December 31, 1995|By CHICAGO TRIBUNE
CHICAGO -- Homebuyers typically hope they can get a great deal on a new house with the help of their real estate broker. But in the near future, homebuyers also will be offered deals on decks, patios and even cars and television sets.
Residential real estate brokers, their profits squeezed from all sides in an increasingly competitive environment, are branching out more widely than ever in an effort to survive. Real estate companies are starting to link up with any business that has an association -- sometimes only a remote association -- with the home-buying process, both to create new profit centers and to fashion a compelling package for the consumer.
"Everybody is trying to find another way to get at the consumer," said Stephen Baird, president of Baird & Warner, the largest independent real estate brokerage in Illinois.
Baird & Warner has begun emphasizing its mortgage broker business, started a few years ago, and in 1996 plans to establish a title company. Further in the future are an insurance agency and a home-repair business, according to Mr. Baird.
"Real estate is a very cyclical business, and, with our large infrastructure costs, it's getting hard to do on just real estate sales," Mr. Baird said.
But the thunderclap heralding a new era in the real estate business may have been the announcement by giant real estate franchiser Century 21 of Parsippany, N.J., that it had a 20-year deal with Amre Inc., a home-improvement company, to market home-improvement services under the Century 21 name.
Dallas-based Amre for many years has been the major provider of home-improvement services under the Sears name. But that will end Jan. 1, when Amre's agreement with Century 21 parent HFS Inc. takes effect. Sears is working on a pact to replace Amre with Pittsburgh-based ASD, which is changing its name to American Home Improvements Products.
Operating as Century 21 Home Improvements, the business will be marketed through about 5,000 Century 21 franchise offices and through 150 kiosks to be opened in shopping malls around the country.
Real estate agents will get fees for successful home-improvement referrals and the home-improvement group also will be recompensed for referrals that result in listings for agents.
Century 21, which HFS bought in August, isn't stopping there. It already has a deal with a New York car dealer that enables Century 21 customers, as well as brokers and agents, to get discounts on new Cadillacs, Buicks and Chevrolets. The company also has made deals to market home-repair and real estate-related books and a glossy home-decorating and lifestyle magazine under the Century 21 name. And it is considering tie-ins with major furniture and appliance suppliers such as Home Depot and General Electric Co.
The new thrust is part of an effort to reshape the real estate industry led by Robert Pittman, an entertainment industry wunderkind and co-founder of MTV who became Century 21 CEO when it was taken over by HFS.
Century 21 Chairman John Snodgrass said Mr. Pittman's philosophy is based on an analogy between the real estate brokers and movie theaters, which make more money on soft drinks, candy and popcorn than on ticket sales.
"With all the cuts into their margins, real estate brokers need additional revenues beyond the conventional business transactions of real estate," Mr. Snodgrass said. "We're providing the popcorn."
One aspiring popcorn supplier for the real estate industry is Merrillville, Ind.-based United Consumer Clubs, which is making a pitch to real estate companies to set up in-house franchises selling consumer club memberships that would enable homebuyers to get deep discounts on furniture and appliances.
The 24-year-old franchiser, which has 94 showrooms around the country and links to more than 700 manufacturers, kicked off its campaign to sign up real estate companies at the National Association of Realtors convention last month and expects to sign up one of the larger regional independents in January, according to Craig King, United Consumer vice president of marketing.
"It's a bona fide ancillary business opportunity for real estate companies, in the same vein as the mortgage or title business," Mr. King said. "Companies have figured out they're spending a lot of money to develop residential customers but not making a lot on them in the residential sales process."
Sears, Roebuck and Co. tried to bring together home-buying-related businesses in the early 1980s as part of its "socks-to-stocks" concept, an experiment that flopped. But times may have changed. Realtors association economist John Tuccillo said technology has advanced, so blending elements of the real estate settlement process -- sale, loan and title insurance -- can proceed more smoothly and quickly.
