Harry Blum still remembers the day they said his business was a goner.
It was 1986, and Mr. Blum was attending a Maryland Association of Realtors convention. During a panel discussion about the future of real estate in Maryland, several heads of major local brokerages declared that small companies would soon become extinct.
"They were basically saying that the only companies that would survive would be the large ones," recalls Mr. Blum, president of Fiola Blum Inc., a 49-agent Pikesville real estate company mainly active in Northwest Baltimore.
Like other small- to medium-sized brokers, Mr. Blum, whose mother founded Fiola Blum Inc. in her breakfast room in 1949, ignored those ominous predictions. He believed that a well-run small company could hold its own. Time has proven him correct.
True, the trend of consolidation still rumbles along. Giants such as O'Conor, Piper & Flynn, Grempler Realty Inc. and Long & Foster Real Estate Inc. have snapped up smaller companies. RE/MAX International Inc. and Century 21 Real Estate Corp. have opened franchises across the state. And such companies, which boast hundreds of agents and hundreds of millions of dollars in sales every year, still dominate the local market.
But many independent "boutique" real estate companies have survived, even in these recessionary times. Some are even thriving.
A few examples:
* Hill & Co. Realtors, a 25-agent brokerage known for dealing in upscale properties from the Inner Harbor to the Maryland/Pennsylvania line, is having a record year, with sales expected to top $75 million. That's an improvement of about $17 million over last year, according to Timothy Rodgers, the owner.
* After suffering setbacks last year, a bad period for most brokerages, Fiola Blum Inc. expects to post sales of about $40 million -- close to 1989 figures of $42 million, according to Mr. Blum.
* Sales at W.H.C. Wilson & Co., a 32-agent company based in Roland Park, have increased 22 percent over 1990, according to Adam Cockey, the managing partner. The 41-year-old firm expanded recently by merging with the Hubble Co., a 35-year-old firm located in Guilford.
Moreover, the recession hasn't discouraged new small brokerages from opening, according to Fletcher Hall, executive vice president of the Greater Baltimore Board of Realtors.
As in previous years, between 10 and 30 new firms have applied for GBBR membership this year, said Mr. Hall. He noted that of the approximately 400 real estate firms that make up the board's membership, most are small or medium-sized.
National trends follow a similar pattern, according to John Tuccillo, chief economist at the National Association of Realtors.
"There's always a fear when there's increased activity from larger firms that this will drive the smaller ones out of business," he said. "But that doesn't necessarily happen. It's clear to us that there are a number of small firms throughout the country which are more than holding their own . . . ."
Rise of the giants
Fifteen years ago, no doubts would have been raised about the viability of the small firm. In those days, the Baltimore-area market was dominated by small- to medium-sized real estate firms, the largest of which probably had no more than 100 agents.
But in the late 1970s and early 1980s, as large, multi-office real estate companies came into vogue, the face of local real estate ** began to change.
Between 1979 and 1983, national companies such as Merrill Lynch Realty and Coldwell Banker Residential Real Estate entered the market by purchasing multi-office firms. In 1982, Long & Foster Real Estate Inc., a company founded in Fairfax, Va., opened its first office in Baltimore and set its sights on more. (It now has 27 offices here.) Two years later, five small- to medium-sized firms merged to become O'Conor, Piper & Flynn.
At the same time, Grempler Realty Inc., a local brokerage founded in 1960, was expanding steadily, buying up small companies and opening numerous offices around the city.
Most of these companies aimed for fast growth and a multitude of offices. Since its formation, for example, O'Conor, Piper & Flynn has purchased 21 other companies; it now has a total of 37 offices and 1,322 agents.
Such giant companies typically offer elaborate training and marketing programs, as well as in-house mortgage, title and insurance companies. That's tough for small firms to match.
To stay afloat, many small firms emphasize professionalism, and personal service enables them to stay afloat.
Take Herbert Davis Associates. The 14-agent company, which handles properties all over central Maryland, employs solely full-time agents.