Pentagon FCU continues to expand its real estate CUSO, a move the credit union says is enhancing member service and solidifying long-term relationships.
The CU insists those who serve in the U.S. armed forces, the CU's primary field of membership, want a trusted partner when making the critical decision to buy or sell a home and that the credit union is the perfect choice.
James Schenck, president of Prudential PenFed Realty, reminded that members of the military are a mobile group. "The general population moves about every seven to eight years. The average military person moves every three."
Schenk said, too, that members of the military often make a home purchase decision in a short period of time due to redeployment, sometimes having only weeks. "It's important to our members to have a real estate partner they are confident in."
Late last year PenFed Realty acquired AHK Realty Inc., doing business as Prudential Texas Properties, a Dallas-based real estate firm, making it the fifth Prudential realty operation acquired by the credit union giant as of 4Q.
The acquisition followed PenFed deals for Prudential real estate firms in Kansas, Florida, Washington, D.C., Tennessee and Texas. It now has more than 47 offices and more than 1,400 sales professionals.
In the Lone Star State the CUSO operates under the name Prudential Texas due to local name recognition. Schenk said the CUSO will ultimately create one national brand.
Schenk told Credit Union Journal the goal is to continue to expand, adding at least two to three firms each year, with deals likely getting bigger. Schenk shared that expansion will next head toward the West Coast and Florida, where there are military bases or concentrations of military retirees.
In addition to military personnel wanting a high level of trust in their real estate agents, Schenk said they also want someone who understands the military lifestyle. PenFed Realty is careful to add only firms that have worked closely with enlisted personnel.
"They don't want to deal with just any local Realtor," added Schenck. "They'd rather work with someone affiliated with the credit union they have done business for many years."
That's how the real estate CUSO began, pointed out Schenck, with the $16.5 billion CU purchasing a small real estate firm in Washington in 2006. "Members kept coming to us, saying, ‘You do my car loan, my mortgage, I'd like to have the credit union help me with the biggest purchase of my life.'"
In 2011 the CUSO purchased a second real estate firm in the Washington area, taking the CUSO to 1,000 agents, and began stepping up expansion efforts from there. "We said, 'OK, we are strong in the D.C. Metro area, where are other military installations where we have a lot of members?'" explained Schenck.
The plan has been to "walk before we run," said Schenck. "The effort is more scalable now. For example, when we were at 200 agents we felt we could acquire another 200. Each time the acquisitions can get bigger."
Bob Dorsa, president and CEO of Las Vegas-based American Credit Union Mortgage Association, said he is aware of other credit unions buying real estate agencies, but said Pentagon FCU "is on the leading edge, in size and scale."
Dorsa added that in most cases, CUs that own real estate agencies provide some form of rebate or reduction in real estate commission when members use the CU service. PFCU offers members a 50-basis-point reduction on the sales commission.
Schenck said in addition to building closer ties with members, the CUSO is a money maker. "Anything Pentagon Federal does has to stand on its own. We are also a valuable source of new members and a membership retention source."