Photo-Illustration: Curbed; Photos: Getty, Trulia
Gino Filippone was at a dinner with seasoned real-estate brokers this spring when the obvious topic came up: the NAR settlement. It seemed to be a gloomy subject: Headlines about it suggested that courts were censuring the industry, making the profession look like a bunch of used-car salesmen. The legal changes to how Filippone, an agent with the Corcoran Group, and his peers would be allowed to do their jobs would mean more meetings, training, and paperwork. But as the table ticked through the potential effects, they also saw a silver lining.
In the past, a seller paid the agent who represented a buyer, which seemed to make buyers accept any agent with a pulse. After all, they weren’t paying. Now, the money can come from the buyer’s side, giving them power to negotiate over the fee and to consider whether their agent deserved, say, a $30,000 lump sum (the classic 3 percent commission on a median $1 million Manhattan apartment). It would certainly seem too much if the buyer already found the home and the broker only handled the closing. A new, required contract that stipulated the fee would have to be signed by a buyer, who might pause to question whom they are hiring, especially if that person had just appeared at random in, say, a Streeteasy pop-up or an Instagram post.
Pro agents realized this and were thrilled. “It dawned on us at the same time,” said Filippone, who remembered a giddy feeling at the table. Almost half of real-estate agents in the country got into the business in the last five years, buoyed by buyers who did not seem aware of how the system worked. (One watchdog group, which called that a “glut,” also says it’s an undercount.) To Filippone and his colleagues, the outcome was clear. “You won’t have this group of immature, inexperienced, licensed salespersons,” he said. They ordered more wine and toasted a rosier future.
“Oh my God,” said a friend at the table. “I can’t wait.”
One analysis predicted the new rules will push out 1 million agents. But this is mostly speculation. And in New York, it’s especially premature. A buyer’s market here means sellers are still mostly offering 6 percent. And the state works under a membership organization that has not yet finalized the terms of how it will join the settlement. Though even back in August, an agent told The Real Deal that ahead of expectations of lower commissions, half of the brokers in his office had quit. “I tend to be a pessimist,” said Ben Jacobs, an Elliman broker who foresaw a future where the contract didn’t change much. But his partner Jessica Chestler thought it could bring them more clients — buyers who, suddenly aware they could shop around, would be looking for a team like theirs that specialized in navigating buyers through a process that can sometimes be “scary,” she said, and had a reputable track record. None of their clients had ever been turned down by a board. “I’m an optimist,” she said. So is Michael Biryla, a broker who had been grinding for ten years in New York and, on news of the settlement terms, started celebrating with colleagues at the Agency. “We were high-fiving in the office,” he said. Leonard Steinberg, a broker and executive at Compass, agreed that “agents who are doing this as a hobby and are unprofessional will probably leave the profession. A silver lining.”
Every industry relies on seasoned pros to pick up the slack — like the adage that 20 percent of workers do 80 percent of the work. But in real estate, “it’s more like 90 to 10,” said John Brandon, a Yale-educated broker who co-founded Archpoint Advisory, a boutique firm that markets its ability to hand-hold. No degree is required to become a real-estate agent — even a high-school diploma — and video tutorials to pass state exams are sold on Groupon ($86.40 in New York for a one-week course). “There are great brokers out there who are always a pleasure to work with, and others who you have to hope and pray for,” Brandon said. And hope and prayer are all New Yorkers have: Of the 3,700 complaints made to the state about real-estate agents over the last four years, only 61 brokers and agents lost their licenses.
The lack of scrutiny is a national problem, of course: Lexi Newman, a broker with Compass in Los Angeles, likes to tell clients that a sale “is only going to be as smooth as its weakest link, and sometimes that’s the agent on the other side.” And those agents can actually ruin deals — like the one who tried to negotiate a price down by insulting the home, which turned off her sellers, or another who threatened a sale by going on vacation instead of signing papers at a closing. In Miami, where the agent Ivan Chorney has expertise in select developments, he’s lost listings to green agents a seller just happened to already know. “The brother, the friend, and a lot of times in Miami, it’s the pretty girl — that happens all the time. I can’t tell you how many times I should have gotten a listing and the seller said, ‘Actually, I’m going to hire a friend who lives an hour away,’” he said. Those agents can overprice homes, mess with marketing, or fail to book timely showings. “There are all these people who will take one of the biggest investments of their life and will go and give it to an amateur.”
“Picture the classic older New York woman, in a fur coat and a scarf,” said Filippone. “She’s been a broker for 40 years. She wants to do this until she’s 80. But her life changed five years ago.” And recently, he said, she’s found herself “run over by a kid with a lot of followers on Instagram, who pushes every button in a seasoned broker — looks shiny and new, and hasn’t done any of the homework.” This can force a seasoned broker to do their “homework” for the other side, doing more work for the same pay. Filippone recently sold a condo whose agent went into contract, then didn’t send in his client’s application. The client’s broker said, “and I quote, ‘We didn’t know there was a condo package.’” When the veteran Compass broker Eric Marrus represents a listing, and finds himself across from an agent who can’t do a package, he buckles down. “I’d like to have the luxury of saying to someone, ‘Go fly a kite.’” But he has a responsibility to the seller to get the most for their space, smooth any rough edges, and, sometimes, edit a board package for the other side. Matthew Bank, a broker who owns the boutique firm Bank Neary, has filled out an entire application for a buyer — whose agent “did absolutely nothing.” And one mortgage officer who found themselves working on a deal with two inexperienced agents did the board package themselves, according to what they told the Compass agent Molly Franklin.
It’s all an epic waste of everyone’s time. Steve Clair, a Serhant agent, remembered one open house for a walk-up in the West Village when he welcomed a stream of agents and their clients who asked to see the elevator. Of course, there was none, as was made clear on the listing. “We’re in New York City,” he said. “How is everybody not efficient?” And inefficiency gets very expensive when homes sit on the market. Marrus, the Compass broker who routinely checks over board applications, remembers walking into a listing in Flatiron that had sat for six months and realizing why. When you compared the apartment against the floor plan, it was missing a room. “A full room,” he said. For a listing agent, a floor plan is “the lowest of low-hanging fruits.”
And it probably cost those sellers real money, too — putting off an initial wave of potential buyers who came for that room, then scaring off anyone who assumed it sat on the market because of a major flaw. Dilettante listing brokers can also cost sellers with bad marketing, weird staging, and a lack of responsiveness. Clair had to email an agent last week repeatedly to ask for photos of a home’s interior, then got a response that didn’t exactly woo his clients: an oddly cropped photo of a bathroom.
On the other hand, if green agents get pushed out of the profession, that will mean fewer opportunities for the pros to take advantage of them. At a recent Lower East Side listing, Biryla, the high-fiving agent, met an eager buyer and an agent she introduced as her “bestie,” a person with “no experience, no mentor, nothing,” he said. He had no obligation to help her, share comps. So he didn’t. Though there were no other offers, he told her that she would need to waive all of her contingencies and come in over asking. “She did,” he said. “I could smell blood in the water.”
