But finding a buyer for a church can be very difficult. The combination of zoning restrictions, neighborhood approvals, and functional space requirements often precludes use by other organizations or businesses in the space. So the only possible buyer is a smaller church looking to expand. And then some of the parishioners may be very picky on who goes into the space. I remember going to the Limelight in New York City years ago, a night club in a converted church, and I am sure that the Diocese did not plan on that use for an old church.

If you are offered the opportunity to sell a church, move slowly and carefully into the relationship. Find out what the stumbling blocks on potential buyers are, if the parish is willing to sell so the property can be demolished and rebuilt, and what restrictions they will put on potential buyers. It will be a hard sell to begin with and if the churches leadership is not being accommodating and logical, it can be a very difficult sale for you.

Leigh Nurre faces one of the toughest transactions in real estate: selling a property designed for one purpose and of interest to only a sliver of the market.

Nurre is among hundreds of U.S. real estate agents and brokers marketing older churches as traditional mainline congregations decline, people move to the suburbs and churches increasingly become all-week lifestyle centers that need more room. Nurre and others make telephone calls to new, renting congregations that may or may not have money to buy. They advertise on commercial real estate sites under “special purpose” designations. And they get exploratory calls from developers and others floating ideas for other uses, from funeral homes to private schools.

Nothing about the process is easy. Most older churches are designed solely for services and can require rezoning for alternate uses. Residential areas accustomed to a low-impact religious neighbor can be fussy about busier uses. Seller congregations can even balk at buyer proposals they find offensive. Churches also are expensive and fledgling congregations often lack the necessary large down payments on sites often listed for more than $1 million. via sacbee.com.

While some sections of the city and surrounding areas have lost value, there are pockets that saw over 20 percent increases last year. Is this surprising, maybe is you are thinking the sky is falling. However,  those that watch markets work know that buying and selling real estate know that moving over a couple of streets can change the characteristics of the marketplace.

So buying a home in a part of town that has appreciated greatly may not make a whole lot of financial sense right now, but look around and you may find a part of town that is gentrifying or is transforming and tremendous profits may be out there for you.

Areas with declines were generally expensive, with homes costing $500,000 on average, while many of the fast-appreciating communities were more affordable, according to a Sun analysis of home sales data that offers the first detailed look at the post-housing-boom landscape. Half of the region’s 10 most costly ZIP codes in 2005 saw a drop in average price last year, from Monkton in Baltimore County to Davidsonville in Anne Arundel.

Local real estate agents say they believe the market is on an upswing after months of sluggishness. January seemed to bear that out, with sales rising for the first time in more than a year just before the all-important spring season. But even last year, average prices increased at least 10 percent in a third of Baltimore’s suburban communities — and in a remarkable three-quarters of city neighborhoods.

Prices in half of the city’s neighborhoods, in fact, jumped at least 20 percent.

“That just confirms what I see and what I hear,” said Joseph T. “Jody” Landers III, executive vice president of the Greater Baltimore Board of Realtors. “We see pockets where there have been some slight declines … but you continue to see some strong gains. … You also have to put that into some historic context: For two decades, there was no price appreciation in many of these neighborhoods.” via baltimoresun.com

Just over 10 years after Cendant’s predecessor began a buying spree that included real estate brands Century 21, ERA, PHH and Coldwell Banker, the company’s impact on the industry is undeniable. With about 25 percent of all Realtors in the nation affiliated with the corporation, the story of the largest real estate brokerage and franchise company in the nation is still unfolding.

This story is packed with elements of mystery and intrigue, twists and turns, massive-scale acquisitions and consolidations, deception and scandal, courtroom drama, financial fallout and recovery, a restructuring of management, a rapid rise to power and prominence, and a carefully calculated breakup and re-branding. The cast is thick with power brokers and industry luminaries.

Cendant Corp. grew its real estate operations with hurricane force, building upon the buying spree of predecessor HFS, a hotel franchisor.

Tracing back 11 years, Cendant’s real estate roots were planted with the acquisition of Century 21 by predecessor HFS in 1995. From 1995-97 HFS acquired Century 21, ERA, PHH and Coldwell Banker, and Cendant was formed through a merger of HFS Inc. and CUC International Inc., a direct marketing and member services company, in December 1997.

Since inception, the company has been a cash cow for real estate company owners seeking an exit strategy, and has driven an unprecedented surge in industry consolidation.

Not even a decade old, the company has amassed a collection of reputable brands, with such company-owned and franchise affiliates as Century 21, Coldwell Banker, ERA and Sotheby’s, and about 313,500 sales associates are affiliated with Cendant’s major company-owned and franchise real estate brands. There are about 15,000 residential and commercial real estate offices affiliated with Cendant’s Real Estate Franchise Group.

NRT Inc., a Cendant subsidiary that oversees company-owned real estate offices, acquired 31 companies last year and has acquired about 320 companies since its creation. NRT has about 1,000 offices and 64,000 sales associates and operates in about 35 major metropolitan markets across the country.

Revenue for Cendant’s real estate services division in fourth-quarter 2005 reached $1.62 billion, which represents about 38 percent of the company’s total revenue for that quarter. In addition to its real estate business, the company also has operations in the hospitality services, timeshare resorts, vehicle rental and travel distribution services industries.

Focus on business and consolidation

Larry Knapp, president of Saratoga, Calif.-based Alain Pinel Realtors and a former NRT executive, said Cendant has brought a more intense business focus to the real estate brokerage industry. “The creation of what is today known as Cendant has forced the rest of the industry to operate at a higher level, which it has done. I think that the real estate industry before this (Cendant) consolidation play came along was run less like a business and more by the seat of somebody’s pants.”

Knapp, who began his real estate career in 1969 as a real estate agent in Sacramento, Calif., served as president for Coldwell Banker Northern California from 1985-97 and later served as senior vice president for NRT Inc.’s Western Region. NRT was initially established in 1996 as a real estate trust and grew through acquisitions to become a dominant real estate brokerage company. NRT Inc. began as a joint venture with Apollo Management, an investment group, and in 2002 Cendant bought out Apollo for about $230 million worth of stock and the assumption of about $300 million in net debt.

Cendant predecessor HFS was known for its franchising success, so real estate franchise operations were a good fit, but company-owned real estate operations posed a new challenge, Knapp said. It would have been easy for Cendant to simply be the “gorilla franchising business” based on the brands it had acquired from predecessor HFS, Knapp noted, but the company was not content with a singular role as real estate franchisor.

“The impact of Cendant and HFS on the industry was more from the consolidation play on the company-owned side than it was on the franchise side. That’s where they left their core business of franchising. There was a learning curve,” he said. “The company-owned operations created a dilemma for them. They were in competition with their franchisees. Early on (Cendant was) very aggressive in selling franchises. They started selling franchises in the middle of company-owned operations. There was an adjustment period where the franchise side of the business and the company-owned side of the business had to kind of agree on the rules and regulations of expansion. The message got over to the franchise side: sell outside the perimeters of company-owned (offices),” Knapp said.

Cendant Chairman and CEO Henry Silverman had told real estate managers that he believed the real estate industry was ripe for consolidation on a large scale. That movement had already begun prior to the arrival of HFS and Cendant to the real estate scene – companies like Coldwell Banker and Merrill Lynch had been active in consolidation efforts in years prior.

Cendant had an acquisition strategy that focused on gaining market share within a particular market area, he said. “Most of the consolidation they did was in the markets where they already had a presence … merging them into existing operations, closing unneeded offices, reducing redundant costs and in some cases eliminating duplicate advertising costs. While some of these acquisitions put them into new markets, most of them were consolidations right in markets where there already were (existing company-owned offices),” he said.

The company-owned operations became a good channel to purchase the operations of Cendant franchise businesses that were for sale, Knapp said.

Though Cendant has established a reputation as a major consolidator, Knapp said the company did not make a name for itself in the early years as a trailblazer in technology or business innovation, for example.

It was a challenge, he said, to combine all of the legacy technology systems for all of the companies that it had acquired. “It would’ve taken a rocket scientists to get it all together. I think it took them a long time back in New Jersey to realize how important the technology play was going to be and do it on a large scale. They worked hard to present a good technology system like all the rest of us.” It was also a tall order for NRT to streamline the bits and pieces of many real estate-related services, such as mortgage and settlement services, from its various acquisitions and turn that into a functional business, he said.

Cendant has at times been a trendsetter in the adoption of new technologies, and took a big technological step in November 2004 when it announced the launch of LeadRouter, a lead management system that quickly feeds leads to real estate agents via telephone or e-mail from a variety of sources.

The company last year launched a tool called SearchRouter, which allows consumers to navigate from the main Web sites of its national brands to a large inventory of property listings in a local market area.

Also, NRT Inc. this year extended a market
ing agreement for enhanced property advertisements at the popular home-search site Realtor.com. NRT first announced a marketing agreement with Realtor.com’s parent company, Homestore, in Feb. 22 for the enhanced display of all NRT-affiliated listings at the Web site. The company’s actions speak volumes about an increasing shift in real estate advertising to online venues.

Cendant announced a plan to spinoff its real estate segment in June this year as a separate company called Realogy. As proposed, the new company will have its stock listed on the New York Stock Exchange under the symbol “H.” Cendant also plans to launch separate companies from three other operating segments.

Bob Moles, chairman of Cupertino, Calif.-based Intero Real Estate and former president and CEO for Cendant’s Real Estate Franchise Group, was president of Contempo Realty when that company was bought by NRT in 1997.

When HFS acquired Century 21 and ERA, the industry was still trying to figure out whether the company would become a major figure in the industry, Moles said. The acquisition of Coldwell Banker and then PHH, which included mortgage services and relocation services, made it clear that Cendant was sincere.

“The acquisition of Century 21 sent a signal, and ERA sent a signal. People (said), ‘Wow, what is this?’ The acquisition of Coldwell Banker was big. After Coldwell Banker and after PHH, people thought this was a very serious company,” he said.

After Cendant formed, the company set its sights on acquiring regional independent brokerage companies, and it was not uncommon for the company to rattle off several new acquisition deals in a single week.

Among the major deals: Jon Douglas Co. in Southern California, Arvida Realty Services in Florida, Burnet Financial Group in Minnesota and Chicago, The DeWolfe Cos. in New England, and Fred Sands Realtors in Southern California. All of these companies had an annual sales volume in the billions. Other major acquisitions included Hunneman Real Estate Corp. in Boston, Gundaker Realtors in St. Louis, Cornish & Carey Residential Real Estate in Northern California, Coldwell Banker Stevens in Washington, D.C., and Baltimore, O’Conor, Piper & Flynn in the Northeast, Contempo Realty in Northern California, Northside Realty in Atlanta, and The Corcoran Group in New York.

Cendant definitely escalated industry consolidations, said Moles, who was named president and CEO of Century 21 Real Estate Corp. in 1997 and later oversaw franchise operations for all of Cendant’s real estate brands until he returned to California in 2004 to join Intero.

“I wouldn’t have traded the experience,” he said of his time at Cendant. “Those first three or four years were pretty exciting years and it was really unique to be a part of that. This is a very entrepreneurial business. There were times when people were having to move very fast.” When he arrived at the company there were about 1,700 employees and when he left there were about 92,000, he said.

Cendant brought lots of capital into play in the real estate industry, which had never been done before in such a big way. And the timing was right for HFS and Cendant to make a move, he said. “Clearly in the seven years I was out there we really had the wind at our backs in terms of property appreciation and (sales).”

Knapp agreed, “The timing of the creation of NRT was pretty perfect. From 1997 until now has been probably the best nine years in the history of real estate. The market is not likely to continue to grow.”

Cendant officials are well aware of changing sales market conditions this year. In February, the company announced it would consolidate local offices to quickly cut about $50 million in costs.

The real estate market turned rapidly in December 2005 in some markets, and the company saw a cancellation rate on sales transactions spike about 30 percent that month, perhaps because speculators were fleeing. Also, the volume of real estate transactions at NRT companies dropped about 19 percent in New England, California and Florida in fourth-quarter 2005, the company reported, while transaction volume in other market areas increased about 4 percent during the quarter.

Small and mid-sized companies face an increasingly competitive real estate environment, Moles said, and there are challenges for large national companies, too. Massive size can be a ”two-edge sword,” he said. “Sometimes when you’re real big the ability to move quickly … is hampered. I think (size) can be both a blessing and a curse.” But Cendant has effectively used its size as an asset in consolidating the industry.

Also, it can be difficult to manage real estate operations within a publicly traded company, Moles said, as “you’ve got to manage to shareholder expectations – sometimes it’s difficult to take a long-term perspective.”

With the real estate segment as a separate company, the national scope of Cendant’s real estate operations and its franchise royalties should provide some balance to market fluctuations in specific geographic areas, Moles said. “Its revenue streams are diversified across major metro areas.”

Early days

Before today’s successes, the corporate marriage of HFS and CUC proved disastrous in its early stages. Cendant in 1998 restated its earnings for 1995-97, revealing that “a ‘widespread and systemic’ fraud had occurred at CUC and the merged company that included improperly recognizing fictitious revenues, falsely coding services sold to customers and fraudulently manipulating merger reserves,” according to court documents. A report adopted by Cendant’s Board of Directors found that CUC’s operating income was inflated by about $500 million during a period from May 1995 to August 1998, the court documents reveal.

In financial filings to the U.S. Securities and Exchange Commission in 1998, Cendant reported that earnings had been overstated by about $300 million, or 24 percent, during that three-year period, and earnings per share were overstated by about 130 percent.

Cendant officials did not offer any comment for this article due to “vacation schedules,” Kevin Doell, a spokesperson for Cendant’s Real Estate Services Division, said.

Cendant’s stock price plummeted with the news of the accounting fraud. In one day following the company’s initial disclosure in April 1998 about the problems, Cendant’s stock dropped 47 percent per share and its market capitalization sunk $14.2 billion. With later announcements in July and August the company’s market capitalization dropped further – for a total of $20.5 billion, or 67 percent, court documents state.

Several company officials made millions by selling shares of stock before the radical drop in stock price. Chairman and CEO Silverman in February 1998 sold 1.7 million shares of Cendant common stock – his entire holding in the company – and received $61.4 million, according to court documents.

Heads rolled. Walter A. Forbes, the former CUC chairman, CEO and president who served as chairman of Cendant’s board of Directors following the merger, was forced to resign in July 1998. Forbes sold about $38.5 million worth of CUC and Cendant common stock, court documents state. E. Kirk Shelton, vice chairman for Cendant and former CUC president, was terminated in August 1998. Shelton earned about $23 million in Cendant and CUC stock proceeds. A group of other former CUC officials also resigned as the scandal unfolded.

Complying with the dictum, “Follow the money” (or at least the consumers), real estate advertising now comprises half of the local advertising on search engines, according to a report released this month.

Paid search ads for individual local real estate agents account for 49.6 percent of listings on keyword searches for local business segments across 10 different cities, up from 17.5 percent of local search ads 18 months ago, according to Borrell Associates’ “2006 Local Search Advertising” report.

Local advertisers now occupy a third of sponsored links in search-engine results, according to the report, and many on city-related keywords.

The Borrell report predicts that paid search advertising by local advertisers will more than double this year to $987 million, and nearly double again in 2007.

Local agents’ search ads jumped from 17.5 percent of all local search ads 18 months ago, to 23.9 percent a year later, the report said.

Search ads for the keyword “mortgage” comprised 25.1 percent of listings on keyword searches, the report said. According to the report, the highest bids in terms of amount paid per click were for DUI attorneys, mortgages and real estate.

According to the March 2005 report, local agents occupy almost half of all search advertisements, and not just in big cities, either. “In Des Moines, half of the advertisements on the Google and Yahoo results pages for ‘Des Moines real estate’ are being placed by local agents bidding as much as $3 per click,” the report said.

Matt Shaw, an agent with Coldwell Banker Mid-America Group in Des Moines, told researchers he estimates as much as half of his total advertising budget is spent on search-engine advertising, and an additional 20 percent on other forms of online marketing. “It’s paid off,” Shaw said, according to the study.

The report tracked more than 2,000 online search ads on Yahoo! and Google and also compiled the predictions of 400 so-called ad experts. One of the reports’ more interesting predictions: “More than three-fourths of the Borrell panel agrees that within the next five years, yellow pages books will evolve into directories of local Web site addresses. Eighty-five percent of respondents think this will happen within five years.”