Coldwell Banker Schneidmiller Realty, a 27-year-old Coeur d'Alene real estate brokerage, has pulled back to its roots as part of its strategy to endure the recession.

Gary Schneidmiller, the agency's owner and broker, says he has done some pruning of offshoot endeavors that didn't fit his business model for residential real estate, while cultivating the brokerage's commercial side to grow on its own.

The agency had swelled to three residential offices with a combined 250 agents during the real estate run-up of 2004 and 2005, when annual residential sales in Kootenai County topped 5,000 units, a market pace that was unsustainable, he says. Last year, total residential sales fell to 2,565 homes in Kootenai County, according to the Coeur d'Alene Association of Realtors' Multiple Listing Service. That drop in sales caused many Schneidmiller Realty agents to revert to part-time status, he says.

The agency late last year responded to the market downturn by closing its residential real estate offices in Post Falls and north Coeur d'Alene, and moving its commercial real estate division from its north-side office to a separate building at its Northwest Boulevard campus.

Schneidmiller asserts that customers deserve full-time agents when they consider the largest purchase or sales of their lives.

"Our business model forever was based on full-time agents," he says. "We asked agents to work full-time or make other arrangements."

The brokerage now has 135 residential agents and 15 commercial agents, says Mark Johnson, Schneidmiller Realty's sales manager.

It's not the first time that Schneidmiller, who's been in the real estate business for 36 years, has consolidated residential real estate activity to a central office. In 1982, he operated a brokerage in Post Falls and was developing his current building in Coeur d'Alene when he bought the Coldwell Banker franchise there. Consultants with Coldwell Banker convinced him to consolidate operations in one location, so he packed up the Post Falls office and moved the brokerage to Coeur d'Alene.

"That was right 27 years ago, and it's right today," he says.

The brokerage's commercial division has remained stable in this recession and earlier this year became a separate franchise called Coldwell Banker Schneidmiller Commercial Realty, Johnson says. The commercial franchise also is a member of Oncor International LLC, a global network of commercial real estate brokerages that usually are based in large markets, he says.

"Oncor gives us the opportunity to get face-to-face with significant commercial real estate assignments," he says.

For instance, Schneidmiller Commercial heard from two big leads in just one day in June. Although Schneidmiller declines to name them, he says one is a company from the Southwest that's looking to invest in senior health-care facilities in the North Idaho and Spokane markets, and the other is a potential lease tenant from the eastern U.S. that would require 40,000 square feet of floor space.

Over the last five years, commercial activity made up about 25 percent of Schneidmiller Realty's revenue.

The residential franchise occupies 14,000 square feet of space in a two-story building at 1924 Northwest Blvd., across from the big Riverstone development. Schneidmiller Commercial occupies about 8,000 square feet of office in an adjacent building, at 2000 Northwest Blvd.

The brokerage's primary market is Kootenai County, although about 20 percent of its portfolio is in Spokane County, Johnson says. About 45 of its agents are licensed in Washington and six are licensed in Montana, he says.

Its commercial agents also are involved in transactions in Boise and Seattle.

Sales of new homes historically have made up about half of Schneidmiller Realty's total residential sales volume he says, but over the last couple of years, existing-home sales have outpaced new-home sales.

Though Schneidmiller has seen other down cycles, he says the current downturn is especially challenging.

"We had a huge run-up that probably led to unrealistic price expectations by property owners," he says.

Though property values generally have fallen over the past two years, values are still higher than they were earlier this decade, he says.

"If you compare property values over the last five years, most people are in great shape if they haven't used their property as ATMs," Schneidmiller says.

Johnson predicts 2009 will be comparable to the period from 1999 to 2001 in terms of sales volume. "Those weren't bad years," he says.

Schneidmiller says the greatest challenge for the Kootenai County real estate market will be reducing the current inventory of homes for sale.

"We have had way too much inventory," he says. "We have to correct that first."

Schneidmiller says an ideal balance of supply and demand is four to six months of inventory.

"We still have segments with several years of inventory, and that's not healthy," he says.

Until inventory falls, there's bound to be some bargains around for buyers who have financing, Johnson adds.

"Prices are being reduced and there's some of the lowest interest rates we've ever seen," he says. "That's a great combination if you're a buyer."

Schneidmiller comes from a family of ranchers and farmers that once owned 4,000 acres of land, mostly in the Post Falls and Liberty Lake areas. The family still owns a 900-acre wheat ranch near St. John, Wash., about 60 miles south of Spokane, he says.