Real estate franchisor Realty Executives International has selected New York as its next target, with plans to open 250 franchises statewide.
The Phoenix-based firm has signed a deal with the former Junatane Inc. real estate brokerage in Kinderhook, Columbia County, to develop the state's franchise network.
Junatane, now known as Realty Executives of New York, hopes to franchise 50 offices across the state in 1991. It's unclear how many offices will open on the Niagara Frontier.
"We feel that New York can support 250 offices, based on its population and the number of licensed agents in the state," said Marcel St. Onge, broker-owner of Realty Executives of New York. "We don't feel we're overly optimistic with our plans, considering the response we're getting from contacts through our marketing representatives."
But local brokers are skeptical of the ambitious plans, saying the creation of a statewide network -- particularly in tough economic times -- could be difficult.
"It would be a first in New York if they can do it (set up a large franchise network)," said Peter Hunt president of residential sales for Hunt Real Estate Corp.
Brokers in the Realty Executives system are granted exclusive territories depending on an area's population. The firm has more than 100 offices in 25 states and the Canadian provinces of Quebec and Alberta.
The company hopes to attract experienced New York real estate agents through its commission setup. Unlike traditional real estate offices, where a commission is split between agents and brokers, Realty Executives' agents keep 100 percent of their commissions, in exchange for a broker's fee and either a share of the office's monthly overhead costs or a so-called transaction fee.
Neither St. Onge nor Realty Executives spokesperson Roxanne England would comment on what the broker's fee would be; Ms. England said it varies. A transaction fee is the return of a certain amount to the broker for each sale made, which would help cover overhead.
Local brokers said competing with the 100 percent concept is nothing new and that they do not expect an exodus of their own people.
"We actually looked at Realty Executives' concept for our operation," Hunt said. "We found it to our long-term success to offer agents options because neither their way nor the traditional commission structure is right for all people."
Under Hunt's commission schedule, agents can go the traditional route, collect 70 percent of the sales commission and share certain broker expenses, collect 90 percent of the commission and share expenses, or work for a set salary.
While agents can move between the options, Hunt said that, given the current soft real estate market, few if any agents are operating under the 90 percent commission option.
Even sharing expenses with the owner-broker could result in substantial charges, local brokers said. And 100 percent commissions in the Buffalo area don't have the impact experienced in a high-priced market.
"If you're selling a $400,000 home in Toronto at a 7 percent commission, that's $28,000," said David Eckel, a partner in Stovroff & Herman Realtors. "However, that same home may cost $80,000 in Buffalo, and 7 percent of $80,000 is $5,600."