Saunders, Real Estate, Hamptons

Real Estate Center

Oct 24, 2008 4:59 PMPublication: The East Hampton Press & The Southampton Press

Taking a risk

Oct 24, 2008 4:59 PM

When Andrew Saunders left Sotheby’s International Realty in Bridgehampton to start his own real estate company early this summer it wasn’t the best of times in Hamptons real estate. The number of sales was plummeting industry-wide and prices were beginning to soften, but the quiet panic now openly present in agents’ conversations was nowhere near where it is now.

This week, as Mr. Saunders prepares to open the doors of an opulent new office on Montauk Highway amidst the greatest financial crisis in generations, it could very well be seen as the worst of times.

According to Suffolk Research Services, Inc, the median price of homes sold in East Hampton plummeted 17.5 percent, to $964,999, between the third quarter of 2007 and the third quarter of 2008, while in Southampton the prices dropped 26.8 percent, to $725,000. The number of sales in the five East End towns also dramatically decreased, from 701 units in the third quarter of 2007 to 468 units in the same quarter this year.

Nevertheless, Mr. Saunders calls himself a “Hamptons bull.”

Last week, workers were putting the finishing touches on the office—a former barn and antiques store known as The Mill at Bridgehampton, as Mr. Saunders explained why the dissatisfaction with the corporate nature of the real estate business here will help him to create a top-shelf niche brand.

Mr. Saunders has thoroughly modernized the building, adding sleek, white, wainscoted work stations for 30 brokers, oak floors, chandeliers, and a massive fireplace surrounded by couches above which is a large flat-screen television. The 3,000-square-foot office also has a kitchen and a separate room for an in-house mini ad agency that has already begun to

create a brand tagged as “Saunders—A Higher Form of Realty.”

The office is set to open November 3. On a recent Friday, workers were planting hydrangeas and checking on the health of newly-planted spruce trees in a garden where clients can sit to discuss their home purchases, next to the newly cedar-sided building. The floors were still covered by a protective layer of paper, the couches were sheathed in plastic, waiting for the painting to end, and Mr. Saunders was in a talkative mood as he sat down to discuss why he thinks he can play for keeps if he starts a business now.

“Clearly it’s a challenging period, but when the market turns we’ll be in a position to exploit the upside,” he said. “We’d clearly like to launch a brand like this in a good period.”

“We’re trying to create a place that’s validating for brokers and comfortable for clients,” he said of the posh office, adding that many real estate agents here don’t bring their clients into cluttered offices because they do not reflect the opulence of the properties that they are showing.

Mr. Saunders said that he has already signed 14 brokers, whom he says are among the top producers and most collegial real estate agents in the area, though he couldn’t name them because they are currently still working for other firms and plan to join Saunders Associates once they’ve closed deals they’re working on.

“Many brokers are open-minded about moving,” he said. “There’s been a real reaction against the corporatization of this business. Splits and services have been reduced. They’re run like cost centers, not like profit centers.”

Mr. Saunders said that such a mind-set is not an unnatural thing for a large company such as Reology, which is owned by a major hedge fund, The Apollo Group. Reology is the parent company of many of the major real estate firms on the East End, including Sotheby’s International Realty and the Corcoran Group, and is the franchisor of Century 21. At the time The Apollo Group bought Reology, that company was involved with one in four of the real estate transactions in the United States. Reology has since been hit hard by the economic crisis, and lost $160 million in first six months of 2008, and Mr. Saunders speculated that The Apollo Group’s exposure to the financial crisis can only weaken that company more when it comes to providing services for East End offices.

“This is why change is afoot,” he said. “The ownership structure is not what it used to be. It’s owned by financial operators.”

Mr. Saunders said that his business model is a unique one that he developed after realizing that he and his fellow brokers at Sotheby’s were the engine driving the profit at that company.

Though he said working at Sotheby’s was “very validating” and he made a lot of friends there, he said that support for brokers “wasn’t there because it wasn’t built into the system.”

“My nature is not to pull every penny out of it. I want to provide an environment for serious, intelligent, collegial people to work,” he said. “It’s a very competitive business and from time to time they are pitted against each other. This is not a good training ground for new brokers.”

1  |  2  >>  

You've read 1 of 7 free articles this month.

Already a subscriber? Sign in

Andrew is a terrific broker and businessman. We wish him the best of luck in his new venture!
By michael daly (12), Sag Harbor on Oct 28, 08 11:09 PM