The Real Deal New York

Listings in limbo: What’s to come for Town agents’ millions in exclusives?

After shuttering its resales and leasing business, Town said agents can take listings for a 25% referral fee from new firm
By E.B. Solomont and David Jeans | April 20, 2018 06:13PM

Town Residential’s Astor Place office a day after news broke the residential firm would be shutting down its resale and leasing business. (Credit: Ben Heitmann for The Real Deal)

Around midday on Friday, a van branded “Town Residential” pulled up to 26 Astor Place. The driver got out, unloaded bubble wrap and cardboard boxes from Home Depot, and went into the building. It was time for agents to clear out.

A van outside Town’s Astor Place office

After a tumultuous few months, Town abruptly shuttered its resale and leasing business, as The Real Deal first reported Thursday. Less than 24 hours later, shell-shocked agents were informed that boxes would be available for their personal belongings.

“Several have inquired about the purchase of artwork and accessories found throughout the office,” an email from the firm to agents stated. “Please note that these items are not for sale.”

But the more pressing questions for agents are whether they’ll receive unpaid commissions and how — if — they’ll move their listings and in-contract deals.

Related: Town Residential shutting down sale, leasing business

“Usually the exclusive belongs to the firm, even though the agent brings the business,” said Terrence Oved, a partner at law firm Oved & Oved. Once Town releases the agents’ exclusives, they’ll have to ask sellers to re-sign the exclusive agreement with a new company.

In an email to agents, Town said it would release exclusives to agents’ new firms for a 25 percent referral fee. “If you have any properties in contract, we’ll assign your portion to the new firm,” the email said. It’s unclear, however, whether firms taking on Town’s agents will try to haggle that fee down.

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Town — which took eighth place on TRD’s annual ranking of New York City brokerages with the most listings — said it had 160 active sales listings and 81 in-contract deals totaling $585 million at the end of the first quarter. It also had 174 rental exclusives.

Sources said those figures have dropped considerably in recent months, as Town struggled to stay afloat. On April 16 and 17, the firm’s founder and CEO Andrew Heiberger was hit with a pair of lawsuits alleging he owed nearly $300,000 in unpaid rent at Town’s recently-shuttered Upper East Side office and its office on Irving Place.

The company will continue to work in new development, according to Heiberger, but whether or not there will be any movement with those listings is unclear.

In a LinkedIn post Thursday, Heiberger said the decision to close Town’s resale and leasing business was predicated on “new realities of the new marketplace.”

“It is simply impossible [to] profit from those lines of business when considering the primary factors of rapidly increasing agent commissions stemming from fierce competition to attract and retain the best talent,” he wrote. “There will be another great endeavor to come, stay tuned…”

Almost immediately after news of the shutdown broke, rival firms reached out to suddenly-free agents — particularly Town’s bigger names like Steven Gold, Dana Power and Danny Davis.

“It’s really a scramble,” said one source. “It’s crazy because all these people have a lot of business.”

Related: Resi firms descend on remnants of Town

One agent outside Town’s Astor Place office on Thursday night said he has $17 million in pending deals and $8 million worth of exclusives. Gina Gee, another agent from that office, said she has one exclusive — a three-bedroom at 67 Liberty Street asking $2.395 million — and several referral listings in Los Angeles. She called it a “sad day,” but said she has already gotten calls from a half-dozen firms and was on her way to a job interview on Friday.

An agent leaving Town’s office Friday (Credit: Ben Heitmann for The Real Deal)

Not everyone was in on the feeding frenzy though. Bess Freedman, co-president of Brown Harris Stevens, said she wouldn’t hire for the sake of hiring.

“I feel a sense of mourning, it’s a shame,” Freedman said, adding that Heiberger is tough, smart and not afraid to take risks. “He’s a cowboy,” she said.

Others echoed the sentiment. “The fact is, I am sad,” said Howard Lorber, chairman of Douglas Elliman. “I’m sad for the owner and I’m sad for the brokers that are displaced and have no place to go without much notice.”

In front of Town’s Astor Place office on Friday, one agent was accompanied by her teenage son, who hauled her boxes to a waiting car. Two other brokers took their own belongings from the office. At Town’s office in Gramercy, an agent stopped to snap a picture of the firm’s storefront. When asked if he worked there, he said: “Not anymore.”