When Pat Riley arrived at Allen Tate Cos. 27 years ago, the Charlotte-based real-estate agency had three offices and about 150 brokers. Last week, when it merged with the nation’s third-biggest brokerage, Allen Tate had 47 offices and about 2,100 brokers.
While a leader in the Carolinas based on transaction volume, Tate can keep the growth rolling best by tying up with Pittsburgh-based Howard Hanna Real Estate Services, which has about 9,000 agents and is the leading home seller in New York, Ohio and Pennsylvania, Riley says.
Riley says the venture is not a takeover. Hanna’s owners will be the majority shareholder of a new company, with Riley and the Tate family also holding equity, real-estate news service Inman reported. No outside capital was raised, says Riley, who gains responsibility to expand the combined company into other Southern states.
Tate had 22,300 transaction sides — representing either seller, buyer or both — in 2017, ranking 10th nationally, Inman reported. Howard Hanna had 90,500.
“Big isn’t always better and it never will be, but size matters when raising capital and building awareness,” Riley says. “What it really comes down to is service by full-time Realtors.”
Growth prospects in the Carolinas made the deal attractive, says Hanna Chairman Howard Hanna III. Both companies started in 1957. Allen Tate, founder of the Charlotte firm, died in 2015. The Hannas remain in control of their company, with 11 descendants working for the company, including the presidents of brokerage, mortgage and insurance divisions.
“We do well in established markets like upstate New York, Buffalo and Pittsburgh, but they aren’t growth markets like the Carolinas,” Hanna says.
In addition to its brokerage, Hanna’s mortgage company lent about $1.8 billion last year, compared with about $300 million at Allen Tate. The Pittsburgh firm also has a large title insurance business.
Tate preferred partnering with another family-owned company rather than selling to a private-equity company, as some other big real-estate companies have done in recent years, Riley says.
Concerning current market conditions, Riley says the sellers’ market that has dominated residential real estate in many Carolinas metro areas in recent years has shifted to a more balanced situation in the last two months. “The rapid appreciation of 5% to 7% annually that we’ve seen in many markets isn’t sustainable,” he says, noting that 2% to 3% gains are more likely in the next few years. “I’ve been surprised how quickly the market is adjusting.”