Extell Development is wooing brokers for three of its upcoming residential buildings with the promise of cold hard cash upfront.
The company, led by Gary Barnett , said it will advance 50 percent of commissions on new sales at properties now under construction. The properties are One Manhattan Square on the Lower East Side, 70 Charlton in Hudson Square and the Kent on the Upper East Side.
“Talk about turning the brokerage community on. It’s pretty unusual,” said Douglas Elliman broker Michael Graves. “Brokers usually wait way too long to get paid. The market in general is moving but maybe not as fast as Extell is probably used to. They have the financial wherewithal to do this, so good for them.”
Brokers normally have to wait until a deal closes to collect their commissions, but the arrangement means they get paid half their commission upon the signing of a contract.
The commission incentive will remain in effect through April 30, 2017, according to a memo circulated to the brokerage community.
“Given that we handle sales in-house through Extell Marketing Group, a 40-plus-person division of Extell, we have the ability to offer these initiatives because of our financial stability,” said Anna Zarro, Extell’s senior vice president of sales. “We are always looking at ways to support the brokerage community. This is just one of the various initiatives that we plan to roll out.”
The move has echoes of the last cycle.
Extell sued to recover advanced commissions at its Lucida condo project on the Upper East Side in 2010 after the market crashed and deals didn’t close. The Corcoran Group, Douglas Elliman, Sotheby’s International Realty and other brokerages all either returned advance commissions or reached settlements with Extell over the deals.
Zarro declined to comment on sales figures at any of the three properties.
Extell is just the latest developer to target brokers, rather than only buyers, with sweeteners.
In October, Toll Brothers City Living rolled out a portfolio-wide commission incentive that saw brokers get an extra 0.5 percent commission for every additional buyer they bring to a Toll building. Under that system, brokers get 3 percent on the first deal, 3.5 percent on the second and 4 percent on the third. The split is capped at 4 percent from then on.
Toll Brothers president David Von Spreckelsen confirmed that the incentive is still active through the end of 2017.