The new June issue of the Real Deal has a piece about an unsurprising development among brokers. In the article, which correctly quotes me, writer Candace Taylor notices that many brokers are questioning the value of their affiliation with name-brand firms in New York City.
Referring not only to commission splits but also to annual fees up to $5,000 that brokers must pay their firms, plus errors and omissions insurance, Taylor notes:
Most agents are willing to fork over the cash in exchange for the security of a big-name firm. But for some firms, these marketing fees may be reaching a point of diminishing returns. More and more agents are deciding the high cost of the brand name isn’t worth it, and are moving to smaller firms or taking advantage of new business models that offer larger commission splits.
One reason for the perception that the big firms loom less important is the Internet, which makes it easy for consumers to find listings that might suit them without having a broker do the searching. Another reason is that the firms tend to be raising fees while simultaneously lowering the amount of free services and supplies that they used to provide. Taylor continues:
To some extent, the proof is in the pudding: The total number of Elliman agents in Manhattan fell 3.4 percent between 2009 and 2010, according to The Real Deal’s ranking of top firms last month. The Corcoran Group saw its ranks grow from 1,030 to 1,047, but only after picking up 49 agents from the dissolution of Coldwell Banker Hunt Kennedy, whose agents were encouraged to move to Corcoran because they are both affiliated with the corporate real estate company Realogy.
Meanwhile, newcomer Charles Rutenberg Realty saw its ranks swell by 52 percent. Founded in 2006, Rutenberg operates under a business model that allows agents to keep more of their commissions and pay lower fees than traditional firms, but doesn’t provide permanent workstations for them.
Given her likely space limitations, the writer gives short shrift to the reason that many of us have left the larger brokerages (in my case, Prudential Douglas Elliman) for the smaller ones (Rutenberg, now the city’s seventh biggest).
My chief motivation was to work with a firm with a business model that recognized me as an independent businessman whose money, reputation and success were at stake. The firms with household names tend to treat their brokers as if they were employees dedicated to promoting the firms’ brands, rather than the individuals’.
When I made my move one and half years ago, I did so fearing change and the loss of Big Brother’s shelter.
Now, I tell anyone who will listen that I’ve never been happier.
Rutenberg’s business model is not only the future, but it is the present. It recognizes that I am a grown-up, and it doesn’t try to exploit me. With shrewd founders Paul Purcell and Kathy Braddock, who are always available for advice and support, the firm is the only one I can imagine that fits me to a T.
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022