Promotional packages on the two-story townhouse lay atop a Queen Anne hall table near the door. A stack of Long & Foster’s “Homebuyers Guide” brochures rested inches away. Every pillow had been fluffed. Every picture frame straightened. Now it was just a matter of welcoming visitors.
They began arriving within minutes of Webber opening the door. About 16 couples toured the three-bedroom townhouse, at 511 N. Henry St., by the end of that afternoon. That’s on top of the 19 couples who had visited the $599,000 home since its debut a week earlier.
One Arlington couple dropped by though the asking price was nearly $100,000 over their budget. Webber said they were having a hard time finding anything in their neighborhood even close to what they were willing to spend.
“They were quickly learning what market conditions were actually like,” Webber said of the couple. “Inventory is tight in Northern Virginia, and buyers are eager to take advantage of low interest rates before they go away.”
That market dynamic, Webber said, has meant multiple offers, bidding wars and a healthy clip of business. As a result, he has logged two closings a month in 2012, nearly double what he recorded a year earlier.
And he’s not alone.
Agents at Long & Foster are enjoying a resurgence in business that is boosting the bottom line for the homegrown firm. Sales at the Chantilly company topped $6 billion through March, up 14 percent from the same period a year ago. That figure represents 18,000 homes sold from Pennsylvania to North Carolina.
Behind the numbers, however, lies a larger story of how a local institution weathered the housing crisis and positioned itself for the recovery. Industry watchers agree that Long & Foster is not a passive recipient of the market’s good fortune, but has made necessary changes — including shutting down less-profitable business lines and offices, reducing its sales staff and relying more on technology — to remain competitive.
At the end of 2011, Long & Foster closed the largest percentage of home sales in the metropolitan Washington and Northern Virginia markets, garnering 18 percent market share in both areas, according to local listing service Metropolitan Regional Information Systems, or MRIS. Weichert Realtors, Coldwell Banker and ReMax trailed the firm with less than half that percentage of the market.
“Long & Foster weathered the storm well because they are fiscally healthy, technically sound and a very capable organization from a human resources perspective,” said Dave Charron, chief executive of MRIS. Coming out of the downturn, “they’ve really focused on making sure they are getting the best returns, curtailing where appropriate.”
P. Wesley Foster Jr. can recall some dismal housing markets in the 44 years since he and Henry A. Long opened their first real estate office. But few, if any, could rival the impact the 2007 crash had on the firm.
At the time, Long & Foster was completing its corporate headquarters in Chantilly, an $86 million development that got underway before the housing bubble burst. By the time executives settled into the new digs in 2008, sales were falling at dizzying speeds.
“We had a hell of a year in 2005, and then the market started collapsing,” Foster said, noting that sales at the company plummeted some 55 percent from 2005 to 2010.
To save money, the largest privately owned real estate firm exited the commercial insurance and third-party relocation businesses. It also consolidated 20 percent of its offices, leaving about 170 locations in place. Five offices in rural Pennsylvania, in one instance, were sold to Prudential Homesale Services Group in 2010.
“Cutting to get to a point where we could make money at 55 percent less business was a trial; it really hurt,” Foster said.
Between the consolidations and high attrition amid sluggish sales, the number of agents dwindled from 16,000 in 2007 to 11,000 today.
Charron pointed out that brokerage firms generally have leaner operations in the wake of the housing crash. As the volume of listings dissipated, so did the need for multiple brokers to handle demand. Most agencies, Charron estimates, have cut 20 percent to 25 percent of their overhead — everything from offices to management.
The shake out at Long & Foster wasn’t easy to stomach, but president and chief operating officer Jeffrey Detwiler said the company benefitted in the end.
“With the recalibration of the market, you recognize that there were some real estate markets that couldn’t support traditional brick-and-mortar locations,” he said. As for the reduction in agents, “committed professionals, not just a Realtor with a license, remain active in the market.”
Negotiating real estate deals, he added, became more challenging as foreclosures and short sales began to be a larger portion of listings. Traditional buyers were leery of the complicated contracts and drawn out closings, making it harder to sell those homes.
Adapting to change
Indeed, Long & Foster in 2009 tapped Detwiler, a veteran of the mortgage industry, to help the firm navigate the marketplace. With his time at Countrywide Home Loans and investment bank Credit Suisse, analysts say, the executive provided agents a well-rounded perspective of the troubled real estate market.
“Jeff brought a good combination of marketing and financial sense to the organization,” said Charron of MRIS. “There was such a substantial redirect of the focus of Long & Foster, and other large organizations, that Mr. Foster was smart to bring in a really bright bulb like Jeff.”
Under Detwiler’s guidance, Long & Foster ramped up seminars and encouraged seasoned brokers to counsel those with less experience in distressed sales. The effort, he said, kept agents informed as short sales grew to nearly a quarter of home sales two years ago from less than 1 percent in 2005.
“Long & Foster really monitors trends and anticipates what they believe the market is going to do,” said Christine Todd, chief executive of Northern Virginia Association of Realtors. “Because they’ve been ahead of the curve, as opposed to trying to play catch up, they’ve been able to adapt to this changing market.”
‘Strong technical organization’
One area in which Long & Foster has prevailed in staying ahead of the curve is using technology to better serve customers, Charron said. The company, he said, “had a real strong technical organization to begin with. While they had to shift gears because of the challenging economy, they had the resources to continue to do a good job.”
According to Detwiler, Long & Foster invests $12 million to $15 million a year in technology to, among other things, streamline back-end operations, enhance the capabilities of its listings database and develop mobile applications.
Technology has revolutionized the real estate industry, but the higher-ups at Long & Foster place their faith in the good old-fashioned legwork of agents.
At an annual luncheon celebrating the top agents in Northern Virginia, regional manager Boomer Foster reminded attendees that their fortitude is what kept the firm afloat in the lean years.
“You guys persevered through all of the difficulties of the economy,” said the nephew of the founder. “It’s not lost on us that the reason why we are doing so well is because of the people in this room. You are the backbone of company, and we are forever grateful.”
Northern Virginia, with its stable economic growth, accounted for roughly 30 percent of total sales at Long & Foster in 2011, a watermark that will likely be surpassed this year.
In the first quarter, Long & Foster agents in the area closed $70 million more in transactions compared with the prior year. Agents have also put 433 more homes under contract in Northern Virginia in the past 90 days.
Demand for homes in Arlington County, Fairfax and Alexandria is outpacing supply, placing upward pressure on pricing.
“We only have about 1.4 months worth of inventory in that $400,000 to $600,000 price range in central Fairfax — and that’s the sweet spot,” observed Long & Foster agent Debbie Dogrul, whose 18-member brokerage team closed 407 homes last year. “When you have less than two months’ supply of inventory, you’re in a sellers market.”
Listings across Long & Foster’s network were down 14 percent to 20,909 in February compared with a year earlier.
But company agent Webber remains confident about the earning potential in the market. Young couples, he said, seem more motivated to put in offers these days than in years past, and they are keeping him busy.