Continued: Edina executive adapts in work and life

On Mother's Day 2008, Bob Peltier got up early and went about his morning business at his cabin in Wisconsin. He made some coffee and started arranging gifts for his wife, but in a split second -- without pain or warning -- his right side went numb and he nearly collapsed on the bathroom floor.

After a $12,000 helicopter ride to a hospital in St. Paul, the Twin Cities real estate executive learned that he'd had a stroke that had paralyzed the right side of his body but could have just as easily killed him.

"And I haven't had a bad day since," he said.

After months of physical therapy, Peltier is back at work and with more responsibilities -- and challenges -- than ever before. In January he was promoted to CEO of Edina Realty, where he'll be responsible for the company's title, realty and mortgage divisions at one of the worst times in history for the industry. He's also still struggling to remaster the simplest things he'll never take for granted again: holding a cup of coffee, buttoning the left cuff of his shirt and tying his shoes.

With what seems like a slight delay between his thoughts and the words themselves -- the only visible sign that he'd had a stroke -- he's clear about one thing: "I want it all back."

He not just talking about his physical skills. As head of one of the state's largest real estate brokerages, he likens his determination to overcome the physical challenges he's faced since his stroke to his resolve in the struggles his company faces in what could be the worst economic recession since the Great Depression.

What lessons has he learned over the past year? Adaptation.

That's not always painless, as he's learned. Edina Realty already has shed more than 700 agents during 2008 and has closed some of its largest -- and oldest -- offices to cut costs. That includes the company's venerable Bloomington office, which dates back to the company's founder, Emma Rovick.

Peltier, who had been president of Edina Realty before his promotion, knows that severing the emotional ties to that office was difficult for many, but looking forward is even more important, he said. Since the downturn began, at least 15 offices have closed, including the one in Burnsville.

"It took guts to do it," Peltier said of those closings. "But we can't afford to have the bricks and mortar."

Longtime sales agent Ken Veness worked in that office for 14 years and remembers the day the decision was announced and the startled reaction of several agents.

"They probably had not been paying attention to the production and activity of the market," he said. "We all could see the sales board every day; we knew that sales were hard to come by."

Peltier said that while the company is in the black, "and not just by a hair," his No. 1 goal is still to make money. "And we can't build and grow and be profitable just by cutting expenses; we still have to sell a product."

So instead of investing more money in bricks and mortar, he's investing heavily in technology that he will hopes will give the company a competitive edge and eventually reduce expenses by giving agents more independence from a physical office.

And while he's trimming staff, but not tinkering with commission structures, he's also focused on acquiring smaller companies in existing markets that will help grow market share. At a time when profit margins are narrowing and uncertainty is growing, he has deep pockets to fund those deals.

He's backed by the resources of Warren Buffett's Berkshire Hathaway, which owns Edina Realty's parent company, HomeServices of America. And in that organization he has a friendly ally: The CEO is his older brother Ron, who said last year that he would spend more than $200 million on new acquisitions to bolster HomeServices' presence nationwide. Ron Peltier said Bob Peltier was promoted in recognition of what he's done to help the company "thrive" at a time when the broader market was contracting.

That includes several key acquisitions. During the past year, the company absorbed the assets of the Realty Center, based in Edina, and Prudential Plus Realty in Hutchinson. The company also has recruited 412 agents, most of them with industry experience. Still, by the end of the year the company expects to have about 25 percent fewer agents than it did in 2006.

Edina Realty isn't alone in its efforts to broaden market share. Its local rival, Coldwell Banker Burnet, has acquired several new offices including the 23 agents from Prudential Metrowide Realty who became Coldwell Banker Burnet agents when the deal was announced in December. In June 2008 the company acquired the four offices that belonged to RHS Realty. Both are acquisitions aimed at bolstering the company's position in the southern and northwest metro suburbs.

Those acquisitions have happened even as Coldwell Banker Burnet's owner, Realogy Corp., and others have faced challenging economic times. Last week, Realogy reported a net loss of $1.91 billion for 2008 but said it would meet its obligations with assistance from its parent company, Apollo Management.

With the housing market still trying to find the bottom, brokerages all across the nation are facing similar challenges, said Tom Musil, director of the Shenohon Center for Real Estate at the University of St. Thomas. At the same time, those large companies will fare better in the long run, particularly if they can acquire the assets of weaker competitors.

"It's less risky for a big company to do that, because the agents will more likely stay with a bigger company because of the resources and the image," he said.

Those resources and broad brand recognition are why Erick Ries joined forces last year with Edina Realty. He and his father ran a small brokerage with 35 to 40 agents who focused on markets in various parts of the metro area. Ries said that competing with larger companies that had more access to training and technology was often difficult. Coldwell Banker Burnet, for example, announced in early January that it was going to be launching a new "mobile agent" real estate information service that gives home buyers access to detailed information on their cell phones, and Edina Realty has similar mobile services.

"We couldn't keep going as a small firm," Ries said.

Mike Muske, longtime owner/broker at ERA Muske Co. in Forest Lake, says he's seeing the same trend across the country as regional companies like the one he operates merge or fold. Two years ago his firm had more than 120 agents, but he's closed two offices and is now down to about 75 agents.

Though many of his agents compete directly with agents from Edina, he supports Peltier's acquisition strategy.

"He's right on track," Muske said. "That would have been an unconventional approach a few years ago, but given the time we're in, it's very much the right approach."

Jim Buchta • 612-673-7376