As the coronavirus brought New York’s residential market to a near standstill, some firms axed brokers and one actually ramped up hiring.
The city’s largest brokerage, Douglas Elliman, pared back by 129 agents, or about 5 percent of its headcount, between March and June — the most significant decline in an analysis of Department of State data by The Real Deal. The firm declined to comment.
Nest Seekers International lost 17 agents, about 4 percent of the sales force it had when the pandemic hit.
Eddie Shapiro, CEO of the firm, said the net loss didn’t represent anything unusual.
“I’m not disappointed or alarmed by it,” he said. “I expected it to be a lot worse.”
Read more
Shapiro said when transaction volume fell off a cliff, Nest Seekers buckled down to weather the storm. Indeed, many firms cut marketing budgets, laid off or furloughed administrative staff, trimmed executive salaries and even announced plans to consolidate offices.
Compass took many of those measures, but also made a concerted effort to continue recruiting. The firm grew by 11 percent, adding close to 250 to its ranks during the second quarter.
Rory Golod, Compass New York regional president, said that was a 91 percent year-over-year increase in its hiring.
The only other firm that saw a net gain was the Corcoran Group, which added 10 agents to raise its agent count to 2,405.
Statewide, the number of licensed real estate agents and brokers declined by about 4 percent, or 2,300, between the start of the state’s shutdown in late March and late June.
It is not clear if agents and brokers exited the business for good or just delayed renewing their licenses. New York City gets about 2,000 newbies per month while about 1,600 licensees drop off for a net gain of 400, according to an estimate by New York City-based real estate data firm Space.
TRD’s analysis found that about 767 real estate licensees dropped off each month last quarter.
But brokerage leaders deny there’s been any unusual number of exits from their ranks. In fact, many say churn was fairly normal despite the housing market seizing up. Calls from recruiters, offers of six-figure signing bonuses and decisions to terminate agents — all part and parcel of the business in normal times — continued during the second quarter of 2020, they said.
“A lot of agents had a moment to reassess where they were and what company they wanted to be a part of,” Golod said, touting Compass’s lending and technology services. The firm also forged ahead with new offices in New Jersey and on Long Island’s Gold Coast.
For some firms, declines were by design. Brown Harris Stevens and Halstead, which announced a merger in June but were considered as separate firms in TRD’s analysis, saw a net loss in headcount of 1.6 percent and 2.8 percent, respectively. That pencils out to approximately 38 agents.
The loss was attributed to letting underperforming agents go, according to both Bess Freedman, CEO of BHS, and Richard Grossman, president of Halstead.
“We did go through our ranks,” said Grossman. “The agents that we asked to leave us during this period of time [were] agents that weren’t making it before Covid … and we just never had that conversation.”
Grossman explained that most of the agents that were asked to leave had not been actively doing business prior to the onset of the shutdown and either exited entirely, or became referral agents with their licenses transferred into a holding company, a common practice among New York City brokerages.
BHS took a similar approach, “pruning” licensees that were no longer active, Freedman said.
She said although some agents did approach BHS and move their businesses over, the firm did not do any recruiting last quarter. Freedman attributed that to hearing from BHS agents who were approached by recruiters. She recalled one agent who fielded a call from a recruiter while recovering from Covid-19.
“It just felt tone deaf,” she said.
Grossman agreed, saying that Halstead also did not partake in recruitment.
“We didn’t feel this was the right time to be doing that during this pandemic,” he said. “Agents [called by recruiters] would come to us and say, ‘Wow, isn’t this the most inappropriate time.’”
Freedman added that BHS agents reported receiving an uptick in calls from recruiters following the merger announcement and that six-figure signing bonuses were offered to some of her agents during the quarter.
Compass’ Golod strongly denied that Compass, which has garnered a reputation for aggressive recruiting, was behind any of the sky-high offers.
“It’s just untrue,” he said, adding that Compass offers recruits a “small financial consideration” that is “closely aligned” with market standards.
“You can’t buy agents. It doesn’t work. Many companies have tried. If that were the case, every agent would be at a 100% split firm,” he continued.
Golod also pushed back on the idea that recruiting during a pandemic was bad form.
“Providing agents an opportunity where they can unleash their potential and make more money, I don’t see how that’s distasteful,” he said. “I think this insinuation that recruiting is distasteful or unethical is really just an excuse for traditional brokerages that don’t want to compete.”
Write to Erin Hudson at ekh@therealdeal.com