P. Wesley Foster Jr. sat in his Fairfax, Va., office Wednesday morning and sounded more like a candidate coming off the campaign trail than the real estate mogul he is.
"I've got so many new names that I can't keep up with," the president of Long & Foster Real Estate Inc. said.
Ever since his company purchased Grempler Realty Inc., with its 22 offices and 800 agents, nine days ago, the 66-year-old owner of the nation's fourth-largest real estate firm has been working the phones and crisscrossing the Baltimore area. He's been campaigning to persuade agents and managers of the former Coldwell Banker franchise to "give us a try" and stay the course with Long & Foster.
"We've got to get out there and defend what we've bought," he said, admitting that he's rarely had to work so hard after an acquisition - this is the biggest in Long & Foster's history - to prevent defections to other companies.
"Other companies we bought, we never lost anyone," Foster said proudly. "We are fighting like hell to tell our story and keep everybody."
For the most part, he's been successful, keeping such agents as Elaine Northrup, who is responsible for millions of dollars of luxury sales in Howard County. Yet, Foster has also taken some hits.
Coldwell Banker Stevens Realtors, based in Vienna, Va., already has picked off close to a half-dozen top Grempler managers and is swiftly opening Baltimore offices to fill the Coldwell Banker void left when Grempler's franchise agreement ended at midnight Aug. 31.
O'Conor, Piper & Flynn ERA, the Baltimore-area real estate leader, held a recruiting event last Sunday to lure Grempler agents. And at this week's Maryland Association of Realtors Convention in Ocean City, there is sure to be more courting among the top three who vie for Baltimore's real estate dollar.
The purchase of Grempler, a 40-year-old institution started by Mary Bell Grempler and the No. 3 firm behind OPF and Long & Foster, does change the landscape of Baltimore real estate for the next generation. And it raises questions:
Can Long & Foster overtake O'Conor, Piper & Flynn ERA as the No. 1 realty firm in the Baltimore area?
What impact will Stevens, a stronger Coldwell Banker franchise than Grempler, have in the marketplace?
What will be the ultimate effect on the consumer?
"It is certainly a win for Wes, because he is expanding market share like crazy with this acquisition," said Laurie Moore-Moore, editor of Real Trends, an industry newsletter. "And for O'Conor, Piper & Flynn, I am sure [Grempler was] a company that they would have liked to have acquired, but on the other hand I think we will see some very interesting competition. The real competition will be in the marketplace for consumers."
Time was running out on Grempler's seven-year franchise agreement with Coldwell Banker. The agreement had been in place since Sept. 1, 1993, when Grempler bought eight company-owned, Baltimore-area Coldwell Banker offices and added its own 15 to the most recognized national brand in real estate.
However, during the seven-year stretch, D. R. Grempler, company president and son of Mary Bell and her ex-husband Donald, could not effectively grow the firm and compete with OPF or Long & Foster, two of the strongest organizations not only in Baltimore but in the nation.
It became more difficult when OPF was purchased in February 1998 by NRT Inc. The Parsippany, N.J.-based firm was created in 1997 as a joint venture between Cendant Corp. and Apollo Management LP, and became a national power by buying major independent real estate companies and placing them under the Century 21, Coldwell Banker or ERA brand names, all owned by Cendant.
Grempler complained that much of the relocation business generated by Cendant Mobility - those homebuyers moving into the Baltimore area - was being redirected to the bigger O'Conor, Piper & Flynn ERA and not to Coldwell Banker Grempler. Animosity grew between Grempler and Cendant two years ago, when another Coldwell Banker franchise moved into the Mall in Columbia, infringing on what Grempler claimed as his territory.
The conclusion that D. R. Grempler came to this summer was that it was time to get out, and he began to talk to people.
He primarily held conversations with James P. O'Conor, president of NRT Mid-Atlantic, which oversees O'Conor, Piper & Flynn ERA; Thomas M. Stevens, president of Coldwell Banker Stevens, the fourth-largest Coldwell Banker franchise in the nation; and Foster.
A twist in the negotiations with Foster came when Grempler asked him to sign an agreement prohibiting him from talking with Patrick J. Kane, a key Grempler executive. Foster agreed.
"What happened was that we were talking [about hiring] Kane before we were talking to D. R., and then when we were talking to D. R. He said, 'Don't talk to Kane.' So we signed an agreement not to talk to Kane," Foster said. "Well, dumb-dumb, we should have at least called Kane one more time and said, 'We want you.' But we didn't. And he felt we had lost interest in him."
Stevens, in the meantime, lured away Kane, who helped Stevens in his negotiations with D. R. Grempler and became Stevens' senior vice president for Maryland.
Grempler's talks with OPF went nowhere. He believed that it would have been only a defensive purchase by OPF to keep his company out of Long & Foster's hands. A sale to OPF ultimately would lead to most of the old Grempler offices being closed because of duplication.
Stevens, on the other hand, thought he could make the deal as late as Aug. 31.
"Every adviser he had told him that he should not buy the company," Kane said. But Stevens persisted.
"He tried to buy it because it would have been the least disruption to the [Grempler] agents. None of the employees at Grempler would have lost their jobs. His plan was to leave the entire Baltimore operation intact, just bring his tools of business," Kane said, but ultimately "we found out late Thursday night [Aug. 31] that Tom was not going to be the purchaser."
A deal had been struck with Foster, and the following morning more than two dozen Long & Foster executives made the trek from Virginia to Grempler's training center on Security Boulevard, where the final papers were signed and Grempler's managers got their first taste of the Long & Foster way of life.
But by not hiring Kane, who originally worked in Montgomery County and who had developed strong relationships with his office managers during his seven years with Grempler, Foster realized he had a problem.
"This Pat Kane screw-up is going to hurt us a little bit," Foster said. "He's over there doing what he is supposed to do. We will fight like the daylights and hopefully keep most of [the managers and agents]. And the ones we don't keep, we'd like to get back."
Joann Pierro, an agent for 34 years, the last seven with Grempler, said some Grempler agents "are really distraught because they were Grempler people all their careers ... but they will survive. I'm sitting back watching to see who stays and who goes. There are always a few who will leave because they panic.
"I just felt that someone was going to buy us. You could see it coming," she said, but added, "the name changes, but the game remains the same."
The battle for No. 1
There is no question that O'Conor, Piper & Flynn ERA is the dominant real estate company in the Baltimore metropolitan area. Through the first half of 2000, its market share in the area was 26.87 percent, compared with Long & Foster's 18 percent and Grempler's 6.38 percent. In Baltimore and Baltimore County, its share is more dramatic, with more than a third of all sales coming through OPF offices.
But the question becomes, how much of Grempler's market share will translate to Long & Foster or be siphoned off by OPF or Coldwell Banker Stevens? And ultimately is OPF - for the first time since it was formed in 1984 - vulnerable?
"I would like to think so," said Foster, but "I think [OPF president] John Evans would tell you, 'No.'
"We just keep plugging [away], and would like to think right now that, as we have found in the past, when a good local firm like OPF gets tied up with a national firm, they get caught in the bureaucracy and can't react the way we can, and we can do things that will help us catch them."
Said Kane: "I think OPF's market position has always been vulnerable. You just have to have the right competition and the right set of things.
"Right now you have Long & Foster with a little more presence, but you also have a Coldwell Banker Stevens and we are talking about a 31-office company that is coming in, soon to be 40 offices literally overnight. Are they vulnerable? Yeah, they're vulnerable."
Long & Foster is increasing its television spots and both they and Coldwell Banker Stevens are adding more newspaper advertising to make the consumer aware of the changes taking place.
Evans and O'Conor were out of town and not available for comment. Nancy Hubble, a company vice president and someone who has worked the Baltimore real estate business for 44 years as an agent and as an owner, said she believes OPF's stature will not be altered.
"It was important for Long & Foster to gain more market share," she said. "But I still think we are very strong and I don't think we've lost much by not getting [Grempler].
"But I also think it was quite a smart move on Wes Foster's part for him to pick up the company, add some offices, add some agents," she added. "But you never know how it is going to work out until everything shakes out. Who stays? Who goes?
"Although they picked up a lot of offices, you are going to see a lot of those offices close. Having run a business, I can tell you that you don't operate an office if it is not making money. It may take a month to do it and just sit down and re-evaluate the production in each office, whether it is making money or not; whether it is a duplication of another office that is close by; whether you can merge agents from the two offices together. I think you will see a lot of that."
Laurie Moore-Moore of Real Trends sees the battle coming down to who will be best at wooing the consumer.
"It is going to be true competition going head to head to capture the consumer. That will make for a very interesting market," Moore-Moore said. "You will have to position yourself in some way that is better and unique, and you do that through your marketing, and then you actually will have to be better and unique, and that is a question of delivering quality customer service that the consumer wants."
The Stevens factor
The real winner in all of this may be Thomas Stevens.
At age 50, Stevens is young and aggressive. In 1993, he purchased 11 Coldwell Banker offices in Virginia, and in the past seven years has tripled that number and has more than 1,300 agents. He runs the 52nd-largest real estate brokerage in the country, said Moore-Moore, compared with Grempler, which was No. 74. And he has done this in the shadow of Long & Foster.
Although most of his success has come in Northern Virginia and the suburban Washington market, Stevens has been operating three offices in Anne Arundel County for the past two years.
"Tom Stevens should be delighted about the acquisition because it opens the door for him to expand his Coldwell Banker brand," Moore-Moore said. "If he would have purchased [Grempler] it would have been terrific for him because he would have immediately expanded his presence and his market share.
"But I think it is still a win for Tom because he is the player in the Coldwell Banker brand and it is a well-respected brand name to have significant market share," she said. "I suspect that he will be able to capture some of that market share."
Moore-Moore described Stevens as "a smart operator with excellent management skills and a fierce competitor. He is a professional manager because he knows what he is doing.
"He is not at all shy about getting out in the marketplace and really going after agents and competing for consumers."
It didn't take long for Stevens to get Kane to start opening offices in the Baltimore market. A Lutherville office at York Road and Bellona Avenue opened Wednesday. Another is opening at the Festival in Bel Air and Kane is in the process of setting up shop with former Grempler managers in Ellicott City and White Marsh.
"I am looking at the entire greater Baltimore metropolitan area," Kane said. "We'll eventually be everywhere we need to be."
Although Foster respects Stevens' success (he once worked for Long & Foster), he downplayed the impact.
"I don't think he is going to get much market share out of this," Foster said.
"We are going to do our best to keep him from getting any. I think we will be fairly successful. But he's trying, and he got a good man in Pat Kane."
All Kane wants is to get a solid foothold in the Baltimore marketplace.
"I think there is still going to be a very, very strong - for the time being - No. 3 company [in Baltimore] in Coldwell Banker Stevens, and then we will all just head for the position that we look for in No. 1.
"What Coldwell Banker Stevens wants to be is a viable alternative," Kane said. "That someone coming across the country, when they are looking for real estate, is that Coldwell Banker is a name that they know and trust."
But for all the shifting in the marketplace, what will the consumer notice the most? For Hubble, it may be nothing at all.
"I don't think it changes things that much [for buyers and sellers]," the OPF vice president said.
"People deal with agents. They deal with companies, but they also deal with agents," Hubble said. "For the buying public, it's not going to make any major changes."