If the Real Estate Board of New York were a restaurant, the city’s top residential brokers have long felt they’re seated near the kitchen.
Those old feelings resurfaced last month at a closed-door meeting between brokerage chiefs and REBNY president John Banks. Tempers flared, and Douglas Elliman chairman Howard Lorber, saying he’d had enough, stormed out of the room. “They got the message, let’s put it that way,” said one brokerage CEO in attendance.
Reached by phone, Lorber didn’t deny things got testy. He said his frustration stems from what he believes is REBNY’s tendency to focus on commercial members at the expense of residential firms.
“When you look at the dues paid by the residential side — versus what the residential side gets compared to the commercial side — it’s not a fair allocation of revenue and expenses,” he said.
Several sources said the latest spat has to do, in part, with Compass and allegations that the SoftBank-backed brokerage unfairly goes after other firms’ listings. Sources said that when Compass brings on a new agent, the agent is given a form to share with their clients, urging the seller to sign over the exclusive to Compass.
“The group feels that’s unethical and improper under REBNY rules,” said Lorber, referring to the universal co-brokerage agreement (UCBA), which governs how New York City brokers do business together. “They may have gotten a listing agreement signed by the seller, but the seller doesn’t know the rules. The listing belongs to the company until it expires.”
Sources said Elliman and the Corcoran Group have both sought arbitration on multiple occasions, and that Compass was recently fined $1,000 after losing one such ethics complaint.
As a matter of policy, REBNY does not comment on arbitration matters. But in a statement, Banks said the residential division is a “top priority” for the organization. He cited the syndication last year of the residential listing service (RLS), and said over the past year, REBNY has increased the number of programs it holds by 26 percent, and claims that participation has jumped by 45 percent.
That “deep engagement of our members is what makes REBNY such a dynamic organization,” he said.
For its part, Compass defended the “independent decision” of clients to transfer their listing to a new firm. “Any attempts by a brokerage to not allow agents to honor this independent decision is anti-agent and anti-consumer,” said Rory Golod, the firm’s general manager in New York.
Residential brokers make up roughly three-quarters of REBNY’s 17,000 dues-paying members. But for years, the organization has faced accusations that it places too much emphasis on commercial members. Some have even called for the organization to split.
“It’s two different worlds,” said Donna Olshan of Olshan Realty. “It’s two different interests and right now, in this environment, the residential brokers need an advocate just for residential.”
Earlier this month, a coalition of top residential brokers formed an advocacy group for residential sales agents called the New York Residential Agent Continuum.
REBNY did get into the good graces of some residential agents last year when it challenged StreetEasy over the website’s controversial Premier Agent feature and the new fees it charged agents. At the time, REBNY sent the Department of State two letters opposing Premier Agent, which they said caused a “maelstrom” of consumer confusion. And last summer, REBNY syndicated its residential listings service (RLS), a long-awaited initiative that one brokerage chief called a “huge victory” for the residential sector.
But tensions have been rising, and last month’s meeting was the second time since September that Banks met with representatives of major residential firms to air their grievances — which include complaints by some that REBNY isn’t protecting its members’ interests.
“REBNY hadn’t been doing anything until the heads of the firms got together and said he better, or he’s going to watch his dues-paying members walk out the door,” said one brokerage chief who attended both meetings.
Halstead Property CEO Diane Ramirez, who was also at the meetings, disagreed with the idea that there’s “widespread” frustration among REBNY’s residential members. “That does not mean from time to time anyone can get frustrated,” said Ramirez, who sits on REBNY’s residential brokerage board of directors. “I equate it to having two children. At one point or another, they think I’m giving the other more attention.”
Nonetheless, she acknowledged that some of Lorber’s frustrations are nuances of today’s brokerage business. She said REBNY’s residential brokerage board of directors recently ratified changes to the UCBA to set more specific rules and add penalties. Ramirez declined to get into specifics before the rules are published.
“Before, our rules were ‘Play nice in the sandbox,’” she said. “Now, we realize that we all don’t have the same definition of playing nice.”