The Real Deal New York

City Connections adds two offices, introduces new commission split option

January 14, 2011 01:28PM
By Candace Taylor

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From left: 311 East 76th Street, 510 Amsterdam Avenue and City Connections’ David Schlamm (building photos credit: PropertyShark)

Brokerage City Connections Realty today announced tweaks to its business model and plans to open two new storefront offices housing up to 75 new “virtual” agents.

City Connections founder David Schlamm said the firm will open 550-square-foot offices at 510 Amsterdam Avenue, between 84th and 85th streets, and 311 East 76th Street at Second Avenue. They should be up and running by April 1, he said.

The new offices will be used primarily by 50 to 75 new virtual agents that Schlamm said he plans to hire over the next year, bringing the firm’s total to 200 agents. These agents will work primarily from home, but can use the offices to meet with clients. Currently the firm has roughly 60 virtual agents and 60 agents with permanent desk space, Schlamm said.

The change was prompted by overcrowding at City Connections’ 6,400-square-foot corporate headquarters, and lone existing office, at 71 West 23rd Street, Schlamm said.

He said he’s been getting an increasing number of inquiries from potential agents.

“More people are calling me than ever before,” he said.

One reason for that, he said, is the growing prevalence of firms that, like City Connections, offer agents higher-than-average commission splits. At the largest of these firms, 400-agent Rutenberg Realty, agents pay a monthly fee of $99, and keep their entire commission check minus a transaction fee of $1,000 to $2,000 for sales or $200 to $800 for rentals. In January alone, two new high-commission-split firms launched in Manhattan: Spire Realty and Keller Williams New York City, founded by former Prudential Douglas Elliman super-broker Ilan Bracha.

And that may be just the beginning; more of these so-called “thin brokerages” are likely on the way, said Patrick Healy, a management consultant specializing in marketing and operations for the real estate industry. “These business models are going to be tremendous; you are going to see them pop like crazy this year,” he said.

Many agents were initially skeptical of the new model, but as these high-commission firms proliferate, more agents are considering them, said Schlamm, who founded City Connections Realty in the 1980′s and switched to a high-split model in 2004. Agents there keep 90 percent of their commissions and pay monthly fees of $825 to $1,325, depending on the size of their desk space and how often they use it, Schlamm said.

Brokers at traditional firms “see more and more brokers defecting, and it makes them think,” Schlamm said. These days, he added, “brokers want higher splits, and they’re getting them.”

To help spur recruiting, Schlamm said he’s introducing a new split option for his agents. Virtual agents now have the option of paying $150 per month and receiving a 70 percent commission split on the first $60,000 they earn for the company, and 90 percent after that.

Some agents are intimidated by the size of City Connections’ desk fees, he said, and he hopes this will help allay that.
“It takes away the fear of laying out the money,” he said.

Schlamm thinks the new storefronts will help increase the company’s visibility on the Upper East and West sides.

He hired designer/developer Carol Blum, who specializes in loft condo conversions, to work on the new offices, and said he’s going for an aesthetic that is “a cross between Google and Starbucks.”

“I think it’s going to be cool, fun and different,” he said.

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