Real Estate Cat Fight in Des Moines, Iowa: Why Real Estate Brokerages Guard Turf Like Fort Knox
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This is a story a bit out of our region, up in Des Moines, Iowa, in fact, but it is very interesting as it shows how hard real estate brokerages battle for turf even in corn country. What does that mean for consumers? It means that brokers will spend just about any amount of money they can to retain agents and hold their turf. Brokers get a percentage of agents’ sales, and when a newcomer comes in and starts recruiting, they don’t want newbies, they want seasoned agents who can move the inventory.
That’s when the drama ensues.
In a nutshell, there is a large independent broker in Des Moines named Iowa Realty, a subsidiary of Berkshire Hathaway affiliate HomeServices of America Inc., as in Warren Buffet over there in Nebraska. Iowa rules Des Moines real estate with 65 offices and 1,000 agents, maybe more as I write.
In comes Keller Williams, which affiliated with a small, 37 agent independent firm that then was known as Burnett Realty. It became Keller Williams Greater Des Moines just over a year ago.
Well, Iowa Realty tells the new Keller Williams franchise that it won’t work with them — essentially, that it would not share commissions with Keller Williams agents should the franchisor open an office in the Des Moines market.
Why? Because Iowa felt KW was poaching agents. In a letter sent to the new franchise, Iowa Realty accused Keller Williams of “damaging” and “unwanted” recruiting efforts. These included “attempted clandestine efforts of Keller Williams to recruit an Iowa Realty agent to act as a ‘mole’ who in turn is to recruit other Iowa Realty agents to sign non-disclosure agreements to hear the pitch why they should leave Iowa Realty and become Keller Williams agents.” The whole story is here by NAREE-award winning journalist Andria V. Brambila. over at Inman
OK, now here’s why I got caught up in this seemingly corn-fed, out in the boonies story: how can another broker do that? Steal agents, no, I’m sure that happens every day. No, I mean not share commissions. And snub listings. Has this ever happened in Dallas (email me if you wish to remain anonymous)??? Essentially Iowa Realty said “Iowa Realty will pay Golden Circle Real Estate Group LLC (the KW franchise) … agents upon the sale of an Iowa Realty, resale property listing, 0 (BIG FAT ZERO) percent of the commission posted on the multiple listing service.” This was not the case for certain REO properties (foreclosures) or new home construction, probably because of laws preventing this.
If a KW agent knew that showing a home listed by one of Iowa Realty’s agents would result in zero commission, my guess is he likely would not be showing that one, or at least have a good reason to steer the client elsewhere. Of course, as big as Iowa Realty is, maybe they didn’t care? They were also charged with omitting properties listed by Keller Williams agents from the MLS listings on Iowa Realty’s website.
My question: is that fair to the consumer? (If that’s what really happened.)
The CEO and president of Iowa Realty, a Mike Knapp, said Iowa Realty “has been the leader in Iowa’s real estate industry for more than 60 years. Our success is the result of working diligently in tandem with our agents to deliver the best possible real estate and marketing services to our customers. This is our mission and our focus.”
In 2011, the company closed 7,488 transaction sides worth $1.3 billion in sales, that is an off year. Clearly Iowa Realty rules Des Moines real estate.
But Keller Williams Realty is the second-largest real estate franchisor in the U.S. with 700 offices and nearly 75,000 associates in the U.S. and Canada. There are about 20 Keller Williams offices in the Dallas/Fort Worth area.
So the Keller Williams legal complaint charged the brokerage with “unfair competition, interference with a contractual relationship, and interference with prospective business by “refusing to pay the commission listed on the MLS to Keller Williams Realty’s agents, making disparaging comments about Keller Williams Realty’s business, and omitting properties listed by Keller Williams Realty’s agents from the MLS listings on Iowa Realty’s website.”
Iowa Realty must know what it’s doing: it has successfully brushed off similar lawsuits in the past, including one from Next Generation Realty, a flat-fee real estate company that alleged antitrust violations in 1999.
Anyhoo, now I hear the lawsuit is all over. Yep, Keller Williams abandoned the lawsuit, how do you like that? Said Brian Wentz, team leader and CEO of Keller Williams Greater Des Moines, said the brokerage decided to end the suit to focus on agents, its consumers and growing its market share.
“Really what it boils down to is we’re choosing to go win in the marketplace instead of the courtroom,” he said.
Wentz said Iowa Realty had sought to obtain the names of agents, inside and outside of Iowa Realty, with whom Keller Williams had had confidential conversations regarding transferring to the new brokerage.
In the suit, Keller Williams had claimed losses incurred when agents who had committed to joining the company chose not to after Iowa Realty implemented its commission policy. Attorneys for Iowa Realty requested the names of those agents in order to answer Keller Williams’ interference claims, according to a court filing.
The names never materialized. Said the Keller folks:
“As an organization we chose to honor our commitment to confidentiality … because we felt it wouldn’t be appropriate to put those agents and their families under the microscope that (releasing their names) would have created,” Wentz said. “Not providing the names was the right thing to do.”
Launching with 28 agents just over a year ago, Keller Williams Greater Des Moines recently signed its 100th agent.
15 of those 100 agents were recruited from Iowa Realty.
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Keller Williams agents from across the country have joined together to contribute and pay these agents their fair share of comissions they earned in Iowa.
Keller Williams agents from across the country have joined together to contribute and pay these agents their fair share of comissions they earned in Iowa.
Proud to be part of the KW family!
Proud to be part of the KW family!
In the World there are people who have the limiting belief that the success of others will somehow limit their own success. Keller Williams agents have continued to show and sell the listings of Iowa Realty even though their compensation has been been reduced to $1.00. Integrity is doing the right thing, at all times.
This is so impressive and I understand that KW agents from around the US are also supporting these agents.
In the World there are people who have the limiting belief that the success of others will somehow limit their own success. Keller Williams agents have continued to show and sell the listings of Iowa Realty even though their compensation has been been reduced to $1.00. Integrity is doing the right thing, at all times.
This is so impressive and I understand that KW agents from around the US are also supporting these agents.
And then comes the biggest question of all: If the best possible way to get your home sold is by choosing the Real Estate Company that deals fairly with ALL AGENTS so that ALL AGENTS will work just as hard to SELL YOUR HOME, then why would you ever consider listing with a company that freely admits it does everything possible to discourage other agents from showing your home? Sellers of Greater Des Moines Iowa, you need to really think about who you want to represent quite possibly your largest asset when it comes time to sell? Do you want the OLDEST Real Estate Company with OLD FASHIONED ideas or do you want the LARGEST, FASTEST GROWING, company with over 96,600 agents that all work together to sell your home, and treats all agents fairly and equally?
And then comes the biggest question of all: If the best possible way to get your home sold is by choosing the Real Estate Company that deals fairly with ALL AGENTS so that ALL AGENTS will work just as hard to SELL YOUR HOME, then why would you ever consider listing with a company that freely admits it does everything possible to discourage other agents from showing your home? Sellers of Greater Des Moines Iowa, you need to really think about who you want to represent quite possibly your largest asset when it comes time to sell? Do you want the OLDEST Real Estate Company with OLD FASHIONED ideas or do you want the LARGEST, FASTEST GROWING, company with over 96,600 agents that all work together to sell your home, and treats all agents fairly and equally?
I guess this real estate brokerage is threatened by having competition from THE BEST, most compassionate well trained Realtor's in the business. Can't say I blame them, I would not want to compete with us either, I would want to work with any one of us though. This would inspire me to become a better Brokerage though, not to try to squeeze hard working, dedicated Real Estate professionals out. In our market, we feel we are all in the same world, regardless of which brokerage, our only goal is to best serve our clients. More hard working agents, typically means faster sales, better service and the urgency to be even better!
This story is appalling to this Austin, Texas Realtor!!!
Please keep us updated.
Kind regards,
Christine Pura
I guess this real estate brokerage is threatened by having competition from THE BEST, most compassionate well trained Realtor's in the business. Can't say I blame them, I would not want to compete with us either, I would want to work with any one of us though. This would inspire me to become a better Brokerage though, not to try to squeeze hard working, dedicated Real Estate professionals out. In our market, we feel we are all in the same world, regardless of which brokerage, our only goal is to best serve our clients. More hard working agents, typically means faster sales, better service and the urgency to be even better!
This story is appalling to this Austin, Texas Realtor!!!
Please keep us updated.
Kind regards,
Christine Pura
This article is a just a touch dated so here's a little update;
After KW dropped the lawsuit against Iowa Realty, Iowa in turn has decided to sue KW and some of the KW agents who joined. It is rather pathetic, but I guess you can sue anyone for anything, right?
The last number I heard was that Iowa Realty has withheld nearly $750,000 in earned commissions from KW to date. These are commissions that the consumer actually thinks are being shared. What a shame.
In a 2003 lawsuit between Iowa Realty and Next Generation Realty, Iowa Realty's CEO, Mike Knapp stated “Our programs, innovations and business initiatives are designed to enhance competition in the market. We believe that home buyers and sellers in Central Iowa will benefit when we all go back to competing in the marketplace, rather than in the courtroom.” I guess he's changed his mind. Towards the same law suit he stated "my 5 year old daughter understands the concept of sharing."
To my knowledge, the person who initially wanted to recruit agents for a KW in Des Moines was in no way affiliated with KW. This took place in 2006 or so, long before Kacy Bell of Tulsa, Oklahoma initiated a push for a market center in DSM back in 2011. So essentially Mr. Knapp is punishing our 109 agents and clients based on something they had nothing to do with. Isn't that sweet!!
I commend the model and culture of Keller Williams Realty, and congratulate the KWDSM Market Center leadership and hard work for it's growth from about 23 agents to 109 just 19 months later. That is impressive!!
This article is a just a touch dated so here's a little update;
After KW dropped the lawsuit against Iowa Realty, Iowa in turn has decided to sue KW and some of the KW agents who joined. It is rather pathetic, but I guess you can sue anyone for anything, right?
The last number I heard was that Iowa Realty has withheld nearly $750,000 in earned commissions from KW to date. These are commissions that the consumer actually thinks are being shared. What a shame.
In a 2003 lawsuit between Iowa Realty and Next Generation Realty, Iowa Realty's CEO, Mike Knapp stated “Our programs, innovations and business initiatives are designed to enhance competition in the market. We believe that home buyers and sellers in Central Iowa will benefit when we all go back to competing in the marketplace, rather than in the courtroom.” I guess he's changed his mind. Towards the same law suit he stated "my 5 year old daughter understands the concept of sharing."
To my knowledge, the person who initially wanted to recruit agents for a KW in Des Moines was in no way affiliated with KW. This took place in 2006 or so, long before Kacy Bell of Tulsa, Oklahoma initiated a push for a market center in DSM back in 2011. So essentially Mr. Knapp is punishing our 109 agents and clients based on something they had nothing to do with. Isn't that sweet!!
I commend the model and culture of Keller Williams Realty, and congratulate the KWDSM Market Center leadership and hard work for it's growth from about 23 agents to 109 just 19 months later. That is impressive!!
Through agent contributions, KW has made each of the KW Des Moines agents whole on commissions lost so far (totally over $800k). And KW intends to continue to provide for the agents in Des Moines.
If you would like to help. Visit http://momentorship.com/ and subscribe to a daily inspiration and leadership forum hosted by KW's Co-Owner and Vice Chairman, Mo Anderson.
Through agent contributions, KW has made each of the KW Des Moines agents whole on commissions lost so far (totally over $800k). And KW intends to continue to provide for the agents in Des Moines.
If you would like to help. Visit http://momentorship.com/ and subscribe to a daily inspiration and leadership forum hosted by KW's Co-Owner and Vice Chairman, Mo Anderson.
Seriously? You took an interesting subject and turned your article into a joke. I understand that you are located in a much-larger market than Des Moines–I knew that, even though I live in the ‘out in the boonies’ market you so obviously know nothing about–I’m not in real estate, either, and I STILL knew that! You peppered your article with condescending jabs about ‘corn’ and other stereotypical references about Iowa. I guess you all dress, act and talk like J.R. Ewing, then? I’m going to go out on a limb and guess you stopped your literary education at Composition 2–after you learned how to write a slanted article.
I grew up in corn country!
I was born and raised in Des Moines. Knapp and Iowa Realty have been a firmly entrenched legacy in the Des Moines real estate market, and I can imagine that serious competition is not welcomed. They have been a powerful force for decades, influencing much of the political and economic landscape both publicly and privately, Monopoly? Almost. Connections? Certainly. Power? Definitely.
The Des Moines market is booming and it is obvious that those who previously held all the marbles want to keep them.