Hot Property

A real estate exchange

In an unobtrusive brick warehouse near San Francisco Bay, 75 or more heavyweight property dealers gather together once a month for what they call market day. For hours they huddle and haggle around a group of video monitors set up on the floor of the burgeoning American Real Estate Exchange (AMREX). Across the screens flash capsule descriptions of big-ticket real estate offerings (minimum asking price: $250,000) whose total value on a given day may reach more than a billion dollars. Some of the items on the block at last month's market day an interest in an $80 million Palm Springs Calif, resort, a British island in the Pacific, a $10 million bank in Aspen, Colo and $850,000 worth of property in Dallas.

Traditionally, real estate traders and brokers have operated pretty much on their own and dealt with each other one on one. AMREX offers major property dealers an organized exchange resembling those provided for commodity traders and stock and bond investors. AMREX works in much the same manner as do other exchanges. The 2,500 members who actively buy and sell through AMREX ante up token annual dues of $575. For this they can key into the exchange's international real estate listings, which are beamed daily to AMREX headquarters by satellite from Europe. The listings are displayed on the video terminals, and with the help of a 1,000-page inventory book, buyers and sellers can size up the market quickly and in one central location. AMREX'S members are mostly real estate firms institutions and banks (among them Chase Manhattan) and private investors. Though most of the members do not show up on a day-to-day basis, they are still hooked up to the system through the exchange's dozen or so floor traders. The traders guarantee AMREX $30,000 in annual fees under a trading contract and try to match up sellers with interested buyers. Once a trader thinks he has a good match, he will try to bring the two parties together for a potential deal.

AMREX is the brainchild of Gerald Jackson, 43, a former real estate agent and farmer. He developed the concept of AMREX while teaching real estate at the University of California at Berkeley. In the course of his research he discovered that local ownership of a random sample of prime property in the Los Angeles area had dropped from 90% in 1945 to close to 40% by 1965. Deciding that such absentee buying could be better handled through a central exchange of sorts, Jackson started a West Coast exchange in 1968 with a local real estate firm. Though business was uneven for the next few years and his partners pulled out quickly, by last September Jackson was finally able to open a legitimate exchange trading floor in his San Francisco warehouse. He hooked up with Telerate, a computerized bond-listing firm that also supplied him daily with a tabulation of international real estate offerings. With a large assortment of domestic and foreign listings sporting an average price of more than $4 million, AMREX began to interest the serious, big-money traders, who found the system convenient. Says San Francisco Broker Tom Connelly, 31: "AMREX makes our operation a lot more efficient. We're able to look at 1,000 properties in the same time it used to take us to look at 100."

As the only central exchange for dealing in such high-cost properties AMREX is prospering. It charges a 1/2% commission on the first $1 million of any transaction and 1/4% each million above it. Twenty-five percent of this amount goes to the floor specialist who put the deal together. (Most specialists successfully close from three to five deals a month but may make as many as 20 prospective match-ups a day.) Though Jackson's expansion plans include opening a London office, his customers seem quite pleased with the present setup. Says Connelly AMREX is like a candy store. There is always something good for sale."

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