Sotheby's: The First Luxury Realty Empire

In the heart of London in 1744, Sotheby’s was founded by Samuel Baker after the auction of “polite literature” from Sir John Stanley’s library fetched £826. Since then, Sotheby’s has grown into a global presence with an annual worldwide sales turnover currently in excess of $4 billion. Sotheby’s today stands synonymous with pioneering, full-service luxury art business; it is the one of the biggest and most prestigious auction houses in the world. The remarkable heritage of the luxury house is a promise and testament to the quality of artworks and articles that it auctions and deals in. This extraordinary enterprise is what Sotheby’s is the most acclaimed for. In this article, we’ll be focusing on the real estate empire of Sotheby’s.

Sotheby’s International Realty was created in 1976 to provide an influential marketing and referral program for the world’s most distinctive properties, and to connect them with the most illustrious clientele in the world. Built upon the 200 years of cultured and stately legacy that Sotheby’s auction house had crafted, its venture into the luxury real estate market carried the full-weight of the excellence of its brand image. Sotheby’s Realty was the first auction house to have endeavored into the global real estate business, giving them an edge over their other competitors. Christie’s, their arch-rival in the auction house business, bought “Great Estates,” a real estate marketing company and entered the realty market in 1995. According to an article published in the New York Times in 1996,

“The reason Christie's had wanted to enter the fray was obvious: For 20 years, Sotheby's International Realty had been successfully mining the willingness of wealthy collectors who patronized the auction house to list their magnificent estates with the same company. And the business is lucrative. In 1994, the last year Sotheby's holding company separated its real estate business from its auction business, Sotheby's sold $630 million worth of property, up from $472 million in 1993.”
Published in the same article, Stuart N. Siegel, Sotheby’s International Realty's president then, has been quoted saying, “Christie's entered the real estate business for only one reason: to level the field in the auction business.”
This enables us to envision the fierce competition between the two great houses as they attempted to sell to or list the luxury properties of their existing clientele of affluent patrons of collectibles and arts. It also helps us understand and envisage the ambitious attitude and character of the Sotheby’s International Realty which has helped it establish, develop and consolidate its position as the first luxury realty empire.

Sotheby’s entered into a long-term strategic alliance with Realogy Holdings Corp., a global leader in real estate franchising and a provider of real estate brokerage, relocation and settlement services. The agreement supported the development of a full franchise system and licensing of the Sotheby’s International Realty name. The brand has won numerous awards that stand testimony to its quality and virtue - it won the Franchise Business Review’s Best in Category for “Real Estate Franchisee Satisfaction Award” for seven years consecutively. Sotheby’s Realty International destinations are smoothly accessed through their global network of distinctive properties in the finest locations worldwide. As of today, Sotheby’s International Realty careers included 23,000+ sales associates in 100+ offices with a network encompassing 72 countries and territories worldwide. A quick search for Sotheby’s real estate in New York itself found over 7000 listings.

Sotheby’s lifestyle is a thoughtful affair. In 2012, the brand launched the first of a planned series of branded websites for specialty markets. The first specialty market site focused on the luxury Farm & Ranch market segment, of which the Sotheby’s International Realty network represented over $6 billion of property listings worldwide then. Today, the distinctive label offers over 15 such specialties including Fly-In Home and Communities, Private Island Properties and World Class Equestrian Properties. Sotheby’s Commercial Real Estate is also one of the Lifestyle Specialty Collections offered by the brand.

According to me, there are three very distinctive qualities that have strengthened and solidified the stature of Sotheby’s International Realty.

Sotheby's International Realty Business Model

Sotheby’s opened up a cutting-edge way of advancing their business - the practice of hiring local market experts across high-density upscale areas in order to build a stockpile of luxury realty communities to be consolidated under the same umbrella. This practice offers an unprecedented level of exposure to the most impressive luxury real estate to their clients. In varied markets from all over the world, Sotheby’s provides assistance from local sales professionals who speak the language, know the neighborhoods, and are in tune with the culture of the community. This presents the client with an immediate access to all-rounded, authentic knowledge they would need about their soon-to-be investment. This approach, christened “architecture hiring”, has enabled to brand to grow into a luxury real estate empire where the company carries the credibility of a multinational and possesses the expertise of the local.

In 2019, Sotheby's International Realty announced a strategic business move to integrate the company's affiliate network and company-owned brokerage as one global organisation to be led by President and Chief Executive Officer, Philip White. An interview conducted by Forbes reveals his views regarding the move. “By aligning the capabilities of the affiliate and company-owned teams, Sotheby’s International Realty will have even more resources to continue to provide industry-leading services to agents. (I believe) with a legacy of strong leadership in global residential real estate and an expert team of operators, marketers, and managers, Sotheby’s International Realty is well-positioned to build on our success and help affiliated agents and owners grow in their respective markets.”

Leadership - Philip White, A Player and A Coach

“Quality Growth” is the key concept that Sotheby’s International Realty CEO, Philip White, stresses on. White joined the brand as the Chief Operating Officer in 2004 when SIR’s global sales volume amounted to $4.2 billion. In 2019, Sotheby's International Realty achieved a record global sales volume of more than $114 billion. In his words, its essential to preserve the brand’s quality “because it’s a 275-year-old brand. It’s about expanding and not diluting it.”  White has a history of listing and selling real estate both as an agent and broker/owner, so he understands the everyday conundrums and challenges that agents face. He believes that it’s important for him to stay close to the day to day business to understand the growing and changing needs of today’s clientele. Having built Sotheby's International Realty network up to the global, prominent position in the luxury realty market it enjoys today, he has demonstrated his ability to direct effectively. Philip White led Sotheby’s International Realty out of afflictions after the meltdown of Lehman Brothers in 2008-2009.

In Manhattan, the number of new leases signed in April plummeted 70.9% compared to the same time last year, to 1,407—the lowest number of new leases recorded in a decade, according to a report from Douglas Elliman. However, in these current uncertain times plagued by the Covid-19 pandemic, White seems to be particularly adept at steering the brand in the right direction. In his interview conducted by Penta, he talks about his real estate brokers keeping up with the changing times. In his words his agents “Embrace technology and leverage the time they’re working from home to learn new skill sets. Business is still happening as brokers leverage virtual solutions. Brokers are hosting virtual open houses and home tours on social media, helping clients de-clutter and prepare their homes for sale using video messaging, FaceTime, virtual staging technology, and other inventive solutions.”

Utilising Technology to The Fullest Over 98% of homebuyers ranked photography as the most important feature on a real estate website. The luxury realty business flourishes based on the personal relationships that agents and brokers develop with their clients. Sotheby’s International Realty has always used technology to support and enhance each conversation that they have with a (potential) client. Sotheby’s marketing strategy included great investments in their websites’ online presence and the crafting of good content - from curating photography portfolios to attract consideration to the production of high-quality videos all based on tracking public engagement with their content.

The conception of Sotheby’s International Realty eGallery helped in a real-time, property slide show on high-definition screens in the Sotheby’s International Realty and Sotheby’s auction house locations around the world. Sotheby’s International Realty App for mobile-phones, running on both iOS and Android, is an integrated video and virtual reality experience on select properties. The app allows search globally in 72 countries, available in 18 languages, displaying local currency and unit of measure to facilitate easy comprehension. The Curate app by Sotheby's International Realty allows consumers to visualise a property as their own home before purchase, by creating an immersive augmented reality atmosphere, thereby curating the home buying experience. The application announced an affiliation with Perigold, the luxury home furnishings retailer, to introduce distinguished Perigold furniture and décor within the app.

Keeping with their heritage and legacy of excellence while adapting to the contemporary needs of the times,Sotheby’s International Realty has established dominance in the luxury realty market.