The Real Deal New York

Remote control: brokerages scrap storefronts in favor of virtual offices

February 06, 2013 02:30PM
By Guelda Voien

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From left: Vanessa Gad, Rolan Sereny and Neil Binder

Residential real estate brokerages often boast about the breadth and quantity of their offices, as well as the number of agents who work full-time on-site. But recently, several firms have gone the virtual route, forgoing physical offices in an effort to shave down operating costs and retain agents with higher commissions in an increasingly competitive environment, brokerage owners told The Real Deal.

Vanessa Gad, CEO of Gad Realty, which launched in November, has operated her three-agent business remotely since its inception, with great success, she said. She lists her husband’s business address with the New York State Department of State, which requires brokerages to provide a physical address in order to business here.

“You really don’t need an office to be successful,” Gad said. “As a broker, you have to find customers and socialize and it’s not in front of your desk that you do that — my philosophy is to be outside.”

Gad, who has appeared on “Million Dollar Listing New York,” recently represented the Brazilian buyer of a $3.5 million apartment at 61 Irving Place in Gramercy Park, as The Real Deal has previously reported.

Max Kozower, owner of Manhattan-based Maxwell Jacobs, runs his office as more of a hybrid, he said. He has a dedicated office at 1230 Sixth Avenue in Midtown, which he rents from a so-called executive suite service, which provides short-term office spaces to smaller businesses.

The virtual approach has worked well, he said, providing agents freedom and keeping costs for the 10-year-old boutique brokerage low. “It allows me to pass a larger amount of the commissions I generate on to agents,” Kozower said.

Gad said she is able to avoid charging a desk fee because of the office arrangement her company uses. “Everybody says they give 80 percent commission, but they have a desk fee, etc. With me [agents] get 80 percent of everything they make.”

Kozower went as far as to suggest that the larger, more established brokerages may soon follow the younger upstarts and adopt the fully-virtual model. “I know people at larger firms who have gone virtual,” he said. “I think the larger firms’ business models are going to be revised.”

Not everyone is so enthusiastic about virtual brokerages, however.

“The bottom line is, if you don’t have an office, you don’t have a business,” said Neil Binder, president of Bellmarc Realty, which boasts 400 agents — one of the city’s largest brokerages. He called doing business without a brick and mortar address “a step above a hobby.”

“I know if I am going to engage a broker, I want to know they are part of an established business,” he said, adding that firms that give addresses where they do not actually do business might face legal difficulties, although enforcement seems unlikely. He also noted that condominium and co-op boards might object to brokerages being run from homes.

Kozower conceded that, as his 24-agent company expands, he will consider a sublease or a direct lease, if agents want it. “Most of our agents are virtual, but there are other agents I’m in discussion with who want office space,” he said. “We will either expand [at 1230 Sixth] or get an office.”

Rolan Sereny, founder of newly-formed — and aptly named — brokerage Brick & Mortar, based in Williamsburg, ran his business remotely for the first six months of operation, and said there were advantages and disadvantages to the set-up.

“It was nice to have that mobility; it’s kind of an ‘on the road’ approach,” a broker develops while working virtually, he said. But there were also things that were difficult, including meeting customers in public places that might be too crowded, and not getting any walk-in traffic.

Brick & Mortar last month opened a storefront in Williamsburg, at 135 North 7th Street, as The Real Deal has reported, and Sereny said the increased visibility has been good for a business of his size, with nine agents. The decision about whether or not to go virtual has a lot to do with the size of the brokerage, he said.

“It’s completely reasonable to have five or six agents and work virtually — you aren’t paying the high electricity bill,” he said.

But aside from the lack of pedestrian business, the major downside Sereny noted was a simple one, and the bane of many a New Yorker’s existence: getting reliable internet.

“Time Warner is difficult,” he said.

  • david schlamm

    As someone who offers both ( we have a 6400SF main office as well as a 550 SF concept storefront office) different people have different needs. Some do very well working mostly from home while occasionally using one of the offices to “pop in and pop out” while others really need/want/desire the synergy and energy of being around other busy/successful agents. Its much easier to be virtual when your business is great, but it can be very lonely/depressing when its not.
    HENCE..we offer both arrangements

  • Mike Akerly

    No one mentioned that it would seem impossible for a principal broker to comply with Article 12-A requirements if they’re truly running a virtual office (not talking about a small office where agents don’t have desks, but a complete lack of a brick and mortar office).

    “Place of business; business sign required. Except as otherwise provided
    in this article, each licensed real estate broker shall have and maintain a
    definite place of business within this State, and shall conspicuously post on
    the outside of the building in which said office is conducted a sign of a
    sufficient size to be readable from the sidewalk indicating the name and the
    business of the applicant as a licensed real estate broker, unless said office
    shall be located in an office, apartment or hotel building, in which event the
    name and the words “licensed real estate broker” shall be posted in the space
    provided for posting of names of occupants of the building, other than the
    mail box”

    • http://twitter.com/CorleyBrooklyn Michael Corley

      I’m not sure your reading of article 12A is accurate regarding signage and other address requirements for a brokerage office.

      NYS DOS has already expressed their position on the “virtual brokerage” business model.

  • http://www.facebook.com/people/Donna-Marie-Tirella/100002535941303 Donna Marie Tirella

    I traded in TWC for Verizon DSL several years ago. The service is much better as is the price – $17.99 a month as opposed to $49.99 a month.

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