Crye-Leike Moves In; Realtor Ahead of Schedule, Leader in Central Arkansas

Written by David Smith, Reporter

Arkansas Democrat-Gazette

 

Harold Crye reached his goal almost a year early.

Crye’s Memphis-based Crye-Leike Realtors Inc. opened its first Little Rock office in June 2002. Before the office was furnished and with only one agent on staff, Crye said he expected to become the largest residential real estate company in a four-county area of central Arkansas ? Garland, Faulkner, Pulaski and Saline counties ? within three years.

Now, with eight offices and 207 agents in the four-county central Arkansas area, Crye-Leike had $194 million in volume through July this year, Crye, the firm’s chief executive officer, said last week. That’s $78 million more than any other real estate firm in the four counties.

It is a pattern Crye-Leike, the 10 th-largest real estate firm in the country, has repeated in its several major markets.

The strategy includes hiring many agents, opening several offices, staying open late, advertising heavily and opening several affiliated businesses, such as a title company and a mortgage company. It’s all part of Crye-Leike’s efforts to provide as many services as possible for clients, Crye said.

Crye-Leike (pronounced crylike) was founded in Memphis in 1977 and became the largest agency there in three years.

Starting out using a pay phone at a Shoney’s Restaurant to recruit agents in 1993, Crye-Leike became No. 1 in Nashville, Tenn., in a year. Crye-Leike became No. 1 in Chattanooga, Tenn., in four years.

Crye-Leike has grown to 74 offices and more than 2,800 agents in Arkansas, Tennessee, Mississippi, Georgia, Kentucky and Florida. It had total volume of $3.7 billion in 2003.

The twist in central Arkansas, some of Crye’s competitors said last week, is that no other agency has offices in all four counties.

But Crye-Leike also is the largest firm in Pulaski and Saline counties, with $146 million in total volume for the first seven months of 2004, $30 million more than perennial leader Janet Jones Co., which did $116 million with 32 agents in one Little Rock office.

Roddy McCaskill, who owns Roddy McCaskill Realty in Little Rock, said he’s surprised Crye-Leike has grown as quickly as it has in central Arkansas.

“But they’ve done the same thing in other markets,” McCaskill said. “So maybe it shouldn’t be surprising.”

Wayne Richie, who sold his successful Audio International business in 1997 and now owns and runs Coldwell Banker Advantage Realty, is familiar with Crye’s strategy. Coldwell Banker Advantage is also one of the fastest-growing agencies in central Arkansas, with almost $115 million in volume through July. Richie bought several firms in the market, including Real Estate Central of North Little Rock, and now has almost as many agents as Crye-Leike.

?CRYE’S MODEL WORKS’     “It’s obvious Harold Crye’s business model works,” Richie said.

Crye-Leike is making central Arkansas “a very competitive arena,” said Vic Hiryak, vice president of Rector Phillips Morse’s residential division.

“But I haven’t noticed that they’ve taken over the market to the extent they predicted,” Hiryak said. “Everyone is still in business. But if they’ve done anything, they’ve made the market very competitive for listings.”

One Little Rock agent, who asked not to be identified, said Crye-Leike can’t be making a profit in central Arkansas, since it has the expense of opening eight offices and paying commissions to more than 200 agents. Another expense will be a $3.5 million, 30,000-square-foot building in west Little Rock. Crye said construction will start soon on the building that will serve as Little Rock headquarters for the company.

The agent also said Crye-Leike makes most of its money off the ancillary businesses, such as a title company, mortgage company and even insurance companies.

Crye didn’t disagree with the agent’s points.

“Anytime you go into a market, you expect you’re going to have some losses for a period of time,” Crye said. “But we’re heading toward becoming profitable a good bit quicker than we had calculated.”

Crye-Leike will make much of its profit later on the ancillary businesses, Crye said.

Crye-Leike opened First Trust Mortgage in Little Rock this year. It should open Realty Title Co. this month and will open property and auto insurance companies later. It opened a property management division in Little Rock this month and has a division that sells houses that banks foreclose.

“All research shows consumers far and away want the convenience of one-stop shopping,” said Crye, who added he expects to open an office in northwest Arkansas at some point. “We’re on the leading edge of providing that, much more so in the Little Rock market.”

FEW PAID WELL, RIVAL SAYS     Last year, a competitor said Crye-Leike typically hires a horde of agents, and so the firm’s average volume per agent is very low and few agents are paid well.     Crye-Leike’s 207 agents in central Arkansas averaged more than $900,000 in volume through July, less than the $3.6 million average for agents at Janet Jones and less than the average for agents at other top firms.

But Crye-Leike is generating some top producers, too. Through July, at least 12 Crye-Leike agents in central Arkansas have exceeded $3 million in volume, according to the company’s records. That is on pace for more than $5 million for the year.

Jackson Rozelle, an agent in the Maumelle office, has produced almost $8 million in seven months, a pace that would generate almost $14 million for the year.

Crye-Leike also is attracting agents with no real estate experience who are becoming top producers.

CAREER CHANGE     Becky Bien, who had a successful career as an executive in the health-care and legal professions, joined Crye-Leike in May last year.

“I wanted to do something where I could be more in charge of my life,” said Bien, 59, an agent in Little Rock.

Used to making $70,000 to $80,000 a year, Bien started slow last year. She generated sales of only $2 million in 2003. It was four months before she got her first commission check.

She got a $100,000 job offer in the health-care industry earlier this year, Bien said. Crye told her to be patient, that she would do better than that in real estate.

“The other job was a safe harbor,” Bien said. “But I read in my morning devotion the day I had to make a decision that a ship in harbor is safe, but that’s not what a ship is built for. I just felt that was a direction from God that I should stay where I was.”

Bien turned down the job.

So far this year, she has about $6 million in volume, putting her gross income above $150,000, she said.

“I’d never worked on commission in my life,” Bien said. “It was scary at first. But I work very hard. I’m at the office until 7 or 8 every night except Saturdays and have open houses on Sunday. But I believe the sky is the limit. I think God is going to really bless me in real estate.”

To entice agents to sign on with him, Crye offers up to 95 percent of the sales commission to top producers, compared with the typical 50 percent split for new agents. Most agencies also have graduated commission scales.

?LIKE A WAL-MART’     “We’re like a Wal-Mart when it comes to town,” Crye said. “We’re offering a good product at a discounted price. The discounted price is not to the guy who is buying or selling his house. The discounted deal is that we’re providing such an aggressive commission schedule for the real estate agents.

“It’s very difficult for small companies to compete with.”

It is impossible to determine which firms are losing business to Crye-Leike, said Jim Carroll, chief executive officer of Carroll Mortgage Co. in Little Rock.

“You can see some to the extent that agents or brokers leave one company to go to Crye-Leike, but that’s about all,” Carroll said. “But that’s not unusual. Realtors move around all the time.”

Crye-Leike’s rapid growth in central Arkansas almost could have been predicted, one Little Rock agent said. No company has ever had a big share of the market. Janet Jones led with about 10 percent of the Pulaski County market.

“If a company hires 100 agents who each do a little bit of business, that doesn’t mean it’s better than a small firm where each agent does a lot of business,” the agent said.

Another goal Crye set that first month in Little Rock was that the company would do $300 million in volume in the four central Arkansas counties within three years.

With $194 million in volume through seven months, Crye-Leike could reach $300 million by the end of the year.

“We’ve grown 124 percent compared with this same time last year,” Crye said. “Next year we’ll probably grow by 50 percent, then 25 percent the next year and then we’ll probably level off.”

Mike MacKinder, president of Rainey Realty, said there has not been much consolidation in the market.

“There aren’t any old-line companies merging or being bought,” MacKinder said.

But Crye said consolidation is also almost a certainty in central Arkansas in the next several years.

When agents realize Crye-Leike’s pay structure, that eventually will attract more experienced agents to the firm, Crye said.

“Or it will force mergers and consolidation in the market,” Crye said. “It doesn’t always happen real quickly because agents are reluctant to make changes.”

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