It would be a tremendous understatement to say that the fourth quarter of 2008 was not a great time to start a new residential real estate company.
The U.S. housing market had already been in a yearlong slump which began when the market went bust after several booming years. Then in late 2008 the U.S. financial markets went into crisis, in large part because of massive numbers of subprime loans that were made to homebuyers and fueled the housing boom.
Greg, Jay and Ralph Cavaiani had spent a few months trying to decide if they wanted to buy a residential real estate franchise. They had operated an office for Shorewest Realtors in Eagle for a few years but wanted to go out on their own.
They decided to start their own business rather than become a franchise that would have to pay franchise fees no matter how slow the market was.
So, despite the worst economic conditions since the Great Depression, the family launched Response Realtors on Dec. 1, 2008. Greg, Jay and Ralph each own a third of the company.
“It was kind of a moment of clarity,” said Greg Cavaiani, president of Response Realtors. “We decided, let’s just do this on our own the way we want to do it. If there’s going to be a down time you might as well start then. Maybe we were overly optimistic, but we though it was the ideal time.”
Greg’s brother, Jay Cavaiani, was the first member of the family to get into the real estate business. After graduating from the University of Wisconsin-Whitewater in 1993, Jay applied for several jobs unsuccessfully. Then he decided to go into real estate and started working for Shorewest Realtors in Oconomowoc.
Jay’s first deal was in Eagle and in time he found a niche in that area.
“It wasn’t a plan for me to be in this market,” Jay said. “I drove through town and there wasn’t a (real estate) office in town.”
Jay eventually convinced Shorewest to open an office in Eagle, in 1996, which grew to 9 agents.
“We became known as the Kettle Moraine specialists,” Jay said. “It was kind of a niche that nobody else was.”
The office targeted an area that included Eagle, Dousman, Ottawa, Palmyra, Mukwonago, North Prairie, Genesee and the northern part of Walworth County.
“We were number one for a lot of years in that area,” Jay said. “Some (other Realtors) were better in those individual towns, but nobody beat us in that overall Kettle Moraine area. We sold a lot of real estate. Our best year in 2001 we sold $17 million. If you were here we were the ones to call.”
Then Jay decided he wanted to go into ministry.
“I went to the company and told them, ‘I’m feeling called to go into ministry,’ but I thought it would be a shame to shut down the office,” Jay said. “I didn’t have someone that could run it at the time.”
Without Jay, Shorewest moved the office to Mukwonago.
In 2005 Greg got his real estate license. The Cavaiani family still owned the building in downtown Eagle and wanted to re-open the Eagle real estate office. Shorewest agreed and Greg built the office up with the previous employees coming back. Then last December they launched Response Realtors.
Jay continues to work in ministry, working on a youth group ministry and is in the process of launching a church. He serves as an advisor for Response Realtors.
Their father, Ralph, works as the business development specialist for Response Realtors.
“We were selling a lot of real estate (with Shorewest),” Greg said. “But what we realized with large, traditional companies, the hands-on approach of talking to our buyers was lost. We wanted to go back to a personal feel. We wanted to bring family values and a reputation of integrity with a personal touch.”
Another advantage of being a stand alone company, instead of a franchise, is that Response Realtors also has the ability to grow into other geographic areas, without being restricted by the boundaries of a franchise.
“We can grow as large as we want it,” Ralph said. “There are no limitations. We just have to be prudent in our operations.”
The Cavaianis admit that sales were slow after they first started the company. They had to establish a new company in a frigid market.
“It was slow, but we persevered,” Jay said.
Sales were very slow in December and in the first quarter of 2009, but things have picked up since June. Response Realtors has averaged more than $1 million is sales per month since July.
“We are meeting our business plan,” Ralph said. “We have positive cash flow.”
“We had to prove we could change the name and still sell real estate and remain independent,” Greg said. “But we were never slow on listings. Listings were coming in since day one.”
Response Realtors has property listings in four counties, but its emphasis is still in southwest Waukesha County, Greg said.
“We still really do consider ourselves the Kettle Moraine specialists,” he said.
Response Realtors is also selling home sites that it owns in the Town of Oconomowoc. The Cavaianis bought the 105-acre property, located one mile north of the Highway 16 bypass and just west of Highway 67 on McMahon Road, in 2005. They started marketing the home sites, called The Highlands of Lake Country, which range from 1.5 to 2 acres and are priced from $89,900 to $189,000, in 2006. They completed infrastructure installation for the subdivision in 2007. So far only one of the 20 lots in the subdivision has sold. But the Cavaianis are confident the lots will attract buyers.
“We’re optimists,” Greg said.