Real Estate Gets Territorial as Long & Foster Sets Sights on Patterson Schwartz’s Top Spot
As the two real estate moguls battle for the top spot, the drama in the New Castle County market grows. Who will come out on top?
This show boasts a cast of characters more compelling than the deal itself. First, let’s meet the cast.
B. Gary Scott purchased a one-office firm called Tatnall & Wenzing in 1961, then renamed it B. Gary Scott Inc. He was one of Delaware’s best-known real estate professionals. He sold his 22-office chain in 1991 to Prudential Preferred Properties, the Philadelphia-based franchise of California-run Prudential Real Estate (now known as Prudential, Fox & Roach). He died in 2008.
Gary A. Scott is the son of B. Gary Scott. He worked for his father, then with Prudential Preferred, and then he moved to Patterson Schwartz in 1993. Gary left Patterson Schwartz in 1998 to join the Allen Tate Co. in Charlotte, N.C. He came back to Wilmington late last year to set up a Long & Foster operation in New Castle County.
Dick Christopher is the former president of Patterson Schwartz. He began his career in 1961 and retired in June 2012.
R.T. Christopher is the son of Dick Christopher. He began his career at Patterson Schwartz.
The curtain opens.
Twenty years ago, when Gary A. Scott, son of B. Gary Scott (who ran Prudential Preferred) went to work for Patterson Schwartz Associates, the move sent tremors through the New Castle County real estate industry.
As The News Journal put it, “Long-time residents know that was tantamount to Mr. Macy calling from Gimbels.”
Compared with 1993, today’s upheaval in the real estate community is more like an earthquake. Gary A. Scott has returned to Delaware after a 15-year hiatus in the southeast. Only this time, it looks like Mr. Macy is running Nordstrom and he’s hiring the Gimbel family and top salespeople from the best boutiques in town.
Delawareans who have paid attention to real estate over the years can’t help but remember the 1960s and 1970s, when Patterson Schwartz and B. Gary Scott Inc. rose to prominence.
Fiercely competitive in a once-genteel industry in which brokerages fight intensely to secure listings and then work politely with each other to close deals for their clients, Patterson Schwartz and B. Gary Scott dominated the county’s real estate market through the 1980s as smaller agencies withered, shut down or offered themselves up for acquisition by regional or national firms eager for a piece of the county’s real estate pie.
B. Gary Scott would eventually succumb to that trend, selling his 22-office chain in 1991 to Prudential Preferred Properties, the Philadelphia-based franchise of the California-run Prudential Real Estate Affiliates.
Two years later, Dick Christopher, president of Patterson Schwartz, pulled off the biggest recruiting coup of an illustrious career that had started in 1961, the year Patterson Schwartz was founded. He hired Gary A. Scott, the son of his former rival, away from Prudential Preferred to become Patterson Schwartz’s general manager.
Act I: The Deal
Gary Scott, who left Patterson Schwartz in 1998 to join the Allen Tate Co. in Charlotte, N.C., is now president of the Long & Foster real estate behemoth, based in Chantilly, Va. He came back to Wilmington late last year to set up a Long & Foster operation in New Castle County.
His first big move: hiring Dick Christopher’s son, R.T. Christopher, away from Patterson Schwartz to run Long & Foster’s new Greenville office. And for good measure, he brings two more Patterson Schwartz veterans into the fold, Maggie Colman and Cathleen Wilder, who just happen to be Dick Christopher’s daughters. Colman is running Long & Foster’s Pike Creek office.
The announcements came six months after Dick Christopher retired, ending a 51-year career at Patterson Schwartz.
“It’s crazy,” says veteran real estate pro John Laursen, a ReMax Associates affiliate who has his office on Concord Pike. “It goes much deeper than Patterson Schwartz and Long & Foster.”
Indeed, by early February, Scott had recruited 40 agents for Long & Foster, including the top-producing Levy Wilson team, which had been affiliated with Prudential Fox & Roach, the successor to Prudential Preferred Properties. In March, the company announced the addition of “top producers” Buzz Moran and Jeff Derp to its Greenville office.
By mid-year, Scott aims to have seven Long & Foster offices (in Delaware), with 225 to 250 agents staffing them. “That would put us No. 1 in office count, No. 2 in agent count,” he says.
Patterson Schwartz now has eight offices, five in New Castle County, one in Dover, and two just over the state lines in Fairville, Pa., and Elkton, Md. Counting sales teams as a single unit, it has about 320 agents, and counting each licensee, it has about 380, says Joe Pluscht, who succeeded Christopher last summer as the company’s president.
“This is much more than Patterson against Long & Foster,” Laursen says. Long & Foster is “taking people from ReMax, from Prudential, from Keller Williams. They’re taking from all the bigger companies.”
Scott is doing so by offering agents a better split on sales commissions, Laursen says. He quotes a fellow agent who wished to remain anonymous, and was recently recruited by Long & Foster. “They basically bought me,” Laursen’s friend told him. “They made it easy for me to go there.”
Scott wouldn’t talk about the specifics of commission splits—nor would anyone else interviewed for this article—other than to note that the amount of the split can vary, and that top-producing salespeople usually get a larger share.
Both Scott and Pluscht insist that agents consider more than commission splits when deciding to change firms. When a company has a strong brand, strong support services and a foothold in the upper end of the market, they say, it becomes more appealing to agents. That’s why Scott says he’s been successful in recruiting a new team for Long & Foster. But it’s also why Pluscht believes the future remains bright for Patterson Schwartz. There’s no mistaking the strengths of the brands.
Act II: The History
From the late 1970s into the ’80s, Gary Scott recalls, Patterson Schwartz and his father’s firm accounted for about half the New Castle County real estate market, with B. Gary Scott usually lagging Patterson Schwartz by 5 to 7 percentage points. When B. Gary Scott sold to Prudential Preferred and the various national firms entered the county market, Patterson Schwartz strengthened its lead, holding about a 30 percent share, while the regional and national firms battled for second and third place, with figures in the mid to upper teens.
Last year, Pluscht says, Patterson Schwartz accounted for a little more than 25 percent of all residential sales in New Castle County, and about 30 percent of the dollar volume. Patterson Schwartz has been running 12 to 14 percentage points ahead of Prudential Fox & Roach the last couple of years, with ReMax and Keller Williams slightly behind in a battle for third.
While Patterson Schwartz’s strength is indisputably local, Long & Foster’s is regional. It is the largest privately held real estate company in the United States, with more than 11,000 agents in seven Mid-Atlantic states and the District of Columbia. However, with a sales force stretching from New Jersey to North Carolina, there was one significant void to its coverage. That void, Scott says, is New Castle County.
To those who see Long & Foster as a threat, this could be the perfect storm. Gary Scott says, however, “I see it as the stars aligning.”
In mid-2012, as Long & Foster developed its business plan for this year, “we saw an opportunity to do something no other firm has been able to do—to truly cover the state of Delaware,” says Gary Scott.
Dick Christopher’s retirement on June 30, 2012, gave Gary Scott an opportunity he couldn’t pass up. A month later, he called R.T. Christopher, then the assistant sales manager and director of education at Patterson Schwartz’s Greenville office.
“R.T. and I are old friends,” says Gary Scott. “I went to his wedding.” After all, they had worked together for five years, and they share the same birthday—Aug. 26. Gary Scott is five years older.
They met several times, discussing Gary Scott’s vision for Long & Foster in Delaware—launching a statewide operation and rocketing to the top of the market—and R.T. Christopher was sold.
“I didn’t leave Patterson Schwartz as a disgruntled employee,” he says. “It has more to do with my history with Gary, and our personal relationship.”
Dick Christopher admits that his retirement paved the way for R.T. and his sisters to break from Patterson Schwartz. “There’s kind of a freedom to me leaving,” he says. “It kind of frees them up. The market opportunity is theirs now.”
And the opportunities for his children, he adds, may be better at Long & Foster than at Patterson Schwartz. “The people at Patterson Schwartz have been in place for a long time,” says Dick Christopher. “They are extremely competent in what they do. Until they retire, you’re not going to take their place.”
It’s the same situation young Gary Scott had encountered two decades earlier when his father sold to Prudential Preferred. No longer tied to the family business, he could make the move to Patterson Schwartz.
On the surface, Gary Scott’s success in bringing the 18-member Levy Wilson real estate team into the Long & Foster fold looks like a raid on Prudential Fox & Roach. But, like so much in Delaware, personal connections run deep.
Carol Wilson, one of the group’s principals, started her real estate career in the 1980s, working for B. Gary Scott. Judy Levy, her partner, spent 18 years with Patterson Schwartz. In a little over 10 years, they built their team into one of the top 250 in the nation, based on rankings by the Wall Street Journal, Levy says.
“I started with B. Gary Scott 30 years ago, so it’s like coming home, with his son heading the company instead of the father,” Wilson says.
While finances played a role in their decision to move to Long & Foster, Levy says, what’s more important is that the company has the leadership to make it a “hometown team.”
And that, according to the real estate professionals interviewed, is what could make Long & Foster’s challenge to Patterson Schwartz far more powerful than those of Weichert, Keller Williams, Prudential Fox & Roach, ReMax and any of the other regional and national firms that have entered the New Castle County market in the last 25 years.
None of those firms, they said, ever thought of making Delaware their primary market. Long & Foster, of course, is far too large an operation for Delaware to become its primary focus. However, with Gary Scott, a Delaware native, running the company, and members of the Christopher family guiding two key sales offices, there’s no doubt that Long & Foster, which opened offices in Bethany and Rehoboth several years ago, will have its fingers on the pulse of the entire Delaware market.
In describing his goals, Gary Scott minces no words. “Our clear objective is to be the largest real estate firm in the state—in offices, in number of quality agents and in production,” he says. “ Our goal is to be No. 1 in January of 2014.”
Act III: The Opposition Speaks
Not so fast, the competition says.
“They’re a long way from dominance,” says Dick Christopher. “Dominance is a dream when you have 1 percent of the market.”
“Everyone aspires to be No. 1 in the market within the shortest period of time,” says Tucker Robbins, a 25-year real estate veteran who heads the Robbins Team, affiliated with Prudential Fox & Roach. To Robbins, “Long & Foster is just another competitor in the area,” and it’s too soon to tell what its impact might be.
“For Long & Foster as an organization to have any less of a goal, I’d be shocked to hear it,” says Pluscht of Patterson Schwartz. “Any franchise that enters this marketplace will not do so with the thought of failing. Nobody enters the marketplace saying, ‘We’ll give this a shot. If it works, great. If it doesn’t, it doesn’t.’”
Pluscht adds that “there’s room in the market” for Long & Foster, and others as well. “There are many brokerages that fall within 5 to 10 percent of market share,” he says.
As for Patterson Schwartz, he says, “we must have an awareness of whom we’re competing with, and we must respect the foundation that we built 50 years ago. We are not going to waver.”
Laursen believes Gary Scott’s leadership gives Long & Foster a chance to shake up the rankings, but not as much as Gary Scott would like. “This year, they’ll go past Weichert, and probably some others. But they’ve got a long way to go to get past ReMax, Patterson Schwartz and Prudential,” he says.
Time will tell whether Long & Foster can achieve the goals Gary Scott has set, and whether Patterson Schwartz can preserve its primacy.
But Dick Christopher—one solid winner—seems assured. If Patterson Schwartz stays on top, it’s a tribute to the business he built.
If Long & Foster soars, his children and his best hire will deserve a good chunk of the credit.
And, no matter what happens, he will be happily retired.
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