The Real Deal New York

Extell must pay $1.3M commission to broker after court battle

Developer vows to appeal court ruling
By Adam Pincus | November 07, 2013 02:46PM

Gary Barnett’s Extell Development must pay $1.32 million to broker Georgia Malone after battling with her for nearly a year over how much commission she deserved on a multifamily building portfolio sale, court records disclosed today show.

The order came down Nov. 1 From State Supreme Court Justice Joan Kenney, who settled on a 2 percent commission for Malone on Extell’s $66 million sale of the Westbourne, a complex of five apartment buildings — at 601, 605, 607, 609 and 611 West 137th Street in Hamilton Heights. The judge also directed the developer to pay interest from the closing date of Dec. 20, 2012.

Malone sued Extell on Dec. 17, 2012, after she claims the company told her it would pay a commission below the “standard and customary commission” that they had agreed to. Extell ultimately offered her $400,000, less than a third of her invoice for $1.32 million. The buyer, an affiliate of Midtown-based Bonjour Capital, was not a party to the litigation.

Extell declined to comment on the litigation, but had responded to the lawsuit in January by stating that it “Promptly rejected said ‘invoice’ as absurd.” In a statement today, an Extell spokesperson told The Real Deal: “We believe the decision is wrong and we will appeal.”

Malone, who runs her eponymous brokerage firm based in Midtown, alleged she and Extell had a verbal agreement on the commission; neither side produced documentation enumerating the figure that they settled on.

In her complaint, Malone stated that Extell told her that the deal was “so ‘thin,’ that there will be insufficient funds at closing to pay [Malone] the [full] brokerage commission.”

An expert witness who testified on behalf of Malone told the court that the commission should be 2 percent for a sale so big and so complicated.

Real estate insiders told TRD that a commission for a deal of that size would typically range from about 0.75 percent to 2 percent.

However, one broker who was not involved in the dispute, said 2 percent was high for a deal of this size.

“A typical commission in multimillion dollar transactions — say north of $50 million — can range between 1 percent to 1.5 percent,” Amit Doshi, executive director at Besen & Associates, said.

“Very rarely have I seen higher unless there is a co-broker or the broker has achieved an exceptional price. Conversely I have been paid less then 1% in larger transactions,” he said.

The 2 percent figure was “based on the amount of work that was done to bring the parties together,” Malone’s attorney, Claude Castro, told TRD.

Correction: An earlier version of this article incorrectly wrote Amit Doshi’s name.

  • Martin L. King

    2% is too high for that transaction. She should be lucky to get 1%

    • jonny

      how do you know?? you are nobody

      • jackdaniels2

        He’s martin luther king you idiot….2% is high. I’ve done deals where i say 1% or go eat squash.

  • ThomSacks

    You agree to pay for something, you pay it. You don’t go to a restaurant and eat a steak and then decide what you should pay for it. You already knew the cost then you are accountable for paying it, no matter what you think it deserves or it’s worth.

  • Howard Gunn

    pathetic placement by a broker of a motion for summary judgment, appeal coming soon…

  • How Could you

    My rabbi said to your rabbi; sitting by the fire. We will not pay the shiksa.

  • Eat a steak

    ThomSacks: I wonder, where did you come up with the steak analogy? Did you work at CIti Habitats at one point a few years ago? I am asking because I once used that exact same analogy with a client with whom I had a bitter commission dispute. I passed around a copy of the email I had sent with this analogy to some of my colleagues in the office at the time. I am curious if you picked up my analogy from that episode and internalized it. It would make me feel good if that were the case. I am not claiming to have a lock on that particular analogy but your usage of it is interesting to me. If you were at the company at the time and remember the episode, look me up on the internet and shoot me an email to say hello. Either way, bravo on the analogy.

    • How Could you

      Of shut up

    • Guest

      its a known saying..

  • ScrewedoverbyExtell

    Extell using the justice system once again to get out of their commitments. Probably will take another 3 years to try every appeal possible and then will still not pay…Malone will likely not see the money for a long long time…

  • James Regan

    My issue with this is that Extell has made a lot of money in the last decade. Why would they cheap out on paying commission on deals and ruining their reputation and playing the role of your regular scumbag, instead of showing some class and making a good name for themselves and in the community. They should know that this is 2013 and if you cheat the system or the community, it’s going to be known, if not by the Real Deal, then by someone else. Pay what you owe and let’s put these lawyers out of business.

    • Kamil

      If you knew Barnett, you’d know he isn’t about being nice. He’s about making money and gaining power.

  • do the right thing

    i can’t see any judge anywhere in NY taking Extell’s side against a broker. Let the interest on $1.32mm accumulate… Brokers get squeezed and screwed way to often, she delivered the deal therefore she earned her fee.

  • yuuuuck

    It’s easy for them to cheat small brokers out of most of their commission because few can spend five years and $250k on legal fees to try for justice and they know it. This goes on again and again. Good for Georgia.

  • NYCRealtor

    Hey Extel. For a lousy 1%, next time there is a good deal and you’re bidding against someone, guess who the broker will sell that property too?
    Exactly, reputation takes a lifetime to earn and a measly second to lose. Is it truly worth it to try to ruin your reputation with brokers?

  • h1

    Why wasn’t there an agreement in place? Is that how real estate is done in NYC?

    • h1

      *written agreement

      • George

        Did you read the article? There was an agreement: $1.32 Million. 3 days before closing, Extell said they were going to pay less than the agreed amount–$400,000

  • S. Mo..

    Typical commission or not, an agreement is signed BEFORE any action takes place, and if it was 2% or 10%, it has to be honored. This “typical” BS is killing the possibilities for negotiation between the parties. The reality is that there are NOT RULES for how much commission is to be paid. It is a psychological concept that someone came up with (“6%”) that seems to brain-wash even those who are not in the business. I am making well over 6%, not because I am greedy, but because I negotiate and I make sure no one leaves the room unhappy!!!! So, Please Stop!

  • Guest

    How can you not know that his name is Amit Doshi and not Doshi Amit? Do you guys pay any attention to the real estate industry?