TRD: Top agents from WEA, Carolwood Estates partner to create escrow firm
In an unusual move, top agents from Westside Estate Agency and Carolwood Estates, two of Beverly Hills’ most successful luxury boutique agencies, have partnered to open a new business called Private Escrow, The Real Deal has learned.
It opened in mid-July in Beverly Hills, helmed by Gail Hershowitz, a veteran escrow officer who has been a favorite of agents at both companies. She was formerly manager at Escrow of the West.
What makes the arrangement remarkable is that the two brokerages often compete directly for listings and buyers in the rarified elevations of the L.A. upscale residential market.
Hershowitz was not aware of another venture where agents from competing, prominent real estate brokerages partnered to build a separate escrow business. Partners in Private Escrow at WEA include Kurt Rappaport and Stephen Shapiro, while at Carolwood Estates they are Drew Fenton and Nick Segal. Hershowitz is also a partner.
Segal, Carolwood Estates’ managing broker, said there will be no conflicts of interest with the new venture.
“We’re not rivals in the escrow business. We know and respect each other. It made sense for us to collaborate,” Segal explained. He declined to confirm the breakdown of ownership in the new company.
In January, Carolwood Estates pitched Hershowitz with the idea of developing an escrow company. Segal said that Carolwood suggested WEA be part of the venture because it had been such a major part of her business. “I didn’t want WEA to be alienated,” he said.
The venture was shaped by a number of shared interests among the boutique agencies and from Hershowitz. For her, the strategy was to develop closer ties with top brokerages that were not affiliated with a favored escrow company.
Private Escrow will be the first company Hershowitz has helmed. Currently, four people work under her, with plans to hire more.
“There are few independent escrow companies left,” Hershowitz said. “It is very hard to get business if you are an independent.”
Stephen Shapiro, co-founder of WEA, said it helped his company to develop deeper ties with an escrow officer they trusted.
“We’re almost the last ones in. Everyone else has an escrow affiliation,” he said.
Shapiro added that the new escrow company could become lucrative.
“There is $3.5 billion to $4 billion in gross sales between us. If we can get a good percentage of our business going into Private Escrow, it will be a profit center for us,” Shapiro said.
Rappaport and Shapiro have worked with Hershowitz for more than 25 years. “ It’s because (Gail) approached us that we feel this association will work. Without her, we wouldn’t have interest in doing this,” Shapiro noted.
Agents are independent contractors; they are not required to use Private Escrow’s services, Hershowitz said.
Michael Nourmand, chief of independent Beverly Hills brokerage Nourmand & Associates, said that a majority of big companies operate their own escrow departments.
“They used to be called affiliated services. Now they are called core support services,” Nourmand said of escrow offices. “ For many, it’s part of the business model.”
However, the escrow business is not easy. A company must have a critical mass of business to support the overhead.
California is one of the few states where escrow companies handle closed sales. Hershowitz said that an escrow company typically handles the details lawyers handle such as transferring titles. Escrow officers often act as impartial third parties in deals. Escrow companies often make $2 for every $2,000 in the sale.
