LAST OF THE INDEPENDENT BROKERAGES
Harvey Kalles Real Estate keeps the big players at bay
There’s no For Sale sign in front of the offices of Harvey Kalles Real Estate Ltd., but that doesn’t stop the offers from coming in for the independent brokerage.
Founded in 1957, the high-end Toronto firm, which has more than 180 full-time agents and is on pace to do a record $2.7 billion in real estate sales this year, is always on the takeover radar of the major real estate companies. It’s one of dozens of independent brokerages across the country that continue to fight the lure of becoming a franchise in a major’s network.
Part of the strategy of those independent firms has been to team up and Kalles made a strategic move in November that helps keep its independence intact, signing an agreement to be part of Luxury Portfolio International, the highend face of Leading Real Estate Companies of the World, the largest global network of locally branded companies.
“I can’t even remember, there have been a number,” said Harvey Kalles, about how many firms have tried to purchase his company over the years. “Some of the commercial brokers who want a real estate division are always interested.”
To fight off those major players, Kalles and some of the other independent brokerages, who loom large on the local level but lack global reach, have joined forces online to cater to what has become an increasingly international property market.
The international nature of real estate today was all but confirmed in Canada this year when the B.C. government slapped a 15 per cent additional property tax on foreign buyers to stem the flow of them into Vancouver.
At one point, before the tax, 13 per cent of deals were going to buyers from abroad.
Michael Kalles, who is now president of the firm his father founded, said Toronto is almost unique by international standards because on the high end of the market, it’s still heavily controlled by independent operators like his firm.
“You go to to California and you see monsters in the high end,” he said. “The high end has more money to be made, but look at the time on the market and what has to be spent to sell a home. You sell a property for $20 million and it can take two years to sell.”
Elise Kalles, Michael’s mother and Harvey’s wife, said reputation is still everything in that segment of the market. “Someone buying a $20-million house doesn’t just pick up your ad and buy a home,” she said.
In Luxury Portfolio International, Kalles gets a platform in nine languages in more than 60 countries with three million visitors per year and an average income of $1.12 million annually. The average visitor owns a primary home worth US$3.4 million and owns a second home. China is the No. 1 visitor.
Kalles has been a longtime member of Leading Real Estate Companies of the World, but is now joining its luxury brand.
Stephanie Pfeffer Anton, executive vice-president of Leading Real Estate Companies, said 550 brokerages, including 14 in Canada, belong to the network.
“The point of it is to give independents the power that other brokers that are part of franchises have. We give them global reach, the marketing tools, the back-end system,” Anton said. “They get everything a franchise has without giving up their brand.”
The luxury brand took off about 11 years ago when Sotheby’s entered into an alliance with Realogy Holdings that required any brokers with Sotheby’s to be franchised under the Realogy brand. Some refused and began looking for a new network and turned to Leading Real Estate Companies, a collection of brokerages out of the U.S.
“Our growth is partially due to creating a better network over time but a big part of it is creating a global connection for real estate,” said Anton.
Kirsten Faverin, marketing manager of CIR Realty, the largest independent brokerage in Alberta with 650 realtors and a member of Leading Real Estate Companies of the World and its luxury division, said independence is important especially when the market turns.
“We’ve established so much (in Calgary), it would just bring our brand down to join a major brokerage,” said Faverin. “We are extremely lucky because there’s no red tape. When a policy change needs to happen, we can make a change in an hour. ”
But like other independents, CIR still needs support in a global economy. “They are our network in terms of reaching for best practices, relocation, global mobility, marketing trends, innovation and sharing technology. Franchisees reach out to each other but they do the same thing, we get to reach out to independents and see the different thinkers doing different things with their own brands.”
The independent firms expect to be around a long time. Kalles does have offices in cottage country in Ontario, but he says he never thought of taking the brand nationally. “Part of the magic of Harvey Kalles is we are on top of every single transaction, we know the players, agents, buyers, sellers. We would never franchise. We won’t dilute the brand.”