If you’re unfamiliar with the real estate world, it is not uncommon for agents to move firms. Just like any job, finding the right fit can make all the difference in job performance and perception, just ask Russell Westbrook of the LA Clippers. But in the case of one Millennial Broker, or TMB, if you’re looking to save on characters, listeners of his podcast “Self Starters,” got a unique and practically real-time insight into how this real estate agent meshes with both his former and current bosses and why he had to move on.

The bosses in question? Just Robert Reffkin and Ryan Serhant. You may have heard of them.

Two Real Estate Moguls in A Podcast Hot Seat

The Millennial Broker, Steven Clair, has been a real estate agent for more than 14 years, and like many agents in the New York area, he’s been finding his place to thrive and, until recently, has been listing property under the real estate tech firm, Compass, led by CEO Robert Reffkin. 

Yet shortly after interviewing Reffkin on his podcast (but prior to the release date), Clair announced his transition to the up-and-coming firm, SERHANT, led by Ryan Serhant. However, many would argue this firm isn’t on its way, it’s already arrived and is challenging Compass for its title of industry disruptor.

A Quick Look at Robert Reffkin and Ryan Serhant

Robert Reffkin is an entrepreneur who first got a taste of real estate from his mother, Ruth, who was and is an agent. After his time at Columbia and Columbia Business School, he had an impressive resume, working on Wall Street, as a White House Fellow under the Secretary of the Treasury John W. Snow, later becoming the Chief of Staff to the COO at Goldman and founding a nonprofit. In 2012, Reffkin and Ori Allon founded Compass, an online real estate tech company designed to address the hardships that agents like his mother experience while working as real estate agents. Compass went public in April 2021 and has been the topic of conversation ever since due to the incredible amount of money lost in the last several years. In 2022 they lost $602 million dollars, up from $494 million in 2021, most recently reported a $150 million loss, and cut 800 employees as of January 2023. Even so, Compass is currently in 72 markets with 300+ offices and 28,000 agents and continues to expand across the US.

Ryan Serhant rose to notoriety on the reality show Million Dollar Listing, where viewers watched him sell, you guessed it, multi-million dollar properties around New York City. Previously a hand model who also had a role on the soap opera As The World Turns, Serhant joined the real estate firm Nest Seekers International in 2008 to help pay the bills. After many successful years selling real estate (both on and off screen), Serhant opened up his own real estate firm, SERHANT, in September 2020. By April 2021, the brokerage reported consistently averaging $100 million in sales volume per month in its first 6 months of business. Serhant has continued to grow his presence by releasing two books, sharing countless clips of listing tours and agent advice on various social media platforms, and currently holds the exclusive marketing and sales rights for one of the most expensive listings in NYC, if not the world, a $250 million penthouse apartment at the top of Central Park Tower. SERHANT has its flagship office in the trendy NYC Soho neighborhood and has just announced an expansion into Florida, Pennsylvania, New Jersey, North Carolina, South Carolina, and Connecticut. This means SERHANT is listing in some of the least affordable cities in the United States, with high price tags and a lot of legwork needed.

Why Would an Agent Leave Compass?

So how did a real estate agent like Clair leave one of the top established brokerages in the country for a self-titled “unbrokerage”? Without even knowing it, Reffkin answered that question. 

“No one manager is going to be able to click even just on a personal level, much less the business level with everyone,” Reffkin said during his interview. While this was his response to Clair’s less-than-ideal experience with a Compass sales manager, it gives insight into the whole decision an agent has to make when finding the right company and the right manager.

From the start of each of Clair’s interviews with the brokerage heads (his past and current bosses), some cues may point to his ultimate decision to leave Compass. With Reffkin, Clair jokes about his struggle to find an empty block on the CEO’s calendar, which is met with perhaps a brief bit of terror from the founder, thinking his calendar might be public. Of course, would you expect easy access to the head of a company valued over a billion dollars? 

 

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A post shared by Self Starters Hosted by Steve Clair (@selfstartersshow)

 But when he speaks with Serhant, there is a more laid-back banter, and you hear that this is not the first occurrence of face time with the big boss. All newly onboarded agents get a protocol meeting with Ryan when they first start, and TMB was wise enough to, again, use the modern powers of online calendaring, check the CEO’s schedule, and put some elbow grease into getting face-to-face.

Direct interaction aside, for years, Compass was at the forefront of the industry, poaching agents from other firms with the promise of new and exciting tech and equity. In addition to perks and benefits, the brokerage offered digital tools like a customer relationship management platform (CRM) and marketing assistance with tools for digital ads, videos, and newsletters.

On top of Compass’ large losses mentioned above, this has been a hard year for real estate as the low-interest rates of 2021 and the impacts of the market’s boom have faded. As Reffkin put it to Clair, “Agents are all small business owners and entrepreneurs… just like our agents are bringing down their expenses, at Compass, we brought down our expenses.”

And bringing them down they are. 

Over the summer, Compass announced that it will no longer offer equity or cash incentives to new agents, inducing rumors of slower hiring and exodus. There was also talk from Reffkin that the firm would be reducing technology and incentive-related expenses but “not reducing agent service levels.”

When asked about an exodus by Clair, Reffkin shared that Compass has had a consistent principal agent retention rate of 98% across Q3 and Q4 of 2022. Compass currently has 13,000 principal agents, which is the term they use to refer to team leaders or individual agents operating independently on the platform. It does not seem they share statistics on the 30,000 agents not considered principal agents.

What Does Ryan Serhant Think About Compass?

Serhant has spoken about what he thinks Compass’ place is in the real estate world and how they have acted as a disruptor and pushed the industry towards a more tech-focused approach, all while putting the agent first. He claims that Compass has been great for the industry and the agent, finally giving them power and not treating them like a number. This aligns with how Reffkin sees his company as a “reverse triangle” where the sales managers work for the agents,  and he himself is essentially everyone’s employee working to take feedback and improve the company. At Compass, the logo is black and white for a specific reason, they want the agent and the listing to be the color, not the firm.

As Serhant says, everyone wants to hate on the “rich kid” because they want them to fail

Open Houses Don’t Sell Homes Anymore

It’s a different world than it was two years ago in terms of social media and internet usage. As of 2022, the average daily social media use was around 147 minutes a day (up 2 minutes from the year prior). With about 10% of one’s day spend scrolling through Instagram, TikTok, and yes, even LinkedIn, integrating marketing and business with social media seems like a no-brainer. Most real estate companies, Compass included, have touted their marketing and technology tools and features as a means to recruit agents to their firms to help reach clients virtually. 

But are cutting-edge tech and helpful marketing tools enough? In this different world, social media marketing in the form of house tours, funny anecdotes, and advice aren’t just marketing in the moment; it’s an investment for future business. As Serhant told WSJ in 2020, “The brokerage company, open houses, and pretty photos don’t sell homes today the way they did 10 and 20 years ago,” he said. “Buyers of high-end real estate, and their children, go to YouTube and social media on their phones to research homes and agents now.” 

Passive social media consumers turn into buyers spending hours scrolling and saving features of their dream homes. Cold calls and emails go unanswered as the younger generations won’t interact with anyone who they haven’t made the subject of a solid internet stalk, and for Serhant and his team, there is plenty of media out there for viewers to dive into.

Buyers, especially New Yorkers, want to have their cake and eat it too. Let them shop for homes, but also let them be entertained.  Outdated newsletters with a few choice listings and events happening in the local market, paired with center-aligned text and random and off-focus statistics about happenings in the country, are not what today’s buyers are looking for. In real life, this is demonstrated by the agent from a smaller firm who sent out their recent newsletter detailing stories of local crime and death that then transitioned into why you should buy an apartment in his market. That’s like home shopping on CNN. 

Even the tried and true market reports that are expertly crafted with bolded letters don’t give the same thrill they used to. By the time they’re released, they are already outdated, bland and provide zero context to the buyer and their situation. Real estate has shown that it can be flashy and fun but also cutting-edge and efficient. 

“Aligning With Greatness” Why An Agent Would Work With SERHANT.

From where TMB stands, it seems he’s moved past the tech and benefits that Compass can offer. For years, followers of @themillennialbroker have gotten a distinctive look as Clair worked on his own to bring in a team for his content production, creating the media consumers and buyers so desperately want. Who wouldn’t want to purchase a West Village carriage house when you’re first introduced to it via drone?

As an agent who is growing and ready to explore new and more creative ways of his trade, Clair now has access to an in-house media company, is surrounded by a “smaller group of highly producing professionals,” and is getting to learn from one of the biggest names in real estate who has been known for flipping the script on how real estate should be done. The splashy SERHANT branding and all the help that goes into that is no doubt an attractive offer if an agent is looking for exposure.

To Clair, switching to SERHANT ‘“aligned with [his] business perfectly” and fit great on a SERHANT x TMB branded hat, coupled with Clair’s signature hand rub that starts all his videos. The branding is strong with this one.

Sure, Ryan Serhant has touted similar promises as Reffkin’s of creating a brokerage for the agent, but there is a different spin that appears to have clicked with The Millennial Broker on a more personal level. Serhant believes his firm is set apart because, on top of him being an agent, the “whole company was built by agents, for agents, for what agents want in 2023 and beyond. This is not like a fundraise, [where we say] hey, what do we think agents need, we’re going to disrupt the real estate game and then lose all our money.”

Seems familiar. 

Compass and SERHANT. now

While SERHANT agents may be splashed across your phone, they still have some catching up to do. In April 2023, The Real Deal ranked SERHANT #8 in NYC in terms of single-family home sales over $5 million, with 3 sales totaling $67,450,000, a pretty impressive spot to be in as a fairly new brokerage. However, there has been recent news of SERHANT agents returning to Compass despite being high performers with the firm. This could become a theme as the shiny blue allure wears off of Serhant’s brand. 

Conversely, Compass was ranked #3 with 22 deals and a staggering $209,514,990 in sales. On July 24th, they released the Performance Tracker, a “game-changing tool designed to revolutionize how Compass agents track and analyze their business metrics,” proving that they are still pushing ahead to give agents a leg up with helpful tech to provide a transparent picture of where they stand. 

But with SERHANT’s recent NYC onboarding push with agents like Clair, that gap could quickly close as Serhant begins his mission to “help every agent and every team build their own brands to help generate more business, make more money for the rest of their lives.” More exposure means more deals, which brings even more cash, and with Instagram growing tired and TikTok bans looming, who wouldn’t want to be on the path to creating a legacy and finding a nice little penthouse to hole up somewhere? Or at least the promise of that sounds nice.

WATCH THE REFFKIN AND SERHANT EPISODES

The post “Aligning With Greatness”- An Inside Look At An Agent’s Decision to Move from Compass to SERHANT appeared first on CitySignal.

So, what can real estate professionals do when the time comes to switch brokers? How do they evaluate which firm is the right fit? And how can they transition smoothly without disrupting their customer base?

At CitySignal, we found that while there’s no one-size-fits-all criterion when it comes to choosing a new broker, there are some key questions and factors to consider.

When Do I Know It’s Time to Switch Brokerages?

“The first step is to determine why you’re looking for a change,” says Yael Dawson, who has worked as a licensed real estate professional in NYC for the last decade. “Brokerages vary greatly in how they treat their agents, how much support they provide, how their commission split works, and how much they trust you to handle your business. You want to be sure that the new firm aligns with your long-term goals and values you as an agent.”

Dawson started her real estate career at Anchor Associates, which some agents may label as a “starter” brokerage. These smaller firms tend to charge a higher commission split, such as 70/30 or 60/40, because they’re taking on new agents who are likely to make more mistakes. These errors can be costly for the brokerage, not only in terms of money but also when it comes to their credibility with landlords across the city.

Dawson recalls a time when a colleague accidentally CC’d their client on an email that was intended for the landlord’s agent only. The client had been upset about how long it was taking to secure an apartment, especially since the landlord rejected their initial offer, and decided to email the landlord’s agent directly.

What the client didn’t know was that the landlord’s agent had a reputation for killing deals whenever there was a breach of protocol. The client should have never been included in the email chain, and when they were, the landlord canceled the deal and threatened to blacklist Anchor Associates.

“Fortunately, that didn’t happen,” Dawson remembers. “Anchor was able to make things right and continue working with the landlord. Our office manager was very understanding and treated the agent involved with kindness. But not all brokerages are as forgiving, so it’s important to find out how a firm handles these types of situations.”

This is just one example in a long list of reasons why real estate agents in NYC may decide to switch brokerages or stay where they are. For Shawn Jenkins, who transitioned from a rental-driven firm to join Corcoran’s luxury sales team, the decision was all about finding a place to grow.

“I was working as a rental agent and wanted to take my career to the next level,” says Jenkins. “Sales [was the obvious choice]. I’m a natural self-starter, so all I needed was a toolkit to help accelerate my career into sales.”

Jenkins knew that Corcoran was the place to be if he wanted to make a name for himself in the luxury sales market, which is off to a great start having already closed a deal over $1 million in Sunset Park. But not all agents have the same sense of clarity or ambition. In some cases, the decision to switch brokerages is more about flexibility or necessity. If an agent’s clients have outgrown their current firm, or if the brokerage is unable to provide them with the tools and support they need, then it might be time to make a change.

But with so many different business models, how can real estate professionals ensure they’re making the right choice?

What Are the Different Brokerage Options and Which One Is Right for Me?

When exploring the different brokerage options in NYC, Dawson recommends making a list of both personal and business objectives. Once the agent has an idea of what those are, it will be much simpler to determine which potential firm is likelier to help them achieve their goals.

“It’s like any other job search,” she explains. “You need to know what you’re looking for and how the chosen firm can help you get there. But unlike a traditional job where you earn an hourly wage or get paid a salary, how much you make as a real estate agent depends on how much you put in. So it’s important to understand how the commission split works and how much support, training, and resources you’ll get for your investment.”

Compensation Models for Brokerages

To illustrate Dawson’s point, here are some examples of the different compensation models adopted by brokerages across NYC:

• Experimental Firm A lets you keep 100% of the commission as long as you pay a monthly desk fee. This fee covers office space and administrative support but does not include training or continuing education. It ranges from $500 to $1,500 per month, depending on the broker’s needs.
• Established Firm B offers an 80/20 split with no monthly desk fees, but the agent would be responsible for all marketing costs associated with their listings, plus other out-of-pocket expenses. At $6 per day just to advertise on Streeteasy, these fees can add up quickly.
• Starter Firm C proposes a 50/50 split. It covers half the cost of marketing and provides continuing education for the agent in the form of webinars and negotiation workshops. But the firm lacks exclusive listings and hasn’t fostered any long-term relationships with landlords. This means the agent will have to compete with thousands of real estate professionals for the same open listings, hustling to secure deals.
• Salary Firm D offers a base minimum of $50,000 per year with monthly bonuses based on KPIs (e.g., lead-response rate, closed deals, customer service ratings, etc.) Put another way, the firm holds onto most of the commission in exchange for providing the agent with a steady paycheck and additional incentives.

Agents who have built a strong referral network and generate a steady stream of leads might be better off going with Firms A or B. On the other hand, agents who are just starting or take a more passive approach to their business might benefit more from Firms C or D. It depends on the agent’s level of expertise, customer base, whether they need hands-on support, and how much time and money they’re willing to invest in their business.

But these aren’t the only factors that differentiate NYC brokerages. Some firms specialize in specific neighborhoods or boroughs while others have a more global reach. Others embrace new technologies like DocuSign, chatbots, and marketing automation, making it easier for buyers and sellers to engage with the firm. Hidebound agencies, on the other hand, are being left in the dust as more and more firms adopt these cutting-edge tools.

All that said, some real estate agents will prioritize company culture over everything else, including the potential for higher commissions.

How Important Is Company Culture When Switching Brokers?

Fern Kamins, a former agent at Anchor Associates, didn’t choose to join Elegran two years ago. She just happened to be sponsored by Anchor when Elegran acquired the smaller company in 2020. The warm welcome she received from her new broker was one of the main reasons she decided to stay.

“The company culture at Elegan is wonderful,” Kamins says. “The management team is forward-thinking, empathetic, and always available to answer questions. It’s a great place to build relationships and grow your real estate career.”

Kamins has been selling real estate in Brooklyn and Manhattan for over 40 years, recently closing several deals at 225 Adams Street in Brooklyn. She’s witnessed how the industry has changed over time and believes that company culture plays a vital role in the agent’s success.

“Everybody thinks that [real estate agents] are stabbing each other in the back,” she remarks. “If you go to the right firm, that isn’t true.”

She continues: “Sadly, many agents prioritize the deal over each other. A toxic company culture perpetuates the stereotype of the agent as a selfish individual whose only goal is to close deals. But Elegran breaks that stereotype. It creates a supportive and respectful environment where agents are valued regardless of their experience level. That’s why I’m still here.”

We asked Kamins if she’s ever worked at a cut-throat real estate firm like the one depicted in David Mamet’s 1992 film “Glengarry Glen Ross.” In one scene, Alec Baldwin’s character famously delivers an eight-minute speech about how “it takes brass balls to sell real estate” and how “coffee’s for closers only.”

Kamins laughed. “I’ve certainly heard of scare tactics used at some brokerages to keep agents ‘motivated,’ if you could call it that,” she said. “I haven’t worked in a place like that myself. I think that if the brokerage environment is clearly toxic, agents shouldn’t hesitate to switch. You don’t need someone yelling at you to do your job.”

Has Kamins’ transition been smooth? “For the most part, yes,” she assured us. “Most of my business is referral-based or working with repeat clients, so I never had to worry about how the switch would affect my business. When I make a switch, I bring my clients with me. It’s that simple.”

When we asked her what advice she had for agents who are considering switching to a different brokerage, Kamins was adamant:

“Figure out your goals, research different firms, and don’t get too hung up on the commission split,” she said. “The most important thing is to find a place that feels like home so you can build meaningful relationships with colleagues and clients alike.”

What Steps Should Agents Take When Switching Brokers?

If you’re a real estate agent who’s just decided to switch brokerages, here are some tips to make your transition as smooth as possible:

1. Notify your current broker before officially resigning (this can be two weeks or 30 days in advance depending on your employment terms).
2. Discuss your current listings with your broker to coordinate how they will be handled after you leave. In some cases, you’ll need to wait until the listing expires before it can be transferred to your new broker.
3. Email your current broker a list of any pending commissions and CC your personal email. This is a great way to keep track of how much money you’re owed since brokers can take time to process commission payments.
4. Bring any documents and information related to your current listings with you when you go to your new broker.
5. Get a confirmation from your old brokerage that your real estate license is no longer sponsored by the firm before you submit the necessary paperwork to your new sponsor.
6. Notify your clients about your move and make sure they know how to get in touch with you at the new brokerage.

The Takeaway

There’s a lot to think about when switching real estate brokerages. One of the most important considerations is finding a firm that provides the support and culture the agent will need to succeed in this ultra-competitive industry. Setting realistic goals and choosing the most effective compensation structure to meet those goals is also essential.

Finally, agents should carefully navigate the process of switching brokers by asking as many questions as they need to feel comfortable with their decision. Taking these steps will help make the transition to a new brokerage as seamless and successful as possible.

The post When and How to Transition to a New Real Estate Brokerage appeared first on CitySignal.

With more than 60,000 licensed real estate agents working in New York state alone, it can be difficult to narrow your options down to the agent most fit for you, and the search process alone can be daunting.

This week I sat down with Chimere Meerschman of The Corcoran Group to discuss what sets her apart and above the rest, as well as some of her best advice and tips for potential home buyers and renters looking to jump into the market.

From Belgium to Ballet: Getting to Know Chimere Meerschman

I’m one of those bold people, you know, when I’m in a situation I really say ‘hey, how am I gonna work this out?’ You know? I get a plan together, and I just do it. I’ve been successfully navigating life with that attitude.

Meerschman and I began our discussion recapping her time in Belgium where she spent several years owning and managing a hotel and cocktail bar, even though at the time, she didn’t speak the language.

It was something that was mine in this, you know, strange country, where I didn’t speak the language. I welcomed guests from all over the country and luckily English was the common language. So that’s how I was able to be successful with a cocktail bar and hotel.

Now fluent in Dutch as well as relatively proficient in French, German, and Danish, Chimere has returned to the States, where she settled back in New York City, her hometown, bringing with her a wealth of sales, hospitality, and business-owning experience. Chimere also had a previous life as a ballet dancer.

I studied dance from 4 to 24. My mother started me in ballet, and I just loved it. So basically danced until I couldn’t dance anymore, had to get to real life. I never planned on it being my career. My mother always told me, ‘it’s fun, it’s great, it’s graceful, it makes you the person you are today.’ But realistically, there’s not a ton of open spots for ballet dancers. Everyone wants to be […] Misty Copeland, but there’s only one Misty Copeland. I was always realistic, I knew it was something I loved to do, and it was fun, but I always wanted to get a “real job.” I enjoyed doing it, I still have my pointe shoes, and whenever I have a free day, which is very rare in real estate, if I need to work out or something, I can put them on and sort of twirl around my apartment as a distraction; do fun stuff. Because I love it, I really do.

On Getting a “Real Job”

I’ve always been in some sort of sales position. So when I left school I was in packaging sales, I graduated from luxury cosmetic packaging sales, which is a niche market in itself. High margins, in beauty offices, in Manhattan which was really nice. And I was in real estate sales in the Hamptons on top of that.

As many know, The Hamptons is one of New York’s most exclusive and expensive housing markets, one of its zip codes landing as the 2nd most expensive zip code in the United States with homes ranging from $5,000,000 to 150,000,000 depending on location.

Real estate for some reason has always been a career choice for me, a lifetime ago as it now, because it’s a combination of something I’m good at, which is sales, customer service and I think I sort of top it off with a concierge or special knack for really taking care of people.

Meerschman understands just how monumental the decision to move is, having done so several times herself, and prioritizes her customers at every turn during the process.

I think moving, divorce, and having a baby [are] the three most stressful things, and moving is one of them. It’s crazy. Not only is it very stressful, it’s one of the most expensive things you’re going to do.

Meerschman is correct of course, starting with moving costs alone which nationally average between $1400 and $2500. But that’s not even scratching the surface.

You’re paying someone a big portion of your salary every month; you’re giving them first month’s rent, security deposit, broker’s fees, just to move in! Then, of course, you’re buying god-knows-what, towels and egg beaters and you know, knives and stuff. So it’s a big purchase as well as a stressful purchase. So I think when you’re doing something like that you really need someone to hold your hand and put you first and I just have that nurturing knack to do it in a really nice way. That’s why that kept becoming my “real job”.

Chimere On What Sets Her Apart From Other Agents

Meerschman’s sales, hospitality, and people skills all coincide to make her a powerhouse of real estate.

So as far as hospitality, you check into the hotel. I want to make sure you have everything you need to make your stay perfect. What time do you need your breakfast? What kind of breakfast do you like to have? When you’re done with what you need to do today, whether you’re coming for business or pleasure, where do you want to eat dinner? What souvenirs do you want to pick up? I feel I made that really accessible for my clients; it was a boutique hotel so I was able to really zero in on each person’s needs. I just somehow translated that to real estate. Where do you need to live? What will work for you as far as #1 where you’re going to live, how much you’re going to pay, what amenities you need. But as well as what kind of search do you need?

Meerschman tailors each sales experience to the client at hand, taking care to meet the needs of each person, but also provides a level that’s a step above what can be a stiff and impersonal transaction.

I’m working with a woman originally from Long Island who now lives in Florida and needs to move to New York for a job. We’re doing everything virtually because that worked for her. We’ve been looking at apartments virtually. We set a time, I send her things virtually, I go in person to the apartment, and I FaceTime her. Not only in the apartment, but in the hallway, you know, what train did I have to take there? What does the street look like? So she can make the best decision on where she wants to live.

Same as what you need as far as amenities and bedrooms and space; where’s the nearest nail salon? Where’s the nearest supermarket? I feel that concierge’s hospitality bleeds into that; I want to give them all of that. Again, this is the biggest purchase they’re making, why not give them everything so they feel really good about this purchase and on top of that just less stressed about it because all of their needs are met?

This kind of “full service” coverage Chimere offers sets her apart from other agents in a very real way, and word of mouth does a lot of work to spread her business.

I often get reviews from clients, ‘thank you so much. I really felt you cared about what I needed, how I needed it, and when I needed it.’ I sort of hold their hand. I think it sort of definitely sets me apart. I’m not really interested in the transaction, I’m interested in the person. Can I help them? Can I find them something and make it work for them? I want them to be happy. I get referrals to this day because I helped someone three, four years ago, and they’re like, ‘wow she was so good.’ Whenever someone needs an agent, I just send them your number. 

I recently reached out in my search for a 2 bedroom apartment downtown. Chimere took the call and from the moment she contacted me, her knowledge of the market and professionalism with follow up was evident. In a very short time she identified the perfect space, a Fidi loft. Her negotiating skills helped me to secure the home at a great price. Additionally she was able to rent my investment apartment with a great income stream. I highly recommend working with Chimere for all of your real estate needs.

Review from RentHop, June 2022

On What She Wishes Clients Knew Before Their NYC Apartment Search

I would want my clients to know ahead of time that because this is New York City and it’s one of the most expensive cities in the world; I think I would like for them to know ahead of time that- and I hate saying this, but they cannot get everything they want; They will have to make a small sacrifice.

So I have a client that comes to me, they want a window in each bedroom, they want a gym, floor to ceiling- they everything: I wish they would know ahead of time that it’s impossible to get everything; best price and all the amenities, it’s just really difficult. I’d like them to come in knowing that ‘I have to sacrifice something and if I do that, I’ll have a very quick and easy and painless, less stressful search because I know that one of those things I want is unrealistic.

Chimere is awesome! It’s difficult to imagine apartment hunting being fun, but Chimere even managed that. Moreso, she was honest and transparent about her recommendations but listened to my requests and showed me even those places she suspected (and was correct) that wouldn’t be the right fit just so that I would feel comfortable with my choice.

Review from RentHop, September 2021

Chimere notes that these expectations come mostly from those less familiar with the nuances of New York City’s housing market, And not because they’re unrealistic or unreasonable people, it’s just a lot of clients who I meet are coming from different cities. Whether it’s Chicago, Florida, or California. Everything is different. California is different from New York. There’s a lot of air and space and light there, we don’t necessarily have that in New York, but we have other things that California doesn’t have. So I’d like them to know that where they’re coming from can’t necessarily dictate where they’re going. It’s just not the same, you know? I think that would make my life and their lives a lot easier knowing that coming in.

On New York City

I mean, New York is, listen, I was born and raised here, so I’m definitely partial. However, I did move to Europe for several years, and I still think New York is the best place. There’s a beautiful combination in New York of class, sophistication, grit, soul, there’s a little bit of everything here. There’s no place more convenient, you can have anything you want whenever you want it, which is amazing. The best food; the best Indian, the best Italian, the best any-type-of-food you want. So, I think when anyone’s moving from another state to New York, it’s likely because they have another job. So your paycheck is larger, and you’re making a lot of money that’s different from a lot of places in the states.

According to the U.S. Bureau of Labor Statistics, Manhattan’s average weekly wage of just over $4000 ranks #1 in the nation, of course, there is a higher cost of living that follows the higher wages.

For Meerschman, it’s all par for the course.

There’s great opportunity everywhere just to enjoy New York. Amenities in buildings, for example, are amazing; you’ve got roof-top pools and gyms and laundry rooms, work-from-home lounge; you know, you get all dressed up to leave your apartment and go to your rooftop lounge, and that’s a thing in New York City. What other place can say that? You’re not even leaving your building, but you’re still out and about. Plus, not to mention all the great people. There’s people in New York from all over the world, and all over the country, I think it makes this amazing melting pot of knowledge, style, and class. Just a little bit of everything, you know?”

Rentals or Sales?

Obviously, when you’re going to buy something, it’s a lot more permanent. You’re spending more money, and you are making a large commitment. But at the root of everything, it’s very similar, it’s still the most expensive purchase you’re ever going to make. There isn’t a big difference in the process, obviously, technically, you’re buying something, you’re getting a loan- there are other things that are involved, but you’re still proving something to someone.

In rentals, in one case, you’re proving to the landlord, “I can afford to live here.” In sales, you’re proving to the board, “I can afford to live here.” But you need the same documents, you still need the last few paystubs, the last two bank statements, tax returns, your letter of employment, all of that stuff is needed. One’s just a little more, or a lot more expensive than the other, but it’s still a very similar process. I think, and I hate to say this, maybe I like rentals better because I can help more people. There are more people renting in New York City than buying. I feel like I have more opportunities to help in the rental market.

On Trends in NYC Rentals & Sales

I feel like right now you have a lot of people wanting their own space. They’d rather get a studio which they can afford on their own than get a two-bedroom that they have to split with a roommate. I’m also noticing people buying something for themselves, not necessarily for the family unit. ‘My kids are out of school, my kids are gone, they’re done. Let me get an apartment that works for me” I’m seeing a lot of that. I’m also seeing a lot of first-time buyers. They’re saying, ‘I’ve never bought in New York or anywhere, and my rent is so high, let me dip my toe in to see what it would cost to buy because now I’m giving all of my money to a landlord because it’s so expensive, let me see what the cost- I’m doing a lot of rent vs buy situations. I feel like the age to buy is getting younger than it was a few years ago.

I asked Chimere if she thought Covid was to blame for some of these trends, as the housing market experienced a surge in prices as the pandemic raged on.

I think it’s a combination. People’s priorities have changed, you know? Do you want to be in a two-bedroom apartment with someone you don’t necessarily know? Or in a four-bedroom with all these people.

All the prices going down then going back up, it’s just like “Let me take care of myself” That’s what I’m seeing. ‘Let me get something by myself, and I’ll figure it out. Whether it’s gonna be smaller, but at least I know it’s mine, and God forbid something like this happens again, I have my little space.

Chimere’s Favorite Building: An Art Installation As A Building

NYC boasts some of the most jaw-dropping and unique constructions across the world and since real estate agents see many buildings a day, both inside and out, we had to know which of all the gorgeous builds is Chimere’s favorite.

I like 56 Leonard, it’s just beautiful. It’s the Jenga building. The building, by Herzog & de Meuron, located at 56 Leonard Street in Tribeca, was fully sold, shortly after its critically acclaimed opening in 2017.

It’s just beautiful. It has an amazing lobby, it’s right in Tribeca. It’s got a beautiful art installation outside. It’s just gorgeous. The windows in the apartments are all floor-to-ceiling. Most of the apartments have at least one outdoor space. It just looks like when you see one of these movies when you see a successful person in New York, they would live in a building like this, you know? I just love it. All of the amenities. It’s just fabulous. It’s quintessential fabulous New York, if you will. You’re in there, and no one can see in because the next building is so far away, you’re so high in the sky, it’s just beautiful- I really like it, I love it actually.

Any Last Tips?

I think it’s important for people to know that they really should work with a good real estate agent. Real-estate agents are quintessential in helping someone find their place to live, renting or buying or selling; it’s our job. Most successful real estate agents, successful ones that I know, myself included, we work seven days a week. We are really in the market, and we know what’s going on… you do yourself a disservice by trying to figure something out by yourself, [as agents] have all of these inside secrets and tips and tricks. It’s almost like going to court without a lawyer – representing yourself is not a good idea.

We’re helpful. Find a good one, not saying just pick anyone, find a good one that you like and you jibe with and let them help you find something in the right apartment for your price range, all the amenities you need. We also renegotiate for clients, a lot of clients don’t know that, we have relationships with management and landlords and we can say ‘hey, I need a couple of hundred dollars off.’ People don’t know that but I can do that and I do it all the time. I’m bringing multiple clients, they’re only bringing themselves. By bringing multiple clients to the table, agents like Meerschman are sometimes able to negotiate lower prices or other favorable conditions on behalf of buyers and renters.

We’re here to help.

I asked Chimere if she had any recommendations on places to start one’s search for a quality real estate agent.

You know that Corcoran is a reputable real estate firm. You know RentHop is reputable, they’re like the #2 place to find an apartment. A lot of people [agents] are going to respond to you, but sit down and interview them, say, ‘I need this, this, and this, can you help me?’

You’ll know if that real estate agent is a fit, and you’ll know if they’re not. Nothing wrong with talking to a couple of people and saying, ‘Hey I found someone I like, and I want to work with you.’ And you tell them that, tell the real estate agent, ‘I want to work with you exclusively.’ They’ll be happy, you’ll be happy, and it will be a great situation.

The post Chimere Meerschman, NYC Real Estate Agent, On What You Should Get During Your Apartment Search appeared first on CitySignal.

When I was a real estate agent in the 2010s, my office manager would urge me to target NYC’s burgeoning roommate population. Roommates were, after all, a big business in Manhattan real estate. They continue to be today, with 30 percent of adults aged 23 to 65 sharing apartments in NYC, as reported by Zillow in 2017.

Unlike my discerning clientele of wealthy COOs and socialites, these roommates were usually young professionals fresh out of college, looking to make their mark on the world. Their flexible apartment criteria meant you could rent them almost anything, from a shoe box in the West Village to a closet in Tribeca.

They hit the pavement with a pep in their step, armed with offer letters signed by their newest employers, searching for the perfect place to share with friends and strangers alike.

As someone who has lived with friends and strangers myself, not only did I engage in common roommate disagreements, but I also had a front-row seat to the bickering and antics of others. From splitting the rent unevenly to squabbling over long-term guests, I’ve heard it all.

Here are some common disagreements among roommates that I’ve come across in my years working in Manhattan real estate:

Rent & Utilities: Who Pays For What?

Rent is expensive in NYC. And utilities can add up quickly, too. Landlords will likely include heat and water, but electricity, gas, and internet are typically not included in the rent. This can be a source of common roommate disagreements in NYC because — let’s face it — some people are better at conserving energy than others. Just ask Roommate A, who isn’t bothered by NYC’s hot summer nights and has to split the electric bill evenly with Roommate B, who leaves the AC blasting 24/7. Or Roommate C who runs the washer and dryer every other day, while Roommate D only does laundry once every two weeks.

Another common roommate disagreement in NYC is who pays for household items like toilet paper, paper towels, and cleaning supplies. If Roommate B stocks up at Duane Reade this week, should Roommate C be expected to cover the same amount next week?

Disagreements may also arise if one roommate expects the other(s) to divide the rent equally even though the bedrooms are not equal in size. This issue comes up commonly in converted two- or three-bedroom apartments where one bedroom is significantly smaller than the other or has a pressurized wall that doesn’t go up to the ceiling, eliminating privacy.

In my humble experience, it seems unreasonable to divvy up the rent equally for bedrooms that are not equal in size or have different amenities, such as en-suite bathrooms and walk-in closets. It also feels petty to fight over who pays for what household items. After all, common sense dictates that if you use more of something, you should replace it.

One way to solve the issue of rent is to have each roommate pay proportionally based on the size of each room and/or any additional amenities it comes with. (Common areas like living rooms and bathrooms needn’t be factored into this equation since their equal usage is implied.)

Those who are math-averse (like me) may use a rent-splitting app like Splitwise, which allows roommates to input their monthly rents and then add or subtract common expenses to see who owes what.

House Chores: Who Cleans What and When?

Another common source of roommate disagreements in NYC is house chores. Who cleans the bathroom? Who takes out the trash? Who does the dishes? And when?

These are valid questions that should be answered before signing a lease. Some people are neat freaks and can’t stand living in a messy apartment without so much as a coaster to prevent those pesky rings from forming on the coffee table. Others couldn’t care less.

One possible solution to this common roommate problem in NYC is to create a rotating cleaning schedule (which may or may not cling to a refrigerator magnet in the kitchen). For example, this week Roommate A cleans the bathroom, Roommate B takes out the trash, and Roommate C does the dishes. Then next week, the roles are reversed.

Another solution is to budget for a professional cleaning service to come in once a week or once every two weeks. This can be pricey, but it’s worth it to avoid common roommate disagreements in NYC.

Roommate Guests: Who Can Have Them, and For How Long?

Guests are another common source of tension among roommates. Some people are social butterflies and will manifest a constant stream of visitors, while others prefer to keep their socializing to a minimum.

One of the most challenging aspects is hosting out-of-town relatives for long periods. The roommates imposing said relatives may brush off the inconvenience (because it is not inconvenient to them), claiming that this is how things are done in their respective cultures or within their unique family dynamic, leaving the other roommates seething with resentment.

Still, others will straight-up add another roommate to the mix by moving their significant other in without so much as a discussion with the other people they live with. Sometimes they move them in facetiously or by attrition as if to say, “Whoopsie! I hope you don’t mind that I added my boyfriend to the lease!” Or perhaps it’s the boyfriend who just won’t go home because his roommates are constantly disagreeing.

The common thread here is a lack of communication among roommates about expectations, boundaries, and common courtesy. One solution is to discuss guests and significant others before signing the lease. That way, everyone is on the same page from the start.

Solution 2.0 is to sign a legally-binding Roommate Agreement (yes, that’s a thing), which stipulates the rules about guests, house chores, common areas, etc.

Templates for this agreement can be found online, or you can create your own. Either way, make sure that everyone signs the agreement before moving in, so there’s no confusion about expectations later on.

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Decor: Who Gets to Decide?

Let’s say you move in with Roommate A whose giant neon red-and-white Budweiser sign can only fit on the living room wall. It clashes horribly with Roommate B’s faux fur reading chair and Roommate C’s DIY industrial-pipe coffee table. Don’t even get me started on the cow-hide rug in the middle of the room (a gift from Roommate A’s mom).

A possible solution to common roommate disagreements about decor is to create an inventory of who owns what before moving in and whether or not they’re open to selling, trading, or giving away their belongings. That way, everyone knows what they’re getting into and there are no surprises (or arguments) down the road.

Another solution is to allow each person to decorate their bedroom however they want but to come to a consensus about common areas like the living room, kitchen, and bathroom. It’s important to be respectful of everyone’s taste when discussing potential arrangements and to be flexible with decor items, including the neon Budweiser sign from Roommate A’s college days.

Communication: The Key to Avoiding Roommate Disagreements

Our last common roommate disagreement in NYC is about communication (or the lack thereof).

It’s common for roommates to avoid conflict at all costs. Some will go so far as to move out when the other roommates are away for the holidays or on vacation. Others will text each other when they’re in the same apartment (in different rooms) to avoid an in-person conversation that may quickly escalate into a full-blown argument or fight.

This, of course, is not a sustainable solution to common disagreements among roommates in NYC.

The key to avoiding these scenarios is to communicate with each other openly and honestly about your expectations, needs, and wants. Perhaps it’s even more important to make it safe for your roommates to express their needs and wants without fear of judgment or retaliation, as one serial roommate learned in the aftermath of her experience, which included over 30 co-living situations.

Sometimes communicating before you sign the lease can help you find the perfect roommate to share your space. Other times, it’s helpful to have a monthly or quarterly check-in to see how everyone is doing and to identify any potential problems before they fester and become bigger issues.

With these solutions in mind, common roommate disagreements in NYC don’t have to be a cause for stress or anxiety. On the contrary, they can be a bonding experience that brings you closer to the people you live with, especially in a post-pandemic world where many are spending more time at home than ever before.

The post Ask An Agent: Common Roommate Disagreements and How To Deal With Them appeared first on CitySignal.

Home prices increased nearly 15% from April 2020 through the end of the year, and another 18% in 2021. Collectively, home prices appreciated 40% between April 2020 and April 2022. 2021 actually had the highest level of existing home sales since 2006, the height of the previous homebuying boom.

As a result, the number of people working in the real estate industry exploded. For some context, loan processor employment increased 23% from Q3 2020 to Q3 2021 as companies scrambled to meet the growing mortgage demand.

However, 2022 has not been as friendly to the real estate industry. Rapidly rising home prices, coupled with high mortgage interest rates, greatly reduced homebuying and mortgage demand. After a 15-year high for home sales in 2021, existing home sales fell 23.8% from September 2021 to 2022.

Mortgage applications were also way down from a year prior, falling 42% from October 2021 to October 2022 to a 25-year low. During the same period, refinance applications were down a whopping 86%.

“The ongoing trend of rising mortgage rates continues to depress mortgage application activity, which remained at its slowest pace since 1997,” Joel Kan, Vice President and Deputy Chief Economist at the Mortgage Bankers Association, said in a statement.

Widespread Industry Layoffs

After a recent jobs boom, the number of loan originators or loan processors has been down 10% since the beginning of 2022. According to reporting from NBC News, there are about 1.6 million realtors, but that number could decline by 25% come 2025 or 2026 due to decreasing homebuying demand.

Many major real estate firms will have reduced their workforce in 2022. In July, RE/MAX announced that 17% of its staff, or 120 employees, would be let go by the end of the year. Wells Fargo began reducing their mortgage staff in April and expects more layoffs shortly as mortgage originations at the firm are down an astonishing 90% from a year prior.

In October, Zillow laid off 300 employees, while Realtor.com laid off an undisclosed number of employees in September. Compass, a large real estate brokerage, also announced that they were going through with a round of layoffs in September.

Layoffs from many prominent real estate brokerages and mortgage firms reflect a tightening housing market with declining demand. Unaffordable home prices, high-interest rates, and low housing inventory will keep homebuying and mortgage demand down. As a result, economists predict home prices will decline substantially in 2023. For example, Moody’s Analytics predicts that home prices will fall 10% next year.

The post Large Real Estate Firms Reduce Workforce as Homebuying Demand Cools appeared first on CitySignal.

Home prices rose to new highs during the pandemic. As prices skyrocketed, increasing scrutiny into realtor commissions followed suit. CitySignal previously reported on the 2021 Department of Justice (DOJ) investigation into realtor commissions and fees in the United States. There was a similar federal investigation into broker commissions in Canada shortly after the American investigation commenced.

The DOJ investigation alleged that brokerages and realtor associations made commission rates less competitive through price-fixing. As an example, realtors often steered buyers away from homes listed with low commissions by falsely claiming that the property is overpriced, that the seller won’t negotiate on the sales price, or other potentially fraudulent claims. The federal investigation could potentially lead to an effective net reduction in commission structures. A new report details how this could become a reality.

NYC Realtor Commissions are “an Anomaly”

Real estate commissions for buyer agents are three times higher in Manhattan than in southern and eastern Brooklyn, according to new reporting from the Consumer Federation of America (CFA), a consumer watchdog group. The report “Diverse Real Estate Commissions: The New York City Residential Brokerage Anomaly”, points out some peculiarities in the way New York establishes real estate commission rates.

The main goal of the report was to investigate why the Brooklyn MLS, which operates in Southern and Eastern Brooklyn, could operate with a median 3% realtor commission fee and turn a profit. In fact, buyer agents who operate in the Brooklyn MLS only receive a median of 1% commission.

The report’s author, Stephen Brobeck, refers to the NYC realtor commission structure, and especially the Brooklyn MLS, as an anomaly since nationwide realtor commissions consistently average 5-6% nationally. He reviewed 6 service areas in the NYC area, all with different commission rates. The table below represents the average commission rate for buyer agents in the six listing areas the report analyzed.

Instead of having one uniform MLS, there are three main listing services in the New York City area, each with its own rules and mandates regarding commission rates. The report notes the significance of this phenomenon, as each listing service experiments with different commission and service structures. The three main listing services, along with their commission structures and rules, are the following:

• The RLS (Residential Listing Service), formed by the Real Estate Board of New York (REBNY), operates in and commands the vast majority of home sales in Manhattan and the wealthy brownstone areas of Brooklyn closest to Manhattan, with possible plans to expand into other areas of Brooklyn. Commissions for homes sold through the RLS have 5-6% commission rates, with a requirement that half of commissions go to the buyer agent.
• The OneKey MLS is affiliated with NAR and dominates sales in all areas outside Manhattan and Brooklyn. It doesn’t require buyer agent compensation to be the same as the listing agent’s commission, but it does conform to the NAR rule that buyer brokers receive an offer of compensation. If the buyer agent doesn’t receive compensation, the seller’s agent can’t submit a listing.
• The Brooklyn MLS operates predominantly in southern and eastern Brooklyn, and succeeded from the MLS associated with the National Association of Realtors (NAR) to establish their own rules and regulations. The Brooklyn MLS does not require brokers to offer commissions to buyer brokers. Median commissions are 3%, while buyer agents get 1%.

Main Conclusions of the Report

The Consumer Federation of America’s (CFA) 20-page report on commission rates in the NYC area isn’t exactly the most exciting read. However, anyone who wants to sell or buy a home nationwide should pay attention to the conclusions of the report.

The Brooklyn MLS is an anomaly, as listings sold through the service average a median 3% commission, compared to the national median of 5-6%. The report’s author Stephen Brobeck concluded that the Brooklyn MLS proves that realtors can charge a lower commission rate than the typical 5-6% and still make a profit. Most importantly, the Brooklyn MLS is able to charge low commission rates partially because buyer broker commissions aren’t required and are typically low when included.

The Brooklyn MLS operates in areas of Brooklyn that have some of the lowest home prices in NYC, yet agents there can still turn a profit. Home prices in New York City are high but are the lowest in areas with the lowest commission rates.

Brobeck also concluded that “the presence of just one MLS with low commissions in an area can drive down rates in other MLSs operating in the same or nearby areas.”

“The New York City residential real estate market shows that some rate competition among brokers and agents is possible,” Brobeck added.

In the report, Brobeck advocated that a commission structure similar to the Brooklyn MLS be copied on a national level and even called for a complete ban on buyer broker commissions.

“The NYC market shows that when listing agents are not required to offer non-negotiable commissions to buyer agents, rates decline,” Brobeck said. “However, when these commissions are required, and listing agents must provide equal compensation to buyer agents, rates remain high.”

“Uncoupling rates would likely stimulate not only greater rate competition, but also needed experimentation with different rate and service models,” Brobeck concluded.

In short, banning buyer broker commissions would reduce commission rates. Dr. Panle Jia Barwick, a professor in the department of economics at Cornell, came to a similar conclusion.

According to Dr. Barwick’s research, if buyer broker commission rules were eliminated, services would become more competitively priced since buyers would have to pay their agent’s commission fee. They could negotiate the rate, or even elect to go without a buyer’s agent if desired. Sellers would also have the power to negotiate rates with their listing agent. Other countries like Australia and the U.K. have similar rules in place. The change could reduce typical commission rates by one to two percent over a couple of years, according to Dr. Barwick.

Can Home Sellers Negotiate a Lower Commission Rate?

CFA encouraged NYC consumers, especially those who list their property under REBNY, to attempt to negotiate lower commission rates.

“In most instances, those selling homes in Manhattan are being ripped off by high commission rates,” Brobeck said in the report. “On the sale of a $1 million condo, agents rarely deserve $60,000 in compensation, the price of two new economy cars or one expensive one.”

Unfortunately, consumers have very little power to negotiate lower commission rates unless they have a highly sought-after property. However, it’s possible that realtor commission structures could change in the future, and allow consumers greater negotiating power in the process.

The post “An Anomaly”: What the Nation Can Learn From Realtor Commissions in NYC appeared first on CitySignal.

According to the Post, agent Ari Wilford had told the tenant that the fee would financially make sense in the end. The renter had even managed a $500 discount before closing the deal, but even then, had to take a large sum out of their savings to pay for it. 

In New York’s competitive housing market, brokers often charge up to 15% of a year’s rent in broker’s fees, but a fee of $20,000 is unheard of. The fact that the apartment wasn’t even ready on move-in day makes the large sum even harder to believe. The new tenant had to cough up even more cash to put their belongings in storage while they waited for a fresh coat of paint to be applied. 

Taking a closer look at the current rental market in NYC 

It’s no secret that prospective tenants have to fight long and hard to secure their ideal apartment in the City. Many either compromise on desired features, or pay extra to land a livable space. According to Douglas Elliman’s July market reports the median rent in Manhattan hit $4,050 in June—$800 over what it was just a year ago. 

The report also reveals that the average rental price for a Manhattan apartment reached $5,000 for the first time in New York’s history. At that price, the average tenant would be paying close to $61,000 a year just on rent.

Rents are more affordable in the outer boroughs but are up, nonetheless. In Brooklyn, the median rent is currently $3,400, up $525 from July of last year when the median rent was just $2,875 a month. In Northwest Queens (encompassing the areas of Long Island City, Astoria, Sunnyside, and Jackson Heights), median rent sits at $3,146, but that’s still $300 more than what it was in July of 2021. 

While its true pandemic price breaks couldn’t last forever and bidding wars were bound to erupt among prospective tenants, New Yorkers are questioning whether real estate professionals should be given free rein to profit off of current market conditions. 

Disproportional broker’s fees are unusual even in a competitive rental market

Even in a red-hot rental market, such as the one NYC is currently experiencing, broker’s fees reach a maximum of 15% of one year’s rent. In Realtor Ari Wilford’s case, the fee amounted to 100% of one year’s rent. Marvin Michel, a real estate agent with Douglas Elliman, told the Post, “I’ve never seen that, and it’s not something I’d do. All my fees have been 15 percent.”

There’s currently no law capping broker’s fees under the New York Department of State, which is responsible for licensing agents and brokers in New York. However, spokeswoman Mercedes Padilla clarified that a broker’s fee is supposed to “represent charges for actual services.” It’s not meant to be an arbitrary number decided upon by agents or brokers.  

The exorbitant commission caught the department’s attention, prompting an investigation into the deal. It turns out this was not Wilford’s first attempt at collecting a disproportionate fee on a rent-stabilized apartment.

City Wide Apartments defended the fee, but removed Ari Wilford’s profile from their website

According to the New York Post, a previous client of Wilford’s claimed he had initially asked for a fee four times as much as the monthly rent. The apartment was priced at less than $2,000 a month, but Wilford managed to secure a commission of $7,000. “Ari, to be clear, wasn’t even in New York,” said the client, “Because of COVID, he relocated.” Apparently, Wilford had only handled the paperwork.

Another prospective tenant was allegedly asked to pay a $10,000 commission on a $2,400 per month unit in Gramercy Park, but the renter declined. All three apartments were rent-regulated/rent-stabilized. 

Owner of City Wide Apartments, Michael Jacobs, defended Wilford’s fees, telling the outlet, “Brokers provide great value to their clients and have been working harder than ever at a time where demand is surging, supply is low, and finding a home in New York City has become more challenging than ever.”

As of September 21st, Wilford does not appear on the company’s webpage. He has yet to comment on the situation. 

The City’s complicated history with broker’s fees

The fact that brokers are even involved in rental agreements may come as a surprise to tenants and landlords from out of state. In New York, it’s common practice for brokers to negotiate rental transactions given their control over listings, showings, and leases. 

Unlike most cities in the country, New York landlords often prefer to work with brokers instead of directly with tenants. Hiring a broker allows landlords to enjoy greater exposure, fast occupancy, and outsource tenant communications. Tenants almost always have to go through a broker to rent an apartment—even when they found the apartment on their own. 

Broker’s fees are usually paid in one lump sum payment by the tenant before they can move in. That’s on top of the typical security deposit, first month’s rent, and any other expenses renters incur due to the move. New York City is one of the only cities in the country where broker’s have such financial leverage over how tenants rent apartments.

In February of 2020, New York State regulators temporarily banned broker’s fees for renters, capping them at $20

A little over two years ago in an unanticipated move by state regulators, broker’s fees were essentially banned across New York. The measure only lasted about a week, but it put at risk the livelihood of about 25,000 real estate brokers who were actively licensed in the City at the time. 

The new law was intended to supplement the renter-protection laws passed in the summer of 2019, which capped security deposits at one month’s rent. Initially, the addendum on broker’s fees stated tenants couldn’t be charged more than $20 in fees when applying for an apartment which included broker fees, credit checks, and background checks. 

The law was then revised to clarify that brokers could still collect a fee, but it had to be paid by the landlord unless the tenant in question had hired the broker to help find the apartment. 

The intent behind these new laws was to protect tenants, strengthen rent regulations, and ultimately lower the lump sum payment renters had to pay before securing housing. But the progressive gesture caught brokers, landlords, and even some lawmakers off guard. 

The Real Estate Board of New York and the Influential Trade Group came together to challenge the ban. Brokers warned that the new regulations would motivate landlords to spread the broker’s fee across their tenants’ monthly rents, making leasing arrangements more expensive. 

Although that may have been true for the 900,000 unregulated, market-rate apartments at the time, that wouldn’t be the case for rent-regulated apartments in the city. About 2.4 million people currently live in rent-stabilized apartments in New York. 

A week later, a New York judge blocked the ban, allowing brokers to once again charge commission fees on rentals 

The ban on broker’s fees was short-lived, with Justice Michael Mackey of the New York Supreme Court in Albany County blocking the order just a week after it was introduced. The Real Estate Board of New York and New York State Association of Realtors, as well as other real estate groups had sued the Department of State over the ruling. 

The lawsuit claimed that the Department of State was imposing a new rule on the broker’s industry without giving brokers a fair chance to respond. The organizations involved in the suit pointed out that the ban hadn’t come up in 2019 when the state Legislature debated which rent laws were going to be adopted. 

In the short time the ban on broker’s fees stood, tenants conjured up quite a storm. At the time of the contentious ruling, Douglas Elliman had reported that tenants all across the City were refusing to pay commissions and threatening not to close, putting hundreds of active rental transactions at risk. 

In May of 2021, New York State affirmed that broker’s fees were legal

The controversy sparked a formal debate on whether broker’s fees were even legal. Despite broker’s fees being common practice in the NYC rental market, many tenants found it hard to justify paying thousands of dollars upfront just to rent an apartment. 

An apartment priced at $2,500 could require a tenant to pay anywhere between $6,700 and $9,500 upfront. Of the three expenses, the broker’s fees would be the most expensive, sitting between $3,000 and $4,500. Eliminating broker’s fees would drastically reduce the financial burden associated with renting in NY. 

But, last year New York State definitively ruled that broker’s fees were in fact legal and could continue to form a part of the rental market as usual. 

Why are broker’s fees allowed for NYC rentals?

Before information became readily available to us through the internet and smartphones, brokers had a much more active role in real estate. Only through an agent would you be able to find available units, schedule a showing, and coordinate a lease agreement.

In their earlier days, agents had to invest a considerable amount of time and effort to help renters, buyers, and sellers participate in the real estate market. Real estate professionals were responsible for listing apartments in a variety of publications, answering phone calls, and processing all necessary paperwork. 

But, given the ease with which prospective tenants can navigate online listings and even schedule virtual showings, the role of agents and brokers in the rental process has had to evolve. The extent of their involvement in securing rental agreements for tenants varies from one transaction to another. 

Renters who find an apartment on their own often have to pay the same percentage of broker’s fee as a renter who sought out a broker’s assistance from the beginning. Several renter advocacy groups have voiced their concerns over the practice, claiming that exorbitant broker’s fees are a significant barrier to entry for living in NYC. 

Real estate groups, such as the ones mentioned in the lawsuit against the state Legislature, maintain that brokers offer a significant amount of resources to renters and that without rental commissions, many brokers and agents would be left without an income. 

Can a renter get away with not paying a broker fee?

Although broker’s fees are here to stay, there’s still some hope for renters who are unable or unwilling to pay a broker’s fee on their rentals. You’ll notice that many market-based rentals are listed as ‘fee’ or ‘no-fee’ apartments on rental platforms such as RentHop and StreetEasy. Both kinds of apartments require a broker’s fee to be paid; the difference is who pays for it. 

Fee apartments are units where the renter is expected to pay the broker’s fee. No-fee apartments are units where the landlord is responsible for the broker’s fee. Many times the property owner will absorb the costs, but they could also pass on the cost to the renter in the form of higher monthly rents. 

The logic behind a 20k broker’s fee—is it worth it?

Assuming the parties involved agreed upon a broker’s fee worth 15% of the annual rent, the Upper West Side pad leased by broker Ari Wilford warrants a maximum broker’s fee of $3,150. But, in this particular deal, the broker walked away with almost $21,000, an entire year’s worth of rent. 

Wilford had told the landlord the numbers would even out in the end. To justify the fee, the new tenant would have to stay in the apartment just shy of six years, totalling a rental income of $124,200 for the landlord. Taking these numbers into account, the broker would have technically earned his fair share. 

The problem is most tenants stay an average of just three years in a single-family rental, not six. Given that the apartment is rent-stabilized, it’s likely the tenant would stay more than three. But considering the economic situation of someone leasing a rent-stabilized apartment at just $1,725 a month, those $21,000 are not easy to come by. 

Although the average down payment on a home in NY state is $34,998, in other places of the country, a down payment can be as low as $10,000. Why would a renter pay double that in broker’s fee just to rent and not to own? 

The argument is that despite the mass exodus that NYC experienced during the pandemic, NYC is still a highly desirable place to live and that broker’s fees are just another part of the market reflecting it. Don’t hate the player. Hate the game, it seems. 

The post Is There a Case for a $20k Broker’s Fee on a 1 Bedroom, Rent Stabilized Apartment in NYC? appeared first on CitySignal.

What’s the Average Real Estate Agent Salary in NYC?

Unfortunately, there’s no singular answer to that question. The average real estate agent salary in NYC depends on a variety of factors, such as niche, location, years of experience, and whether you work full-time or part-time. 

Luckily, NYC is particularly favorable for real estate agents and provides plenty of opportunities. According to the Bureau of Labor Statistics, the annual average wage for real estate agents in the New York metro was $86,650 as of 2021. When compared to the national average real estate agent salary of $61,480. NYC real estate agents make a pretty good living!

How Real Estate Commissions are Split

Similar to the rest of the country, New York commissions are split between the listing agent, buyer agent, and broker with a standard commission percentage of 6% (the national norm). However, it’s not uncommon for commissions to be capped at 4-5% of the sale price on properties sold for $10 million or more. 

Listing Agent/Buyer Agent Splits: Most real estate deals in New York are “co-broke”, meaning commissions are split evenly between listing and buying agent. This means each party receives 3% of the total home sale price. Sometimes, the split could also be 4% / 2% or 3.5% / 2.5%. 

Broker/Agent Splits: The 3% commission received by each agent is then split between broker and agent at a ratio of 40/60 or 65/35. The percentage received by  the agent depends on the amount of business they bring into the brokerage. Typically, the more homes you sell, the bigger your percentage split is between you and your broker.

How the Tax Code Impacts Real Estate Agent Salaries

The vast majority of real estate agents in the U.S. are not salaried. Instead, they’re considered independent contractors. As self-employed workers, they have a higher tax burden counting towards their Medicare and Social Security contributions. The self-employed tax rate is set by the IRS and is currently 15.3%—that’s double the national tax rate of 7.65% for traditional employees. 

New York Income Tax Brackets

In addition to the federal tax, New York real estate agents also pay state income tax which is based on annual earnings. You can reference the New York State Income Tax Brackets below:

• $0 – $8,450 – 4.00%
• $8,450 – $11,650 – 4.50%
• $11,650 – $13,850 – 5.25%
• $13,850 – $21,300 – 5.90%
• $21,300 – $80,150 – 6.45%
• $80,150 – $214,000 – 6.65%
• $214,000 – $1,070,350 – 6.85%
• $1,070,350+ – 8.82%

In addition to state income tax, there’s also a city income tax. The NYC income tax lies somewhere between 2.9 and 3.8 percent. Although taxes are relatively high for real estate agents in NYC, sizable commissions and the ability to write off certain business expenses could help balance out the heavy tax burden.

Self-employed individuals have the right to deduct relevant business expenses from their tax basis. For a real estate agent, this could mean expenses such as gas, car insurance, marketing materials, annual NAR membership fees, and professional development courses. Deductions lower your taxable income, reducing your tax responsibility at the end of the year.  Remember to consider these tax implications when calculating take-home income as a real estate agent in NYC.

How Can I Maximize My Earnings as a Real Estate Agent?

The limitations on your salary as an NYC real estate agent may seem discouraging at first, but keep in mind commissions aren’t the only way agents make money! A real estate agent’s salary in NYC can be supplemented via ancillary services. 

Ancillary services offer existing clients a new service that complements a business’ primary functions. As a real estate agent, your primary business function is to help clients buy and sell homes. However, there are a few additional yet related services homebuyers and home sellers may need in the process of buying or selling a home. 

The right combination of ancillary services can provide real estate agents a considerable advantage over the competition by becoming a one-stop shop for clients. Below are examples of ancillary services savvy real estate agents can provide:

Types of Ancillary Real Estate Services 

Property Management

As real estate investors expand their property portfolios, it often becomes challenging to keep up with tenants across all rentals. Finding a reliable and trustworthy property manager is at the top of any investor’s list of priorities. 

Given the nature of their work, real estate agents could be excellent property managers. Good agents can identify physical issues on a property, have a network of contractors for repairs, and run established systems that are efficient and reliable. 

Many agents manage properties they’ve sold on behalf of their clients, such as long-term rentals or vacation rentals. If you can prove to be a reliable property management resource in your market, clients will soon start coming to you through recommendations. 

Home Staging 

The process of staging a home before putting it on the market is a crucial component of selling a property. According to Forbes, staged homes sell faster and for more money than non-staged homes. Not only do agents offering home staging services help their clients, but they can also partner with investors and even other real estate agents on a variety of projects. 

The truth is, sellers aren’t the only ones interested in staging their homes, so your home staging business can operate as a stand-alone service. Vacation rental companies, individual property investors, and agents looking to add a special touch to their listings are all potential home staging clients.

Cleaning Services

A less sexy, yet necessary task in the sale or rental of any home is deep cleaning. Commercial cleaning services are essential in today’s workplace, especially after the onset of the pandemic. They’re equally as important in the sale of a home, because sellers will have to leave the place spotless before handing over the keys. 

Cleaning is a major pain point for home sellers. By providing cleaning services to homeowners, agents remove an extra burden from the seller and facilitate the move-in process for the buyer.

What are the costs associated with being an agent in NYC?

First-year real estate agents in NYC can expect to pay between $2,000 and $2,500 to get started in the profession. Some of these expenses must be paid up-front, while others can be paid on a monthly or quarterly basis. 

A handful of these expenses are mandatory, such as the real estate course, exam fee, and salesperson application fee. Together these mandatory fees cost between $320 and $470. 

Other expenses are optional yet highly suggested, such as a membership with the local association of realtors, MLS membership, lock box fees, and increased auto insurance. If you’re in NYC, a membership to REBNY may be  Together these memberships, and additional fees cost between $1625 and $1725. 

Aspiring agents should also consider the ongoing costs of working as a real estate agent in NYC, which include continuing education, marketing materials, home staging, and other business expenses. 

Every two years, NYC real estate agents are required to complete 22.5 hours of additional instruction outside of their initial 75-hour course in order to renew their license. With 78,167 active real estate agents and realtors in New York, competition is fierce, so investing in personal marketing is necessary. 

Staging a home for sale is a crucial component of selling a property, especially with a market as competitive as this one. Business expenses such as phone bills, gas, and office supplies will vary depending on where you are located and who you work under but are also essential. 

The post How Much Do Real Estate Agents Make in NYC?  appeared first on CitySignal.

Hey Daniela! Thank you for speaking with me.

Of course!

So tell me about yourself. How did you get into real estate?

I am 22 years old. I’ve been in real estate for about 9 months now and loving it so far! I have always wanted to work for myself and for a while most of my friends and family would tell me that they felt I would be great at real estate. At that time I was feeling underwhelmed with growth opportunities at my previous job and I really didn’t want to work for anyone other than myself anymore.

I was also new to NYC, which made the shift to working independently a little scary. All of my family and my connections were back in Miami where I grew up. This proved to be a challenge for a short period of time. I also decided I would make this shift while we were still mid-pandemic and during the Fall which is when we usually see the rental market cooling off. 

I had three months of rent saved up when I left my 9-5. Three months to make this happen for myself. My proudest moment thus far, as silly as it sounds, was when I cashed in on my first deal that I did, completely on my own, about 2 months in from when I started.

 

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That’s not silly at all! If I may, how different is real estate in New York compared to Miami? 

I feel like NY is really so much faster in general and that applies to real estate just like everything else. Property prices are skyrocketing in Miami at the moment which is fantastic for all agents that work down there but I do feel that no place holds greater opportunity than NYC. 

What tips would you recommend to someone from Miami who’s looking to move to NYC? What neighborhoods would you send them to?

It really depends where you come from in Miami and what lifestyle you are looking for. I moved from the suburbs and it was a huge lifestyle change just in general. I opted to move to a quiet neighborhood in Brooklyn to help me adjust. But others may be more interested in a faster pace of living, in which case I would recommend LES or Soho.

Interesting. So since cashing in on your first deal was your proudest moment, what has been the most difficult? What are some challenges to being an agent?

I would say that the biggest difficulty I have faced with real estate is setting up my work/life balance and the uncertainty/instability that comes with being 100% accountable for your income. I definitely got burned out my first few months in. I was working 24/7, I would never mentally disconnect from work. I feel that this comes with the territory of being the only one accountable for your success. 

However, I learned very quickly that running yourself into the ground is not the most productive or effective way to make money. Just like with any job, there needs to be a time where you disconnect. That is something I feel needs to be talked about more in an industry that heavily promotes hustle culture.

How do you think NYC can move beyond the hustle culture that it’s known for? 

I think NYC will always be full of highly driven individuals. There is no changing that and we shouldn’t try to change that. That’s what makes this NYC. However, I think that if we all try to begin appreciating what a break can do for our mental and physical health, we will be on the right track. 

I 100% agree. It must especially be hard working in an industry where age and experience are often seen as major assets. Considering how young you are, how do you stand out from that crowd?

People always seem surprised at my age. I see it only as an advantage. I am only 22 and I have managed to figure out what I love to do & how to profit from it. That’s more than I can say for a lot of people.

Haha it’s certainly more than I could say at 22. Did your age make it difficult to get into real estate?

I feel that my age has made it easier for me to transition into real estate. In a way I had nothing to lose. I feel that your early 20’s are the best time to make leaps in terms of career choices. I have never had someone doubt that I am capable or experienced because I do my best to know my product and what I’m talking about. 

What are some of your strategies when trying to sell a home?

My clients get my absolute undivided attention. To make this possible I only work with a certain amount of buyers and sellers at any given time. Where you may get lost in the sea of many with another broker, making my clients feel heard and appreciated is my top priority.

So you provide a sense of comfort to those seeking to buy? Your clients must really appreciate that. What other strategies do you employ? Does Social Media play a big role in your work?

I feel that social media plays a huge role in all businesses today. Whether you love it or not, no one can deny the incredible power that a brand’s online presence holds. If you want to stand out, people want to get to know you. They want to associate a personality. A face to your service. Social media gives us the perfect opportunity to showcase that.

What social media platforms have you had the most success on? 

I mainly use Instagram for all of my personal marketing. I do my best to keep it personal so that it doesn’t come off as too salesy. I want to leave people the feeling of knowing me on a personal level, not just business. 

 

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Interesting. I like how focused you are on forming a good relationship with your clients. 

In my opinion, we should actively practice becoming more personable. Think of your clients, and treat them as more than a paycheck. Transactional agents only get so far. 

So, what’s your favorite NYC neighborhood? 

Will I sound cheesy if I say the West Village? Truly it is where I love spending time & it’s my favorite neighborhood to work in. If I were to pick a neighborhood in Brooklyn it would be Park Slope 

Neither of those are cheesy! You could probably work in those neighborhoods for the rest of your career. What are your own dreams for your future in real estate? 

My dream is to devote myself to working only in sales full time. As much as I love rentals, the time you get to spend with a buyer or seller really does allow you to get to know someone and become attached on a more personal level. 

In that same vein, what does the future of New York real estate look like to you?

As long as NYC stands, there will always be people who want to live here. We made it through a worldwide pandemic stronger than ever. I believe that the real estate market in NY will always hold new and exciting opportunities. You just need to be willing to adjust to the times we are living in and you will succeed. We are the new face of this industry.

Well said! Daniela, thank you so much for your insight. I learned a lot, and I’m excited that you and your peers will be paving the way for a bright future.

Absolutely! Thank you.

Daniela, and others like her, want to create a kinder, more personal real estate industry in New York City. What struck me were the words, “get lost in a sea of many.” I think everyone in the city can relate to that. Feeling like just another number for a commission is very off putting. The industry definitely needs the care and personability that Daniela is providing. Buying a home isn’t easy. However, with people like Daniela Roman leading the way, New York real estate can transform from an intimidating industry, into an exciting adventure toward your dream home. 

The post The Innovative Youth in Real Estate: Daniela Roman appeared first on CitySignal.

Commission Structures Explained

Canadian Real Estate Commission structures are similar to American ones but the fees differ based on the province. For example, In Alberta and B.C. commissions are usually seven percent on the initial $100,000, with three percent on the balance. Commissions sit between four and five percent in other provinces. Commissions in the U.S. are usually at 6% of the sales price of the property, but brokerages are free to charge less of a fee.

Realtor commissions in the U.S. are typically 6% of the sales price of a property. The relatively high commission rate is paid largely from the buyer’s payment at closing, which reduces profits for sellers. While commissions are usually at 6%, rates vary on the specific situation or broker. 

Sellers can often decide the commission rate for both sellers’ and buyer’s agents, with higher commissions incentivizing buyers’ agents. The average commission rate in the U.S. sits at 4.9% at the moment, but the most common arrangement is a 6% fee split between the buyers’ and sellers’ agents. With rapidly rising home prices, many consumers feel that hiring an agent and paying the high commission is mandatory but often unnecessary. 

People often view it as inevitable, but the 6% fee leaves many wondering if the cost is worth it. There’s always been a negative sentiment toward real estate commissions, but with home prices skyrocketing since the start of the pandemic, there is a renewed effort to reform the system.

The Lawsuit Explained

The lawsuit alleges that a portion of Canada’s most prominent real estate brokerages, such as Century 21 or Remax, “conspired, agreed or arranged with each other to fix, maintain, increase, or control the price…for buyer brokerage services in the GTA”. GTA stands for Greater Toronto Area. In addition to the largest real estate brokerages, the lawsuit also accuses the Canadian Real Estate Association of aiding the brokerages. 

To sum it up, there are accusations of “price fixing” that lead to significantly higher commission fees over time in the Toronto area. This means that, according to the lawsuit, the Toronto Residential Real Estate Board and Canadian Real Estate Association essentially forces home sellers on the Multiple Listing Service (MLS) to pay the commission of the buyer’s agent/brokerage. 

Since sellers have to also pay for the buyer’s brokerage commission, they have to pay double the commission, with half of the fees going to an agent that didn’t represent them. According to the lawsuit, this commission structure forced sellers to pay for something that they wouldn’t otherwise pay for. This effectively kills marketplace competition, and doesn’t allow consumers the choice to negotiate the price of the agent’s work. 

The rationale for the lawsuit is that the current Canadian real estate commission structure “creates the incentive and ability for buyer brokerages to ‘steer’ buyers away from residential real estate properties where sellers offer lower than the norm buyer brokerage commissions,” according to research commissioned by Kalloghlian Myers LLP, the law firm behind the legal case. 

The firm’s research found that those actions are akin to price-fixing, as it offers a disincentive for sellers to work with an agent for a smaller commission. The price-fixing is largely responsible for continuously increasing commission fees in a very expensive housing market. 

According to The CBC, a buyer’s agent would have made about $8,795 on an average single-family home sale in 2005 within the Greater Toronto Area would have earned a commission of about $8,795 on the average single-family home. In December 2021, the same buyer’s agent would make four times as much ($36,230) on an average home sale, according to Dr. Panle Jia Barwick, an economist who studies real estate commission structures.

During that time, median household income in Canada only increased by about 14 percent, adjusted for inflation, even as commission fees increased 400%. The commission structures in Canada were somewhat controversial before the pandemic, but since Spring 2020 home prices have appreciated over 50% nationwide, shining a light on the severe lack of affordability in the market. 

What Changes Do Critics Propose?

The lawsuit in America is similar to the one in Canada, as they both allege that brokerages and realtor associations were guilty of price-fixing and making commission rates less competitive. For example, agents often steer people away from low-commission homes by claiming that it’s overpriced or that the seller won’t compromise on price, even if that’s not true. 

The Canadian Real Estate Association, in response to the allegations of steering and price fixing, sent a notice to their agents saying that “in addition to being illegal, the conduct undermines consumer protection, consumer confidence and the reputation of the real estate profession as a whole.” 

Real estate commission experts like Dr. Barwick argued that there is a simple change to increase commission competition. If buyer broker commission rules were eliminated, services would become more competitively priced since buyers would have to pay their agent’s commission fee. They could negotiate the rate, or even elect to go without a buyer’s agent if desired. Other countries like Australia and the U.K. have similar rules in place. 

According to Dr. Barwick’s research, making that change could reduce typical commission rates by one to two percent over a couple years. Sellers would also have the power to negotiate rates with their listing agent. 

Of course, the real estate industry doesn’t want commission rates to drop by one to two percent. The Canadian Real Estate Association and Toronto Regional Real Estate Board didn’t offer comments when requested. In America, The National Association of Realtors (NAR) defended the importance of realtors’ expertise and negotiation tactics with growing prices and competition. However, with growing scrutiny and legal action in North America, realtors in the U.S. and Canada may have to work harder to negotiate their commissions. 

The post Realtor Commissions Under Investigation in the U.S. and Canada  appeared first on CitySignal.