Is This New Brokerage Franchise the Best Deal Around?
Sperry Commercial Global Affiliates, an aggressive CRE franchise, offers brokers a full-service platform at a fraction of the cost of competitors, CEO and founder Rand Sperry tells GlobeSt.com in this EXCLUSIVE interview.
Sperry Commercial Global Affiliates LLC, an aggressive CRE franchise, offers brokers a full-service platform at a fraction of the cost of competitors, CEO and founder Rand Sperry tells GlobeSt.com. As we recently reported, the newly launched firm aims to bring to market a broker-oriented platform focused on collaboration and value, according to Sperry, an industry veteran. BRC Advisors Inc. is the first affiliate to join the new firm, with founder James Huang serving as president and adding 100 of the firm’s brokers to the platform. We spoke exclusively with Sperry about the new venture, why now is the right time for it and why it is structured the way it is. Stay tuned for future interview with Huang to get his perspective on why he joined the company.
GlobeSt.com: Why is now the right time for the launch of Sperry Commercial Global Affiliates LLC?
Sperry: I look at it as, “Why not?” The market has come back, and I will admit I kind of waited until I felt there was a lot of strength in the market and a lot of interest in the brokerage and a lot of brokers doing well again. It would have been great to launch this a year ago—that would have been the best timing—but having the opportunity now to get a large group of brokers together under one flag again is very advantageous.
This is a value opportunity. There’s a lot of enthusiasm among the brokerage industry: brokers are pumped up and excited again. ICSC in Las Vegas was as busy as I’ve ever seen; in fact, the last two years have been the busiest I’ve ever seen. Things have gotten back to pre-2008. The last time I did a franchise operation like this was back in 2000, and back then the cost to do this was extremely expensive—the cost was $5 million total for the first four or five years, and half of that was the IT budget. The Internet isn’t really that old, and 17 years ago, I had the ability to reach out, but the market was more limited. I had a staff of 15 to 20 people calling mid-market brokers who could take advantage of branding at an inexpensive cost.
The fact is that most any company out there—SVN, Colliers, CBRE, Cushman & Wakefield—in order to be branded and get the benefits of those types of companies, brokers have to pay significant fees. I’m launching what I hope is good parallel-type program to those offered at the top 10 companies in the country—like Nordstrom service at a Walmart price tag. For $300 per month, it’s pretty much the most competitive by a long shot compared to anyone else offering this platform. Sperry Link Software basically produces your marketing brochures and proposals and executive summaries, pushes info out to all the CoStars of the world and does all the things that used to cost a fortune.
Even though things have gotten less expensive, none of the major companies have cut their fees to brokers. We will make a reasonable profit, but my goal is to build this to up to 5,000 people over next 10 years, and this program makes a lot of sense. As people join, it gives you momentum. The numbers will grow and grow. It’s a value proposition that is too good not to accept. There’s no differentiation in product, but you’re getting a better deal. We’re delivering a really great product that’s competitive with the national companies out there, and we’re doing it a fraction of the cost.
GlobeSt.com: What are the most interesting and surprising things you’ve seen in your years of experience in the industry?
Sperry: That’s an easy question for me: nothing really changes. I’ve been doing this since 1977. Interest rates were 9.5% at the time, 40 years ago. In 1981, interest rates were 20%, and the fixed rate on homes was in the 14% range. Interest rates have been so low for so long.
Every seven to 10 years, there has been a significant change in the market. In the late ’60s, there was a boom and bust as well, but people don’t believe it. Prices are pretty topped out, so we’re heading for some type of recession—not a great recession, but at the top of a cycle. When we hit the devastating ones like in 2008 and 2009, the same homes that were $650,000 were being bought for $250,000. But values do come back sooner than predicted.
The most interesting thing I’ve found in my 40 years is that when things do go in the tank, they do come back. I told sophisticated high-net-worth investors that prices would come back after the recession, and they didn’t believe me. Certainly in Southern California, we take our bumps and bruises, but if you’re a long-term holder, you’ll reap the benefits. Real estate is resilient, and it will always take care of you if you’re patient and keep it.
GlobeSt.com: Why do you feel a broker-oriented platform focused on collaboration and value is the best way to go?
Sperry: To me, if brokers collaborate, they’re doing the best thing for their client, but they don’t always believe it’s the best thing for themselves. Usually, they don’t want to collaborate because they’ll lose half the fees. But if you’re in the business to earn an income, you will collaborate, and it’s and best thing to do for owner. That’s always the philosophy: we work for the client, so a broker collaboration is the best way to get the maximum dollar for the person we represent. Even if we work for the buyer, collaboration is the best thing to do. For example, I recently had a buyer who was interested in buying carwashes. Because we collaborate in this organization, even though there are only 150 of us, I now have seven carwashes to show this client, and we’re helping this buyer find the right carwash for them. Today, that is what we need to do. We want to do the same thing with the same attitude, but with a much better value proposition for the brokers to join us.
