Pat Riley has been busy during his lengthy career with Allen Tate Cos., rolling dozens of family-owned residential real estate firms across the Carolinas into the fold over the past three decades.
Such acquisitions have helped propel Allen Tate to become the largest residential real estate company in the Carolinas, all while Riley built up the community around him through multiple public service leadership roles. And key partnerships, such as Allen Tate joining forces with Pittsburgh-based Howard Hanna Real Estate Services in 2018, have positioned the Charlotte firm for more growth.
Riley, who is president and chief executive of Allen Tate, received the 2022 Lifetime Achievement Award in CBJ's Most Admired CEO Awards program earlier this month. He spoke on a variety of topics during an interview with CBJ tied to that honor.
The Most Admired CEO Awards presentation was held at The Westin Charlotte in uptown on June 16. (June 17, 2022)
Below are parts of that conversation, offering takeaways on the firm's approach to growth and Riley's take on the current housing market. Questions and answers have been edited for length and clarity.
How integral has the firm’s 2018 partnership with Howard Hanna been to Allen Tate’s growth?
Hanna came up in Pittsburgh and Pennsylvania at the same time (Allen Tate) did in ’57, so you have a generation. They’ve been growing like a weed up there, just like us (here). As I’m at this Leading Real Estate Companies of the World board meeting in Chicago (in spring 2017) … I said, “You know what, instead of selling to Wall Street, why don’t we do joint ventures with each other, keep this independent network alive and thriving.” Hoby (Hanna, president of Howard Hanna) went home to his dad, Hoddy (Hanna, the firm's chairman), and (aunt) Helen (Hanna Casey, Howard Hanna CEO), and we put together the first joint venture in America of two large, independent real estate companies. It’s a joint venture. We both own it. (Allen Tate) is working south of the Mason-Dixon Line. You see Tate down here and Hanna up there. That gives us the capital and that north-to-south relocation feed of all those markets up there that are coming south and have been coming south. It’s best of practices. It’s best of tools. And we’re the largest independent company now in America.
We are at the present time trying to continue to grow into the rest of North and South Carolina, and that’s my to-do list each and every day, to take these friends that are fiercely independent that I’ve grown up with down here, and some day, when they’re ready — if they don’t have a succession plan or if they do but need capital or need vision, best practices — that they join us so we continue to grow in North and South Carolina.
When it comes to growing Allen Tate, what do you look for in a firm you’re trying to acquire or partner with?
It’s my job to grow the Carolinas. Hanna is working the Northeast and probably if they jump, they’ll jump somewhere that their markets feed to other than the Carolinas. But by starting to joint market Hanna-Tate, somebody comes down here from Canton, Ohio, and says, “Oh, I know Hanna.” Somebody comes down here from Lancaster, Pennsylvania, they say, “Oh, I know Hanna.” We’re joint label, so that people down here, up there, everybody knows we’re one.
Fiercely independent is No. 1. No. 2 is the real estate transaction is the most difficult transaction to get out. The world likes to try to believe that it’s easy, that we can do it like a Carmax, we can do it online. No. No. No. There’s way too many moving parts. And they found out from Zillow, and they’re finding out from Opendoor, that computers can’t price houses. It takes a human being to price a home. It takes a human being to market the home, especially today with multiple offers, due diligence. It's a very tedious transaction. For us, it’s full-time professional. We do about 15.5 transactions — (with) 1,600 Realtors — per year, compared to a lot of our competitors that do two, three, four a year, so we believe in best-trained, full-time, best-education. But even branches — a lot of companies say now you don’t need a branch; we believe in our 46 branches. When we closed 10 offices during the Great Recession, that’s worse than the chamber of commerce closing. If we close a real estate office in Wesley Chapel or in Statesville, that tells the whole town something that you don’t want the town to feel. That the Realtor left town. That’s not a good symbol, so we believe in branches. We believe in every branch having a full-time trainer, coach. We’re very stringent on trying to be the best out there.
With the housing market in a state of flux and new competitors entering the space, how do you respond?
What it’s called is who has the mic. There’s not one piece of technology, there’s not one tool out there that anybody has that we don’t. It’s who is having the mic. If Wall Street has to tell a story … what they try to tell the world is (they) figured out how to do the real estate transaction technology-wise, better than people. The reality is we have 16 tools, we have our tech pack and our marketing team that can outmatch anybody in the world. The world is supply and demand, and right now we’re going to sell 20,000 houses again this year. There’s not 20,000 signs out there right now, but our world today as a Realtor is to go find what people want. I have to find what you want. I can’t wait for it to come. Many Realtors are adapting to that. And many aren’t adapting to that. The industry will cleanse itself in short order of true pros that will go out and work for you and find what you want. We have buyers out the gazoo for anything, but the problem we have right now is we need sellers. And that means as you walk your dog … you’ve got to knock on the door. You’ve got to talk to people. When you have an open house, you’ve got to tell all those neighbors before you even tell the public that you can go find what they want. We’re on a find-and-seek mission. For many Realtors, they can’t adapt to that. We have probably 6,000 too many Realtors in Charlotte right now.
What are some of the biggest challenges in today's housing market?
Right now I'm trying to tell my people that you don’t have the answers. I don’t have the answers. I've been in this business 50 years. You have to have the confidence of why you don’t have the answers. I look at it as a five-car accident up ahead. One of them is interest rates. The second one is appreciation rates. The third one is recession. The fourth one is boomers. The fifth one is residential investment in real estate — all of these investors buying all these houses makes it very hard for first-time buyers. The outliers are relocation and in-migration.
Everybody asks, "Is it a bubble market?"
"Am I paying too much?"
Then I have to come and say, I don’t have the answer. I can't speak to each particular situation, but I say as a general rule, our taxes and our price per square foot compared to America, we're still a bargain, plus we have all these other wonderful things.
Then when they come and they say, "When's the recession going to be?" ... I think it probably won't be until the (midterm) election is over, because no political party wants to have a recession before elections.
"What rate will it be to slow (the economy) down?" I don't know. My guess would probably be 6% to 7%, which is still below the national norm.
"What's the biggest problem we have today?" The boomers have the inventory we need. Most boomers past 60 don't want to spend money on their houses. ... Now, all the floor plans have primaries down(stairs). People are living longer and they're healthier, and steps aren't the issue anymore. Now, the average downsize for a boomer is 74, and many times it's too late — they didn't put any money in their house the last 10 years. That's when we come in and say we need to help these boomers to be ready, because they're not and we need their houses.
And then you look out there at these doggone investors — there's not a homeowners association ... I don't care if it's the mountains or beaches, I don't care what development you live in, nobody wants us to be a rental society. But investors are just coming in droves to buy houses, and apartment complexes are being built. So the first-home renter, with interest rates going up, with appreciation rates the way they are, it's very hard to get out of that lease. We've got to help parents and grandparents, whoever has money ... transfer it now, maybe a lower debt tax now, and see smiles on the faces of these young people rather than wait until you pass. So we've got to have some of those engaging conversations with parents of kids who may not have that confidence to do it themselves.
Closed local sales in 2021
| Rank | Prior Rank | Business name/prior rank |
|---|---|---|
1 | 1 | Allen Tate Realtors |
2 | 2 | Keller Williams Realty-SouthPark |
3 | 3 | Re/Max Executive |