New order provides appealing alternative

When Kathy Braddock and I decided to create braddock + purcell, we entertained the thought that we were "either really smart or really stupid." Well, after a year of operations under our belt, we know we're moving in the right direction.

After a combined 50 years in the business, we came to the conclusion that the consumer might be interested in an alternative to the current residential real estate process. The selection of a broker to navigate the single largest financial transaction generally made in one's lifetime seemed fairly random. We don't typically select the best attorney, a competent accountant or a top commercial real estate broker, for that matter, from an ad in The New York Times. Why should we select our residential professional that way?.

while running Douglas Elliman we realized that, as in any profession, not everyone is created equal. Brokers don't all come with the same skill sets or the same areas of expertise ... and, that's not a bad thing. But how does the consumer get to the right broker for them? The one that is professional, customer-service oriented, knows the market the buyer or seller is in, comprehends market conditions and matters of finance ... the one that truly brings knowledge to the transaction and doesn't just open a door? The answer is they start with us. We touch the consumer before they connect with a broker. We help him decide what to do, where to do it and then with whom to work. To do this, we created a "best of the best" network of real estate professionals to serve our clients. We are able to provide unbiased and impartial direction because we have no vested interest in any one firm, agent or service provider, nor do we have any vested interest in any one location or property over another.

The individual consumer, as well as corporations, divorce attorneys and financial advisors, have embraced our business concept. They call it a "no brainer." They understand the tremendous added value provided at no cost to the client. (We receive an industry-standard referral fee from the broker to whom the business is referred.) In our first year of business we have handled transactions with a total sales volume of $100 million. We have formed relationships with Time Inc., Boston Consulting Group, Paul Weiss and CitiGroup's Women and Company, among others. Our transaction range is from $219,000 to $20.5 million, with our average transaction at $1.8 million. Our prime area of expertise is the New York tri-state area, but we have helped our clients in places like Santa Barbara, Miami and Washington, D.C.

Our financial model is exciting, as well. Residential real estate firms don't have the strongest margins. In the best of circumstances, a brokerage might achieve EBITDA of 10%, but usually it's around the 2% to 5% range. Firms have had to offer ancillary services (mortgages, title insurance, etc.) to augment earnings. We have the unique ability to capture margins of 80%! And we can work with the best brokers in town regardless of which firm they're with.

The residential real estate business model hasn't changed much over the past 50 years and the consumers have told us that they are looking for a different and better experience.

PAUL PURCELL

PARTNER

BRADDOCK + PURCELL

COPYRIGHT 2004 Hagedorn Publication
COPYRIGHT 2004 Gale Group