Purchase may alter real estate scenery

Shift: Long & Foster Real Estate's purchase of Grempler Realty is not without its problems, but has the potential to change the landscape for real estate sales in the Baltimore area.

September 10, 2000|By Robert Nusgart | Robert Nusgart,SUN REAL ESTATE EDITOR

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."

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