In an unusual move, two of Beverly Hills’ most successful luxury boutique agencies, Westside Estate Agency and top agents in Carolwood Estates, have teamed up to open a new business called Private Escrow, real deal Already learned.
It opened in Beverly Hills in mid-July and is helmed by Gail Hershowitz, a seasoned escrow officer who has been a favorite of both firms’ attorneys. She was previously the manager of Escrow of the West.
What’s notable about the arrangement is that the two brokerages often compete directly for listings and buyers in rare spots in Los Angeles’ high-end housing market.
Hershowitz was unaware of another venture in which agents from competing well-known real estate brokerages teamed up to build an independent escrow business. WEA’s private escrow partners include Kurt Rappaport and Stephen Shapiro, while Carolwood Estates’ partners include Drew Fenton and Nick Segal. Hershowitz is also a partner.
Segal, managing broker at Carolwood Estates, said there would be no conflict of interest in the new venture.
“We’re not competitors in the hosting business. We know and respect each other. Our partnership makes sense,” Siegel explained. He declined to confirm the ownership breakdown of the new company.
In January, Carrollwood Estates approached Hershowitz with the idea of developing a hosting company. Segal said Carolwood suggested WEA join the venture because it was an important part of her business. “I don’t want to alienate the WEA,” he said.
The joint venture was informed by a number of mutual interests between Boutique Agency and Hershowitz. For her, the strategy is to forge closer ties with top brokerages that are not affiliated with favored escrow firms.
Private Escrow will be Hershowitz’s first company at the helm. She currently has four employees on staff and plans to hire more.
“There are very few independent hosting companies left,” Hershowitz said. “It’s hard to get business if you’re independent.”
WEA co-founder Stephen Shapiro said this has helped his firm develop deeper connections with their trusted escrow officers.
“We were pretty much the last ones to come in. Everyone else had escrow relationships,” he said.
New hosting companies could become profitable, Shapiro added.
“The total sales between us is $3.5 billion to $4 billion. If we can get a significant percentage of the business into private administration, that’s going to be our profit center,” Shapiro said.
Rappaport and Shapiro have worked with Hershowitz for more than 25 years. “It was because (Gail) contacted us that we felt the association would work. We wouldn’t be interested in doing it without her,” Shapiro noted.
Agents are independent contractors; Hershowitz says they don’t need to use private escrow services.
Michael Nourmand, chief executive of Nourmand & Associates, an independent brokerage firm in Beverly Hills, said most large firms have their own custody divisions.
“They used to be called ancillary services. Now they’re called support services,” Nullman said of managed offices. “For many, it’s part of the business model.”
However, hosting business is not easy. The company must have sufficient business volume to support overhead.
California is one of the few states where escrow companies handle closed sales. Hershowitz said escrow companies typically handle details handled by lawyers, such as transferring title. Escrow officials often act as impartial third parties in transactions. Hosting companies typically earn $2 for every $2,000 in sales.