Ilan Bracha[Updated 1:30 p.m. with comments from Prudential Douglas Elliman CEO Dorothy Herman] For years, Texas-based real estate franchise company Keller Williams Realty has wanted to get into the lucrative Manhattan market. The question was how.
“For many years, we’ve had a tremendous amount of interest in Manhattan and a tremendous amount of inquiries about Manhattan, and we have been extremely selective because we view that as one of the most important marketplaces in North America,” said Chris Heller, president of KW Worldwide. “We haven’t gone into Manhattan because, in all honesty, we hadn’t found who we believe to be the right partner.”
Now, the fast-growing company is betting that it’s finally found that partner, in the form of Manhattan superbroker Ilan Bracha, a managing director at Prudential Douglas Elliman and head of the powerhouse Bracha Group, the top-ranked team at Elliman in terms of gross commission income. This month, Bracha is launching the first Manhattan franchise of Keller Williams, which has an unconventional business model and profit-sharing opportunities for agents.
The new firm will be headquartered at the 725 Fifth Avenue office of Bracha’s development company, B+B Investment Group. The Israel-born Bracha told The Real Deal he will start with around 20 agents — including some members of his team at Elliman — and hopes to grow to around 250 in the first year. And that’s only the beginning; Bracha said eventually, he wants to have 1,000.
“To be another small company in Manhattan, it’s not what we want,” said Bracha, whose group does about a quarter of a billion dollars per year in sales at Elliman. “We will be the biggest and the best.”
It’s a lofty goal, at a time when the field is crowded with other contenders. Most notably, another broker-turned-developer — Citi Habitats founder Andrew Heiberger — has launched a new brokerage with hopes of becoming Manhattan’s top firm (see “Can Heiberger do it again?”).
But Bracha, who started his real estate career at MLBKaye International Realty and has worked at Elliman since 2004, believes that the unique Keller Williams business model will give his fledgling company an advantage over other firms.
Keller Williams was founded in 1983 by Joe Williams and Gary Keller, author of the best-selling “The Millionaire Real Estate Agent.” The firm is now the third-largest residential real estate company in the United States, and with some 80,000 real estate agents in North America in around 700 offices, it’s also the fastest-growing, Heller said. Bayside-based Keller Williams Realty Landmark is now the largest real estate firm in Queens after opening in late 2006.
All Keller-Williams agents receive a 70 percent commission split, paying only 30 percent to the company, rather than the traditional 50-50 split, explained Bracha, who has admired Keller since reading “The Millionaire Real Estate Agent” years ago. Plus, the amount of commission each agent pays to the company per year under that split will be capped at $50,000, he said. After hitting that cap, 100 percent of commissions go directly to the agent.
Manhattan has seen the emergence of several new firms, including Rutenberg Realty, that allow agents to keep all or most of their commissions rather than splitting them.
Elliman is “a great company,” Bracha said, but in the future, “I just don’t see [agents] paying companies 50 percent, which is millions every year. People don’t want to give so much.”
Another selling point of Keller Williams, he said, is that roughly half of the firm’s profits are paid to agents who have recruited other agents to the company. Agents’ shares of the profit are determined by the production of agents they’ve recruited. Once an agent has been with Keller for more than three years, he or she is vested and can leave the firm and still receive profit share.
Bracha is among the top 10 real estate brokers in the city, according to The Real Deal’s annual ranking. His 15-agent team, the Bracha Group, currently has around $300 million of listings, he said, including new developments Cassa NY Hotel and Residences, and the Azure, the site of a fatal crane collapse in 2008.
Bracha said he feels now is the right time to go out on his own.
“I think the timing is great,” he said. “The market is just about to come back after two years of a very slow market.”
As far as leaving Elliman, he said: “Elliman is a great company…. Are they going to be happy for me? I hope so. I have a lot of years with them, we all did [well.]”
In response to Bracha’s departure, Elliman CEO Dorothy Herman said she has “nothing but nice things to say about Ilan,” and wishes him well in the new venture.
But she said she’s not worried about his departure having a significant impact on Elliman’s bottom line, especially since new development sales, where Bracha focused much of his energy in recent years, have slowed in the real estate downturn.
“As far as income goes, we’re a big company, we’re a strong brand,” she said. “I will miss him, but I’m not worried about his income… it’s not about that. I don’t think that’s going to make a big difference.”