Downturn Claims Former No. 1 Santa Clarita Valley Realty Firm : Real estate: Marcia Gaskill’s Realty World offices had been the chain’s most successful in 1989. Now she has closed her doors.

Marcia Gaskill was the Mike Glickman of the Santa Clarita Valley. Like the real estate wunderkind of the San Fernando Valley, Gaskill, with her former partner Richard E. Grommon, built the most successful brokerage in the area. From 1985 to 1989, her offices were No. 1 in sales for the entire Realty World chain, which has 1,800 franchises nationwide.

Like Glickman, she doled out perks to the most successful agents: trips to Monte Carlo, Cancun, Jamaica, Hawaii and Las Vegas. She hand picked expensive suits for new agents and treated employees to lavish “limo lunches” and office parties.

And, like Glickman, she went out of business.

On Dec. 16, Gaskill closed the doors of her two Santa Clarita Valley offices--Realty World Valencia Homes Inc. in Newhall and Realty World MGM Inc. in Canyon Country--and a third franchise in Palmdale, laying off about 150 employees (about 30 agents grouped together and were offered jobs at a local Remax realty franchise within days).

Gaskill, whose company is more than $2 million in debt, said she “probably” will file soon for personal and corporate bankruptcy liquidation under Chapter 7 of the U.S. Bankruptcy Code.

Glickman, whose Woodland Hills-based brokerage employed more than 1,800 agents at its peak, made headlines when he filed for bankruptcy liquidation in June after the firm had amassed about $2 million in debt.

Gaskill’s announcement that she planned to cease operations after 14 years in business surprised many agents because, until the recent economic downturn, sales had remained relatively healthy.

A bankruptcy filing could complicate the 40 escrows still being handled by Gaskill’s Realty World Escrow Division. But Gaskill said she hopes to close out those files while the firm is still solvent, and she will transfer the remainder to other companies.

Gaskill initially told employees that she might regroup and return. But now, the self-made woman, who left a life as a sheep rancher’s wife in Wyoming and ultimately became a California millionaire before her recent slide, says she may call it quits in the real estate business.

Why did Gaskill go the way of Glickman?

Gaskill, 45, blames her company’s demise on Grommon, who agreed in June, 1989, to sell his 50% interest in their partnership to her for $1.3 million. But Grommon immediately started a competing Realty Executives franchise less than half a mile away in Newhall. The entry added a third large realty firm to the area and that proved to be one too many.

The buyout negotiations had thrown Grommon, 48, and Gaskill into protracted squabbles over the dissolution agreement and resulted in three lawsuits, one of which was settled in June, 1989. So far, Gaskill has spent more than $130,000 in legal fees.

Then last fall, Grommon began foreclosure proceedings against Gaskill over four properties they co-owned, including her Realty World Valencia Homes office on Lyons Avenue in Newhall. Gaskill failed to make the required payments due in early December, so three of the properties were scheduled to be sold at an auction last week.

Heavily in debt from her buyout of Grommon’s share of the business, Gaskill said her brokerage lost $450,000 in 1989 and more than $300,000 last year. And the sour real estate market finished her off.

Grommon, on the advice of his attorney, declined to respond to Gaskill’s claims because of the ongoing lawsuits from the partnership split.

Grommon’s lawyer, Gordon E. Bosserman, said Gaskill’s brokerage failed because her top agents thought they could do better elsewhere, notably at Grommon’s Realty Executives. Other agents joined local Remax franchises, which also offer lucrative commissions, and several smaller firms. Realty Executives and Remax continue to do well in the Santa Clarita Valley despite the downturn, according to agents for both companies.

“The fact of the matter is, he came in and destroyed the business that I bought, making it virtually impossible for me to pay for it, and then the economy went in the tank,” Gaskill said. “We could have lived with the economy, but we could not have lived with the economy with this hostile competitiveness and the leveraged buyout.”

Gaskill claims Grommon lured away her best agents by offering them higher commissions and spread rumors that she was planning to file for bankruptcy.

“The things she has said are really defamatory,” attorney Bosserman said. “The proof of the pudding is Grommon is still in business, he has all the realtors and she can’t pay him what she promised to pay him and she has gone out of business.” Bosserman said Gaskill still owes Grommon $800,000 to $900,000.

Grommon managed to hire many of Gaskill’s agents because he offered them nearly 100% commissions. In a typical real estate deal, home sellers are charged a 6% commission, which is then split between the agency representing the buyer and the agency representing the seller. Most brokerages, including Gaskill’s, keep a portion of the commissions earned by brokers, and perhaps half of that 3% fee goes to the agent. But Grommon’s agents can keep the entire 3% commission in exchange for a fee for each transaction.

Firms such as Grommon’s survive by employing large numbers of top-producing realtors, said agent Dave Karns, who quit Gaskill’s Realty World in 1989 to join Grommon’s Realty Executives. The high volume of transactions means there’s a good chance the company will reap commissions on both ends of the deal, and it increases visibility because of the many “for sale” signs bearing the company’s name, explained Bernard Kash, Gaskill’s top producer for 1990 and now an agent at Remax.

Gaskill has sued Grommon and two other Realty Executives agents, claiming Grommon violated an agreement not to compete against Gaskill after he withdrew from the partnership. Bosserman said that Grommon never made such an agreement, and that Gaskill knew Grommon planned to immediately open his own franchise.

In addition, Realty World Corp., based in Fairfax, Va., is suing Grommon in federal district court in Los Angeles for alleged breach of contract, trademark infringement, fraud and misrepresentation, among other claims. The suit alleges that Grommon broke his franchise contract with Realty World when he converted two Realty World franchises in Oxnard to Realty Executives offices in July, 1989.

And though there is disagreement about whom to blame for Gaskill’s downfall, people who know her and Grommon agree on one thing: If the two had stayed together, the firm’s collapse probably would not have happened.

“It was a partnership breakup more than anything else,” said Ty Ellis, member service director for Realty World’s western zone, based in Orange. “If they had stayed together, I’m sure it would have survived.”

Ellis said Gaskill and Grommon had a winning formula: Both worked hard, took risks and inspired loyalty in their agents. He said Gaskill has a talent for motivating people.

“She is a dynamic personality,” Ellis said. He recalled observing Gaskill taking detailed notes during award presentations at a Realty World national convention seven years ago in Washington, D.C. “She said, ‘I’m finding out what it’s going to take to be the No. 1 office in the system.’ That was indicative,” Ellis said.

Rumors abound about why Gaskill and Grommon went separate ways. In response to a lawsuit filed against her by Grommon in January, 1989, Gaskill accused Grommon of draining cash from one of their partnerships, leaving the firm with nothing in reserve for slow times or taxes. She said Grommon was trying to strip the firm’s value to bring down its price in case he decided to buy out her portion.

“I really got rid of him because I thought he was going to make us go broke, which he has anyways,” Gaskill said during an interview.

Attorney Bosserman denied the accusations and said Grommon split off because he believed he could be more successful alone.

Whatever the reason for the split, Gaskill ran into trouble almost immediately. Shortly after the June, 1989, buyout, the real estate market started its decline. Gaskill said 12 of her top producers left to join Grommon shortly after the split. The resulting loss in commissions took an initial $30,000 per month out of the company’s revenues, she said.

Then there were the rumors that Gaskill was going out of business. According to agent Kash, the rumors became a self-fulfilling prophecy because they created panic among Gaskill’s agents. “The rumors that we were closing killed us,” he said.