Sotheby’s to expand under new ownership

Monday, September 29th, 2014

Kelly Putter

When you hear the name Sotheby’s don’t be embarrassed if your mind automatically conjures up images of caviar, luxury automobiles and champagne flutes of free-flowing Dom Perignon.

But that would only represent a small and clichéd side of the Sotheby’s story in Canada.  Lifestyles of the rich and famous it is not. Hard work, ingenuity, a high set of standards and a bit of Irish luck is more like it. That’s what the company will continue to ride as it enters its second decade.

Acquired recently by Canadian asset management company Dundee Corporation, Sotheby’s International Realty Canada has heavy-duty expansion plans that include 10 new offices in the next three years and potentially as many as 50 new offices in the next five to seven years.

How the company rolls out that kind of growth will likely be how it’s always performed – by adhering to exacting rules around branding, marketing and a code of conduct for its 400 licensed agents. To hear Sotheby’s president and CEO Ross McCredie put it, the company would never hasten the process for the sake of numbers. Having uncompromising standards, after all, can be a time-consuming undertaking.

“The one thing I’ve learned in this business is not to rush it,” says McCredie, 47. “If we find the right people then we’ll go there but the whole concept of building an office overnight is a big mistake and it doesn’t work. A lot of offices will have 1,600 agents working in one office and that doesn’t fit with our model and our brand.”

McCredie tells the story of a Quebec broker who joined Sotheby’s after making the tough decision to leave her previous firm. The reason? The firm had hired a broker who the week before had been her mechanic.

“I’m not saying you can’t do that but the point was she saw the company kept adding more people and it meant nothing to them as a brokerage owner. The question is, is this truly a profession they will be successful in? When someone joins Sotheby’s we make sure we get the right people and we make sure they understand how difficult this business is. Because I would say two-thirds of the people who go into real estate won’t make it and most of those brands and  brokerages out there know that but they don’t care. We care.”

Currently with 30 offices in B.C., Alberta, Quebec and Ontario, the luxury housing brokerage has clearly blossomed from its start in 2004 when it had one office and 10 sales reps. The Sotheby’s business model, which puts quality ahead of quantity and views mediocrity as the enemy, is what wooed Dundee to the company, says McCredie.

“Prior to working at Sotheby’s I worked at Intrawest as a developer and from my view everything was so fragmented and the industry was all over the map because there was everything from great shops to mediocre shops and mediocre agents,” says McCredie. “And I thought, here is a huge opportunity to pick a powerful brand like Sotheby’s and build a great institution or sales centre for our outstanding clients.”

A self-described control freak, McCredie convinced Sotheby’s of London to provide him with the first master franchise ever awarded outside the U.K. Today, Sotheby’s Canada is the largest international master franchise of all Sotheby’s offices operating in more than 60 countries. The Canadian franchise is in the top five internationally. It has operations in the country’s key metropolitan and resort real estate markets, seven of which are in Ontario.  In 2012, the company was ranked 22nd on Profit Magazine’s annual list of fastest-growing Canadian companies.

But Sotheby’s isn’t resting on its laurels no matter how gilded. Discount brokerages and new unproven entrants in the real estate market will continue to challenge the more traditional players, says McCredie, but he believes there will always be a market for clients wanting a brokerage that offers full service.

“We’re selling service and you get the same level of service regardless of whether you’re selling a $400,000 condo or a $4-million Rosedale mansion,” he says. “And the same code of conduct. That’s why we don’t allow our agents to put their pictures on the backs of buses.  We’re very controlling on how people market themselves, how they conduct themselves.”

Last year, Sotheby’s was forced to fire a successful sales rep whose sales tactics left a little to be desired. “We look at how business is conducted and how it reflects on the brand and if any individual behaves in a certain way that we don’t deem appropriate… If we don’t have the right people, we get them.”

While the Sotheby’s name invokes thoughts of high-end, multi-million-dollar properties, the company’s challenge, says McCredie, is letting people know that it also handles real estate that falls into lower dollar categories.  Still, the Sotheby’s sweet spot is the top 40 per cent of the real estate market.

Part of the company’s marketing machine is exclusive software that helps agents manage the entire real estate portfolio for clients plus its capacity to market real estate nationally and internationally. It’s obvious that McCredie takes pride in the company’s ability to inform clients on the good, the bad and the ugly of the Canadian real estate market.

“The whole point to everything we do is, if you were my sister and you were thinking of buying a condo in downtown Toronto and you were seeking advice, I’d give you good solid advice backed with good data points, whether it’s positive or negative.”

The high-end real estate market – homes valued over $1-million – is booming in Vancouver, Toronto, Calgary and Montreal. That has other sales reps taking notice and rebranding themselves to target the higher-end market.

“They’re reacting very much to our marketing and in many cases they copy a lot of our marketing and our language around what we do but at the end of the day they don’t do what we do in terms of marketing. I  believe there will always be a full-service real estate brokerage model that high-net-worth individuals want and we think we own that space – that is my own quite arrogant view. We think we’re the only ones in Canada.”

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