SAN DIEGO — Profit motive drove Edward J. Noonan into the real estate business, he says. The former flight test engineer for McDonnell Douglas Aircraft says he earned his real estate license in 1971 because he wanted to buy a house and, in the process, "cheat the real estate agent out of a commission."
Noonan got the house and escaped the fee. He also took off on a new career: chasing homeowners for commissions.
Within three months, Noonan had quit his job with McDonnell Douglas and started working full-time in residential real estate sales. In 1975, Noonan and a partner bought the Century 21 master franchise for Missouri, southern Illinois and Kansas. The franchise was later sold back to Century 21, and Noonan was named regional president of Century 21's Texas and Louisiana operations.
This month, however, the 40-year-old Noonan ended his affiliation with the nation's real estate leader and signed on as president and chief executive of Red Carpet Corp. of America, the struggling San Diego-based company that is generally credited with introducing franchising to the real estate industry in 1966.
"There were 30 preliminary candidates and eight finalists, and, as (Red Carpet Chairman James Kinney) told someone the other day, 'We got our first draft pick,' " Noonan said in an interview after he arrived at his new job last Monday.
Noonan, who drives a yellow Cadillac convertible outfitted with air horns that toot "The Eyes of Texas Are Upon You," views the task of rebuilding Red Carpet as "an opportunity to become the Lee Iaccoca of the real estate industry. I want to see one of the nation's oldest real estate franchise systems increase its market share and again become a major force."
Noonan candidly admits that it will take a lot to make Red Carpet fly again.
"We're going to grow it," Noonan said of the chain that has declined to just 500 offices clustered in California, Arizona, Texas, Oklahoma and Illinois from 1,400 franchises in 1979. "We're not going to stay the same size for long."
Although a sagging economy hit the industry hard during the late 1970s and early 1980s, Noonan said of Red Carpet's problems: "We should call a spade a spade. It was management problems, structural design problems. . . . Red Carpet never had a sufficient system to service the franchise base."
Noonan said he wants Red Carpet to have 1,000 franchises within 18 months. To help reach that goal, the company is developing a string of services, including relocation and "settling in" help, for households making a move. Noonan said he believes that the expanded selection of services will motivate independent real estate company owners to line up for franchises.
He indicated that much of the growth must come close to Red Carpet's new San Diego home. Red Carpet, which was founded in Walnut Creek in 1966, moved to Oklahoma City in the early 1980s and relocated to San Diego earlier this month.
"Southern California is critical to our marketing strategy," Noonan said. "We have to get that franchise penetration increased."
Stephen Bottfeld, director of Insites, a monthly new residential housing survey conducted by the San Diego-based Goodkin Group, applauded that strategy.
"Southern California is the single-largest market in the U.S. and how well they do here determines how well they will do as a firm, " he said. "If Noonan is centering on Southern California at the outset, he's going in the right direction."
Red Carpet's hopes for a renaissance center on Guild Mortgage, the San Diego-based company that bought a minority interest in August, 1984, and has since acquired 95% of Red Carpet's outstanding stock. The 25-year-old San Diego-based firm services loans in six states and reported $90.2 million in assets and a loan portfolio of about $2 billion at the end of 1984.
$27 Million in Mortgages
Guild, in addition to supplying Red Carpet with much-needed capital, has developed programs that have helped more than 1,000 Red Carpet brokers become certified to originate home loans. Those brokers already are processing $27 million in mortgages.
The rebuilding plan also hinges on Red Carpet's ability to cash in on the "booming market for S & Ls that want to own real estate offices," Noonan said. He suggested that thrifts might follow the franchise route because it is the "easiest and fastest method of getting into the real estate business."
Red Carpet could again be a major U.S. real estate force if it "bolsters its franchise base, builds on the Guild connection and develops the financial services that market leaders Century 21 and ERA already have," Bottfeld said.
However, Red Carpet executives concede that the turnaround will be tough to pull off. "We're very definitely playing catch up to Century 21 and ERA," said Ira Diggs, a vice president. Red Carpet, he said, is one of several companies, including Realty World and Better Homes & Gardens, that are clustered together behind Century 21 and ERA.