Baird: Chicago’s brokerage battle will be won by the ‘owner-driven’ 

Is there any benefit to being a market's runner up in the residential real estate race? 

Stephen Baird, CEO and president of Baird & Warner, argues that consistency and stability can help brokerages weather competitive storms — but even more key is having leaders who are fully vested in the company's success. 

Staying on course while letting others flame out can be an effective strategy to competing in many instances, he believes.

Rivals have become 'a non-factor'

In a conversation with Real Estate News last month, Baird said he's seen many brokerages rise and fall over the decades, as have his predecessors — the Chicago-area company is notable for being the country's longest-running family-owned brokerage in operation at 170 years old. 

But throughout the years, his company has remained steady, always surviving and typically ranking as one of the top three firms in the region. Nationally, Baird & Warner is the 37th-largest brokerage by sales volume, according to the T3 Real Estate Almanac. 

As for the bigger brokerages that have set up shop in the region? "What ends up happening is those companies get market share and then it just slowly leaks away," Baird said, highlighting previous efforts by RE/MAX, Coldwell Banker and Berkshire Hathaway HomeServices to dominate the Chicago market in past decades. 

"Today, [these brokerages] are a non-factor because they don't have good leadership here and haven't had for a long time."

Shrugging off the Compass threat

Baird thinks the same leadership scenario could end up playing out again, this time with Compass. 

In January, the brokerage giant closed on its acquisition of Chicago-area market leader @properties, giving Compass a dominant position in the region — Baird speculates that the combined brokerage operations may now control 20-30% of the Chicago market. The deal also gives Compass a larger platform for local thought leadership; @properties' co-founders are now echoing Compass' messaging on the benefits of private listings while punching back against an Illinois bill that could outlaw pre-marketing. 

"At @properties Christie's International Real Estate, we developed a 'private-to-prominent' listing strategy that starts with an off-MLS marketing period and builds to a full public offering," @properties Co-founders Mike Golden and Thad Wong wrote in a June 2 op-ed published in the Chicago Tribune. "This approach can result in faster, higher-value sales, often before the home ever hits the MLS, or Zillow. Most importantly, it keeps the seller in control," they said. 

Founders 'sold out'

Following a major merger or acquisition, Baird argues, it's only a matter of time until leadership turns over, the culture changes and the company loses a key component of its original success. The founders are eventually replaced by corporate managers who are likely "to be very capable" but are "not going to be owner-driven" and operate with the same level of commitment. 

"When your name's on the door and you're paying the bills and doing whatever you do to make the company, you're a lot more focused. Those people are the most competitive people," Baird said. 

"And with @properties, that was Mike Golden and Thad Wong. They built a great company, but now they've sold out."

A representative for @properties told Real Estate News via email that the two founders "are actively leading both the brokerage and the @properties and Christie's International Real Estate affiliate networks same as always" as co-CEOs, and "there is no pre-determined date nor any conversations regarding any change in that status."

Though Baird respects the competition, he's taken an opposing position on exclusive listings, and — echoing Windermere's OB Jacobi — believes Compass' argument that its 3-phase marketing strategy is about consumer choice "is BS." And despite Compass' aggressive approach in some markets, Baird doesn't expect to see a war of attrition in Chicago over private exclusives, especially since MRED, the region's MLS, already has its own private listing network and has allowed pre-marketing for several years. 

Focused on service, not market share

But Baird, as the leader of a family brand and long-established independent, said he's going to stay focused on maintaining his position and will wait to see what happens as the recently acquired Chicago market leader settles in with its new corporate leadership and culture. 

"Market share has not ever been a primary driver of how we look at the market — it's never been my interest, unless it's a result," Baird explained. 

"The fact that big corporate companies or corporate entities come into the marketplace — I actually like that, because this business is a local business and the corporations treat everybody in the market the same way and can't deliver service in the way that we can."