Tough Competition Small Real Estate Companies Try to Find Their Niche in the Wake of More Mergers

Article excerpt

Byline: Deborah Donovan Daily Herald Real Estate Writer

Starck & Company's recent purchase of Wm. L. Kunkel & Co. Realtors of Des Plaines is a sign of the mergers blowing through the real estate industry.

On the other hand, the suburbs also boast small companies, like John Greene Realtor of Naperville, which are thriving against the bigger competition.

It's common for small companies to be sold to larger ones, industry analysts say. But they maintain "niche" companies can survive.

Clara Terrana, president and chief executive officer of John Greene Realtor, thinks the survival of independent companies is important to home buyers and sellers.

"I don't think consumers are aware that ERA, Century 21 and Coldwell Banker are owned by the same corporation," she said.

"Eventually, if they have enough market share, they can say, 'Here's the way we're going to do it.'"

At John Greene, the niche is geographic - Naperville and Lisle - although the business is currently expanding to Oswego. The company also is very strong in relocation, which goes along with the Naperville image.

The Kunkel story is repeated frequently. The firm that was founded in 1927 and was very active in Des Plaines' development made it into the second generation of ownership. But Ralph Martin, son-in-law of the founder, decided to sell the company when he learned he had a terminal illness.

Martin died in March just after finalizing terms for the sale, said Tom Ross, president of Stark & Company. None of Martin's four children were interested in taking over the business, Ross said.

Kunkel had 28 sales associates and $33 million in 1998 sales. Starck's 483 agents are in 14 offices. In 1998, the company posted $670 million in sales of 3,946 units.

Ross said the company is behind only Coldwell Banker and Baird & Warner in the Chicago area. Baird & Warner recently made news by purchasing National RealStar.

Smaller firms, especially without the support of a franchise system, have more difficulty being profitable because of overhead costs - most notably technology and marketing requirements, Ross said.

Attracting and keeping sales associates can be a challenge for smaller companies, said Tom Dooley of TWD & Associates in Arlington Heights, a consultant to the real estate industry. …