Swamped with unsold homes and dropping profits, Century 21
Premier is closing its Gilroy and Morgan Hill offices today,
cutting loose more than 90 real estate agents.
Gilroy – Swamped with unsold homes and dropping profits, Century 21 Premier is closing its Gilroy and Morgan Hill offices today, cutting loose more than 90 real estate agents.
“To most of us, it was a huge surprise,” said Michelle Montez, who manages the franchise’s Gilroy office. “But if you look at what’s been going on in the market … It shouldn’t have been a huge surprise.”
Agents learned of the closure Tuesday, and have scrambled to find jobs with other brokers, lugging boxes of files. Because agents work on commission, not salary, there’s no shortage of companies willing to take them, said Rich Freedman, CEO of the Century 21 Premier franchise, which he founded as RE/MAX of Gilroy in 1989. Only days after interviewing with two Gilroy companies, real estate agent Katrina Hernandez expects to land her next job today. Nor will customers suffer: As soon as agents relocate, their clients relocate with them.
“My clients are my clients, no matter where I go,” said Hernandez, who started her career with Century 21 Premier four years ago. “They just want to know what sign’s going up in front of their house.” She sighed, tears suddenly springing to her eyes. “But it’s tough to leave.”
The shutdown saddens employees, who lauded Freedman’s leadership and fretted over plummeting sales. More than 1,100 homes are currently up for sale from Morgan Hill to Hollister, according to the online Multiple Listing Service; in Los Banos, new homes sell for less than older ones, said Freedman. As lenders tighten their standards, spooked by the subprime crisis, fewer buyers make the grade. Qualified buyers duck out at the last minute, said Montez, alarmed by foreclosure horror stories.
“In 2005, you barely had time to get a sign up, and the house was sold,” Montez remembered. “Now, houses are still selling – but there are just so many properties on the market.”
Two years ago, Freedman’s franchise took a gamble by opening a Los Banos office, and lost. As housing prices dropped and gas grew costly, fewer buyers wanted to make the commute from Los Banos to Silicon Valley, he said. The franchise lost $200,000 with that office, which closed two months ago.
It didn’t help that Century 21 Premier had upgraded to pricier offices, or that it specialized in Spanish-speaking agents targeting first-time buyers: the brunt of the foreclosure crisis. Freedman estimates that the franchise’s sales dropped by half last year, from 700 to 350 homes annually.
“The $500,000 to $600,000 market has completely dried up,” said Freedman. “If we thought the market would pick up, we’d have ridden it out. But we’re expecting a two-year downturn,” based on the advice of the National Association of Realtors, he said.
Consolidating the Gilroy and Morgan Hill offices would only be “a stopgap measure,” Freedman concluded.
Staff at the Morgan Hill office declined to comment, referring reporters to the Gilroy office.
At the Gilroy site above Westside Grill, Realtor Leticia Arriola-Alcantar is slowly emptying her desk, just a few years after she kicked off her real estate career. She’s staying in the industry, she said, but the closure is distressing.
“Our office was like a family … and now everyone is splitting up,” Arriola-Alcantar said. “The not knowing is the scary part.”
Emily Alpert can be reached at 847-7158 or at
ea*****@gi************.com
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