From the mid-1980s through 2012 the horse race to watch in Ann Arbor real estate was between the Charles Reinhart Company and the Edward Surovell Company. “Every January, the numbers would come out,” laughs Steve Dobson, whose company, the old family firm of Dobson-McOmber, insured both Reinhart and Surovell. “Surovell would announce that they were bigger because they sold more units, and Reinhart would claim they were bigger because they sold more in dollars. Or vice versa.”
Real estate people love to slice and dice numbers, but by most measures it was usually Reinhart by a nose. “We’ve always been number one in the Ann Arbor school district, except for one short period of less than twelve months in the 1990s, when Spear merged with Surovell,” says Dave Lutton, president of Reinhart, or CRC as it’s known in the trade.
Between them, the companies ruled residential housing in Ann Arbor for decades. And Reinhart and Surovell were more than just two powerful independent brokerages–they also shared DNA. Ed Surovell used to work at Reinhart and recruited Dave Lutton to work there. Surovell left in 1981 and launched his own firm, starting a chase that continues to this day.
But while Lutton and Surovell are still the jockeys, they no longer own their mounts. In 2012, Surovell sold his company to Pittsburgh-based Howard Hanna, the fourth-largest real estate brokerage in the country. Then, in late 2013, Lutton sold CRC to Michigan’s largest real estate company, Real Estate One. While Hanna replaced Surovell’s name with its own green-and-yellow logo, Reinhart’s red- and-white signs are still popping up on local lawns like mushrooms. Real Estate One, which already had a local office, kept the name as a “brand.”
Though Lutton, like Surovell, stayed on to work for the new owners, it was a seismic shift. Except for some smaller, niche firms, Ann Arbor real estate is now dominated by regional and national companies like REO and Hanna and franchises like Re/Max and Coldwell Banker.
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Charlie (or “Chuck”–he answers to both) Reinhart didn’t set out to be a real estate titan in 1971. He got into it after closing the Parrot, his campus-area restaurant. (“I wasn’t a very good restaurant owner,” he says.) He sold CRC more than twenty years ago, turned ninety in May, and is officially retired, but still has an office at the company’s Green Road headquarters. “He comes in every day, reads the Wall Street Journal, and has a few projects,” says Lutton affectionately.
Reinhart and then-partner Dick Caldwell picked an interesting time to get into the business. Since World War II, home prices had just kept pace with inflation, and selling real estate was a dull but dependable way to make a living. Then housing prices spiked. Suddenly everyone wanted one, even members of Ann Arbor’s famously non-materialistic counterculture.
“I’ve always been a social lefty and an ardent capitalist,” Lutton says. “I organized an investment club when I was twelve. I’ve always been interested in money, always had an appreciation for what money could do.” That duality might explain how he became one of the most important players in Ann Arbor’s business world. Conservatives like his unabashed love of commerce and his comfort with old, established ways of doing business. His Green Road headquarters is hushed and plushly modern: a lofty, soaring edifice of poured concrete (it used to be a racquetball club), sculpted and softened by art, carpet, and lots of windows.
Liberals, on the other hand, love his 1960s values, which he doesn’t hide. A self-described goof-off during his first several years in Ann Arbor, he came to the U-M to study political science and English literature. From time to time, anyway. As his wife, Louise, a retired art teacher, kindly puts it, “Back then, the real classroom was out on the streets.” One of their early dates, in 1969, was going to a march in Washington protesting the Vietnam War. Lutton partied, worked as a bouncer at Mr. Flood’s Party, partied, sold beer at Campus Corners, partied, and made a lot of friends.
In the early seventies, he and Louise briefly split up. He hitchhiked around South America, while she taught school in Cambridge, Maryland, then a flashpoint of racial tension. They reunited in Ann Arbor a year later, where Lutton got a job delivering mail; his route included Mr. Flood’s Party, where Louise was the daytime bartender.
Lutton’s inner capitalist reemerged in the late 1970s. Married, with house payments, a baby on the way, and no college degree, he thought real estate seemed like a lively field: “guys in ponytails and pickup trucks selling real estate to their west-side friends.” Surovell, several years older than Lutton, was one of the most successful of them. By 1979 he was managing an office for Caldwell-Reinhart and recruited Lutton to work for him.
They quickly became best friends, and Lutton was soon managing a Caldwell-Reinhart office. Lutton recalls one of the great vacations of his life: “Ed, his girlfriend, and Louise and I spent the 1980 Winter Olympics in Lake Placid together,” staying at an empty restaurant owned by a friend of Surovell’s.
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The exit of Ed Surovell from Reinhart is still, thirty years later, a sensitive subject with Lutton. In the spring of 1981, he says, Charlie Reinhart bought out Caldwell and called Surovell and Lutton–his top managers–into his office to ask them for an honest critique of the company: “Ed and I shot our mouths off,” recalls Lutton. “We both said all kinds of crazy things, but I don’t remember what they were. The next morning Ed was fired, and I wasn’t. To this day, I don’t know why that was. I’ve never asked Charlie.”
(I did. “It was just time for Ed to move on,” Reinhart says with practiced blandness, “and he wanted to do some different things.”)
Steve Dobson, who has known all three of them since at least 1981, says that “as bloody as that competition between the two companies was, I have never heard Ed say one bad thing about Chuck Reinhart.” But the friendship between Surovell and Lutton was immediately severed, and neither of them likes to mention the other. (Surovell didn’t want to participate in an article that was chiefly about Lutton, but he named Dobson as a fair, well-informed witness to both companies’ history.)
By 1985, Reinhart had seventy-one people and a hand in one in every two home sales in the Ann Arbor School District. Surovell had fifteen and was growing fast. In an Observer article that year, Surovell noted that it was rare for one firm to dominate a market so completely, and predicted that “in another eighteen months to three years, we’ll cut them back down to thirty-five percent.”
Surovell seemed aware that scaling up while staying local took some guts: he told the Observer that he was worried about the “nationally franchised real estate chains led by Century 21,” and the huge conglomerates like Merrill Lynch. Lutton was too, but he became general manager of Reinhart in 1987, bought out Charlie Reinhart in 1994, and says, “On my watch, we went from three offices to six residential offices, one commercial office, and a mortgage company.”
Surovell, too, grew rapidly–like Reinhart, mostly at the expense of older, less well-managed firms. Spear & Associates, a perennial local power, had been weakened by agent defections when Surovell snapped it up in 1995. Though Reinhart soon reclaimed the top sales spot in the school district, Surovell came close again in 2005, when it had a hand in 742 single-family home sales to Reinhart’s 754.
Then came the crash. According to Observer real estate writer Kevin Duke, between 2005 and 2010, single-family home sales here fell 27 percent, from 1,392 to 1,013. Between 2006 and 2009, the median selling price nosedived from $288,000 to $220,000.
For people with homes to sell, 2006 was the new 1929. “In July of 2006,” says Lutton, “funny things began to happen. People began to push back on price, and then came the actual price declines.” The next few years, CRC white-knuckled its way through the meltdown in the national housing market, magnified locally by the departure of Pfizer.
“We had begun a program of conscious cost-cutting,” Lutton recalls, “dedicated to not letting the public, or the agents, know we were in trouble.” The low point came when Lutton asked for a loan from CRC’s banker–Michigan Commerce Bank, whose board he’d sat on for a dozen years–and found out the bank itself was in trouble. He pulled Reinhart’s accounts, and he and other shareholders made personal loans to keep CRC solvent. (Michigan Commerce ended up in bankruptcy; Lutton says the problems stemmed from its parent holding company, not its local operations.)
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As the local housing market came roaring back in recent years, so did Reinhart. In 2011, Ann Arbor’s top-selling agent of all time, Nancy Bishop, left Surovell for Reinhart. Last year, Duke counted just 476 transactions involving Howard Hanna in the school district to Reinhart’s 1,457. Hanna looks at things differently–citing the company REAL Trends, it claims to have sold the most units in Ann Arbor. (Hanna didn’t respond to requests for more information about its data.)
However you slice the numbers, it’s clear that Reinhart dominates the market’s top end. For this article, Kevin Duke looked at the ten highest-priced sales in the Ann Arbor school district each year from 2009 through 2013. Of those fifty houses, CRC sold thirty-four. No one else came close.
Why does CRC so dominate the high end? “You can be Costco or you can be Plum Market,” Nancy Bishop says. “You can either do a high volume of transactions, or you can do fewer, high-priced ones.” Of course, with 174 agents, and one of them Bishop, CRC is more like Costco and Plum Market. So if Reinhart is doing so well, why sell out?
When Surovell sold to Hanna, Lutton says, “that got our attention.” And he saw no chance of keeping Reinhart local. “No one in Ann Arbor could have afforded it,” a local businessperson points out. Besides, Lutton says, “The world is changing. We’re big in Washtenaw County, but we’re not big in a national context. We serve maybe a half million people. A big company like REO brings in resources, infrastructure, specialists.”
Other big players are also making moves in the local market. In January, following a national realignment, Sharon Snyder’s Prudential Real Estate office became Berkshire Hathaway. “Recruiting is good,” she says. “I’ve had some transfers from competitors.”
On the walls of Lutton’s office are old maps (“I like maps”), photos of northern Michigan (he owns property near Northport), and his grandchild (no explanation needed). More surprising is the shaggy-haired figure in another photo–a young Ed Surovell.
When I ask about that photo, Lutton rambles on about the company picnic where the picture was taken; the woman Surovell was with; the typography of the Reinhart T-shirts they’re wearing. The one subject he doesn’t want to reminisce about, it seems, is Ed Surovell.
