two years,” Hare wrote in an email. “That arrangement fits my personal situation. In my talks with our new, expanded leadership, I think accommodating my special situation will be a fit.”
McIntyre said he was very excited about the deal and expected the Hammond name would continue to be associated with the newly acquired offices for a long time, taking advantage of their brand, while still incorporating them into the Coldwell Banker company. The transition is planned for six months, but it could take longer.
“Yes, there will be some consolidation,” McIntyre said. “Right now it’s business as usual. With these things, you go in with a game plan, but everything takes time and there are leases with different expiration dates. What we would have thought of two weeks ago has already changed. We’ve also made agents part of the conversation. Some offices want as little change as possible; others want it done now.”
Cohen expressed confidence in his new employer’s decision-making.
“In some cases consolidation would be indicated,” he said. “They prefer our locations in many cases. I’d imagine in the normal course of business they’ll make the decisions we’d have made on our own had we continued on solo.”
Back in the Belmont and Cambridge offices owned by Beaty, the changes have already started.
Charles Cherney was a vice president at Hammond and spent his entire 17-year real estate career in the firm’s Cambridge office. Soon after he learned of the proposed merger with RE/MAX Leading Edge, he started exploring his options and on August 3, he left Hammond for Compass Real Estate.
“It occasioned to me that things were changing and I needed to consider my options,” Cherney said. “I spoke with a number of people, including Compass. They are a really good fit for me. I’m a high-tech agent and they’re a high-tech firm. I’m midway through my career in real estate, you could say. This is a great time for me to make a change. Sometimes change is a good thing.”
He’s not alone. Ross Duncan-Brown, was also a vice president who left Hammond’s Cambridge office for Compass after the proposed merger was announced. Industry sources anticipate more agents will be announcing their departure from Hammond shortly.
“I think it was a big announcement,” Cherney said. “It’s inevitable that when there’s that kind of announcement made it’s going to occasion many people to take a look at their situation.”
Cultural Disruptions
McIntyre said the primary reason his firm wanted to acquire Hammond was its culture.
“Their reputation is certainly stellar and at the same time they’re very committed to customer service,” McIntyre said. “Their agents take care of their customers because they’re treated well. Their customers are happy because their agents are happy, and that’s not easy to find.”
Cohen said while Colwell Banker has 10 times as many agents as Hammond in this market, he thinks his offices can still bring something to the real estate giant.
“We have to craft something very carefully to take advantage of Hammond and its style,” Cohen said. “It was never about numbers of agents.”
McIntyre said he isn’t necessarily targeting any other acquisitions, but he’s not ruling them out, either.
“Any time there’s a company with a similar culture and if there’s a place that fills a certain gap, we’re interested,” McIntyre said. “Culture is the most important thing. We’re really excited to have them.”