HENRY DiGIACOMO
‘Things are changing’
Sotheby’s International Realty’s recent acquisition of Cotton Real Estate in Hyannis and Osterville has Cape Cod real estate professionals asking the age-old question: What’s in a name?
The Cape has long been a haven for small boutique firms and mom-and-pop shops, but the value of homes and the strength of the market have many national franchises and larger companies looking to move into the region. Although there are currently offices run by companies like Coldwell Banker and Century 21 in various locations in the commonwealth and the country, the growth of larger, national real estate franchises in the Cape’s distinctive marketplace is being felt more acutely.
According to statistics from the Cape Cod & Islands Association of Realtors, there are more than 475 real estate firms on Cape Cod and the islands of Martha’s Vineyard and Nantucket, two-thirds of which have five or fewer agents.
“What we have here is a very unique situation,” said Henry DiGiacomo, chief executive officer of the Cape Cod & Island Association of Realtors. “Five years ago people were saying that franchises would never come to the Cape and I was raising my eyebrows and saying ‘I don’t know about that.’ In the past months we’ve had Sotheby’s come in and ERA Real Estate, and Weickert is looking here, too. Things are changing.”
Some in the area are embracing the shifting marketplace and making moves to remain competitive. In 2000, Surette Realty and Dick Martin Real Estate merged to create Martin Surette Realty with offices in the Yarmouth and Dennis regions.
“We were always friendly competitors working the same marketplace and we thought the trend in the marketplace at that time hinged around the conception that bigger was better,” said Dick Martin, principal of Martin Surette Realty and owner of the South Yarmouth office.
After they had established themselves as a joint venture, Martin and co-principal and owner Amy Surette Greene began looking around for a larger company to partner with, finally settling on ERA Realty on May 1 of this year.
“[Surette Greene and Martin] had been growing and felt it would strengthen the firm if they had a brand identity,” said DiGiacomo.
Since pairing with ERA the company has opened up a new office in Harwich and is looking to further expand their footprint into Falmouth or Centerville, according to DiGiacomo.
“We’re growing in leaps and bounds,” said Martin.
Sotheby’s recent acquisition of Cotton Real Estate occurred with similar hopes of expansion and further success.
“We were known locally, but now we have a worldwide reach. The bar has been raised even higher than it was. Good is never good enough but now that Sotheby’s is in the picture it’s better than it ever was,” said John “Jack” Cotton Jr., former president and owner of Cotton Real Estate and now vice president and brokerage manager of Sotheby’s Hyannis and Osterville branches.
Pairing with larger companies often gives brokers, agents and customers access to a broader array of services and options than they might have with a smaller business.
“The national franchise trend is a progressive change. It provides consumers greater exposure to other services that otherwise may not be available. The brand name offers different diversity of services to everyone involved in a real estate transaction, from agent to customer,” said DiGiacomo.
Mid-Sized Problems
With the enhanced features that national franchises can afford to offer, smaller firms are faced with finding their own distinctive ways to compete. Some are choosing to pursue the opposite end of the spectrum – instead of offering more, they are specializing in one particular market or service.
“Some smaller firms, in order to be competitive, are focusing on a particular strength or a smaller area – boutique-type services. You could have a real estate firm in Osterville and all they ever do is deal with Osterville properties. If it’s something else, they’ll refer it out and help each other out,” DiGiacomo said.
Differentiating themselves in the marketplace through focused services has helped to secure smaller firms’ presence on the Cape.
“Should smaller firms feel threatened? I don’t think so. We’ve had larger companies in the marketplace for a number of years and everyone seems to be working harmoniously. I don’t think smaller practitioners are fearful, but this trend may motivate them to consider how they want to grow and expand, if they want to change,” DiGiacomo said.
The market extremes seem to have a secured place on the Cape, but the middle ground – the firms that are neither franchised nor a boutique – may be adversely affected by the recent trend.
“The boutique firms will always be there to some extent. They’re integral to the market. But it’s the midrange, which is where [our company] started, that will suffer the most in terms of franchising,” said Martin.
Sotheby’s move into the Cape Cod region added 37 sales associates to its roster, bringing the combined total of the organization up to 1,300 real estate professionals operating in 31 offices worldwide. Even though Sotheby’s is much larger than most Cape companies, it is making an effort to seem more local.
“Sotheby’s view their entry into the Cape Cod marketplace as an organic move. Cotton was already here and [Sotheby’s] wanted to work with them rather than open a brand new shop. It makes good business sense because, rather than imposing outside people, customers will see the same people they’ve always gone to the grocery store with and sat next to in church,” said DiGiacomo.
Because of the nature of the Sotheby’s business model as a niche marketer of high-end homes, it may not seem like a huge institution.
“This is not a franchise. My feeling is that Sotheby’s is a collection of boutiques, so it’s not really a big company coming to the Cape,” said Cotton.
One benefit to being a large company is name recognition. Although small firms are able to gain local celebrity, those outside the community looking for a real estate broker from the area may be attracted by an already-established reputation.
“The name itself may attract people to Cape Cod that otherwise wouldn’t have come,” DiGiacomo said.
According to Cotton, Sotheby’s received no resistance in its move to the region, and in some cases received an outpouring of enthusiasm.
“The reaction was overwhelming. One woman said to me, ‘Cape Cod has finally arrived.’ For [a company] like Sotheby’s to even be interested in this area means something,” Cotton said.
Ultimately, whether big or small, locally or nationally known, a company’s success is contingent upon its customers, who must discern what services they require and from which source.
“The consumer is the winner here. They have expanded options. They can take advantage of brand services or they can decide to deal with a small independent. We’re in a competitive marketplace and firms of all sizes can thrive,” said DiGiacomo.
Perhaps because of that scenario, even though the trend of franchising is just emerging on Cape Cod, experts say it shows no signs of slowing down.
“I absolutely anticipate more brand names and firms coming in as well as more mergers and acquisitions. Who knows where we could be five years from now?” DiGiacomo said.
