Looking past NAR drama to the heart of Hanna’s success 

With $34.5 billion in sales volume last year, Pittsburgh-based Howard Hanna Real Estate is the largest independently owned, privately held brokerage in the country. And when it comes to key strategic decisions that impact the business and its 12,000 agents, the buck stops with Howard W. "Hoby" Hanna IV — not with shareholders and board members. 

So what is most important to the CEO and third-generation leader of his family's nearly seven-decade old brokerage? Hanna sees fiscal responsibility, community-oriented values and a healthy skepticism of NAR and organized real estate as key elements of his leadership philosophy. He discussed these themes and more in a recent call with Real Estate News. 

This interview has been edited for length and clarity.

What are some of the advantages and challenges of being a privately owned business without the influence or backing of private equity or public shareholders?

Being privately held means you don't have to necessarily answer to investors or to outside money where everything is based on a quarterly goal, but you still have people to answer to — you have your partners, employees and agents — so you have to make good decisions.

Your agents choose to be with an independent company because they feel that there's a sense of belonging and that you can compete. I've seen privately held companies that haven't been run with fiscal responsibility and have ended up closing their doors or really hurting the employees and the agents that work for them. 

How does that pressure for fiscal responsibility impact your decision making?

I look at some of the publicly held companies where some of the entrepreneurs or original owners who started them are still large shareholders, so they may feel more responsibility than other places where the leadership is hired guns. 

At those places, do the leaders really understand the real estate business, or are they C-suite executives that go from one company to another in a totally different business where it's more about running a publicly traded company than running a real estate brokerage?

As a privately held company, you're the one borrowing, you're the one writing a check and it's your name on the door. 

At the core, you have to be fiscally sound. You've got to be sharper with your decisions and committed to your decisions, because, in my opinion, you don't have something to fall back on if you make a mistake.

How do consumer satisfaction and agent loyalty play into regional and family brands?

Real estate is a very local business, so as we've grown, we have to make sure part of our core is that we are giving back and participating in that community. And our leaders have to be at that level of community involvement and support and philanthropy, and that we're developing leaders who aren't just there to run the business.

So, we can be in 13 states, but we try to operate in a manner where people see us as local. We want the people in Columbus to think we're the local Columbus broker. We want the people in Westchester, New York, to think we're the Westchester, New York, company and so on. 

We want to be so embedded in the community that a lot of our decisions — in terms of marketing, community involvement and support — are done in that sense. I think that's important whether you're publicly traded or independent; whether you're in one market or you're in multiple markets.

You've been outspoken about NAR's settlement in the commissions cases. Do you believe independent brokerages were particularly harmed by that deal?

Yes. Without a doubt. 

When you go down to the state and local level of board-paying dues, if you look at the brokerage firms that were not protected in their settlement, NAR claimed that there was nothing they could do. They could have paused in the settlement hearings and said to those brokers — the above $2 billion group — hey, can we get together or would you be willing to participate? Instead, they said, "We can't protect you."

Then they put out a formula that they negotiated with the plaintiff's attorney to figure out how much each one of these companies should have to pay. And when you looked at who those companies were — and you looked at where the settlements already were — I mean, great job for Anywhere. Their larger franchises recovered under that whole settlement situation. 

If you were a non-franchise — if you were independent, privately held — that's the majority of who got caught up in that. And those are the people who are the salt of the earth real estate brokers who are putting in their own money.

How has this situation impacted your view of NAR and its leadership?

I almost feel like sometimes they look at us — those of us that are $2 billion and above — as competitors because we have our own training, we support candidates politically for housing causes, we have our websites, we have our lead gen, and we have our own conferences and conventions. So do they look at us as brokers or as competitors? 

I just really felt that there could have been a way to get the people in the room and say, "You know, you might have to fight this out yourself." Would they have been able to do something differently to protect everybody in the industry? 

And yes, there's been changes of leadership at NAR, and I will tell you that we've had some good dialogue and conversation about what the future of NAR could look like. The new leadership is, I think, trying to listen, and it's a long history of trying to unwind some things. 

But I just think organized real estate should stay out of some of the business aspects, like, stay out of the MLS, stay out of setting rules of how we conduct business.