The Real Deal New York

Media Spotlight Targets Brokers

February 01, 2005
By Will Swarts

New York lives are full of love-hate relationships, and Gothamites’ bonds with their real estate brokers are among the most fractious.

In a city where real estate is a consuming preoccupation cutting across class lines and wealth brackets, it’s no surprise that a recent survey indicated both agents and their customers see a connection that is marked by mistrust and low expectations of real estate professionals.

But in a climate where the media is sometimes critical of industry practices, particularly in the general financial press, the business gets a better shake in New York than in some other markets big deals involve the famous, the rich and the powerful, a club that plenty of the city’s denizens aspire to join. New Yorkers may not always love their brokers, but if they can’t always live with ’em, people know they wouldn’t live anywhere without them.

Stories in national publications, including articles last summer in Forbes and the Wall Street Journal, assailed industry practices. Forbes in particular took aim at real estate agents’ reactions to a proposed public offering by national Internet discounter zipRealty, going so far as to say: “The Realtors are pros at the protection game and have beaten back other interlopers, including the nation’s biggest banks and Microsoft, which last year gave up a five-year effort to compile its own real estate listings.”

Coverage of the industry in New York isn’t necessarily softer, but does focus on the practical aspects of finding a place to live, while at the same time touching on what New York magazine senior editor Christopher Bonanno calls “aspects of the social comedy” that swirl through city real estate, from penthouses to tenements. The weekly New York Observer also devotes ample space to real estate with its “Manhattan Transfers” features.

“New Yorkers worry about real estate more than anybody else in the nation,” Bonanno says, explaining the prominence and popularity of the magazine’s real estate coverage, which includes a designated page of prominent real estate news and larger stories on the subject, including a recent cover story on the children of developer Donald Trump. “Prices are so high and inventory is so scarce that essentially everything about your life is governed by real estate.”

“There are two notes we try to hit one is practical advice, but you don’t want big heavy doses of it every week. The Times does that very well,” he says. “The other is the social comedy. Real estate is something people talk about endlessly. We don’t wish to make fun of the industry, but at the same time, you can be respectful of the people involved and take a tone that can be more, ‘It’s a ridiculous situation, but we’re all in this together.’ It’s sort of an elevated version of community newspaper coverage, but we’re focusing on a certain segment of wealth and power.”

One thing New Yorkers have in common is a certain distrust of real estate agents. Though the average New Yorker moves seven times in his or her Big Apple tenure, the relationship between a broker and a buyer or seller usually lasts through one transaction, which is probably why 78 percent of agents and 69 percent of buyers and sellers believe that “most people don’t trust real estate agents or they don’t expect much from them.”

The data comes from a survey commissioned by Braddock and Purcell, a consultancy that claims to be the first in the city to match clients with real estate agents, usually for high-end property transactions. The Times, which has pumped up its real estate coverage with higher volumes of how-to and where-to-hunt articles in its Sunday edition, was among the media outlets to cover the findings.

Paul Purcell, a former president of Douglas Elliman who founded the company with Kathy Braddock, his former general sales manager, says he’s not surprised by the negative reaction, but adds that the business is becoming increasingly professionalized, which will eventually lead to better perceptions of real estate agents among their customers and in the press.

“At the core of it, it is an extremely easy profession to get into the barriers to entry are so low,” says Purcell, who worked as a sales executive for Proctor and Gamble before moving to real estate and climbing to the top of the Elliman organization. “You take a 45-hour state course, and if a firm will hire you, then you are immediately ‘qualified’ to assist someone in the single biggest financial transaction of their lives.”

The public perception, then, is that real estate isn’t rocket science, though Purcell says internal training programs at larger real estate firms help agents with all levels of experience.

“I think real estate professionals should be trained the same way as any other sales organization,” he says. “At Proctor and Gamble, you did not go out on a sales call unless you’d been trained thoroughly. A sales manager went out with you for a year before you worked alone.”

At some firms, Purcell says the sink-or-swim approach to putting new agents to work means management comprised of successful brokers is fulfilling a different function, and it certainly isn’t training.

“They’ve evolved into gatekeepers or in some cases, zoo keepers,” he says. “They were brokers, and the next day they’re managers, which I think is damaging.”

Jim Fisher, a professor at St. Louis University and director of the Emerson Center for Business Ethics there, says the combination of sometimes spotty training and the fact that few people move as much as New Yorkers do adds up to a certain skewed perception of the business.

“Given that few buyers have first-hand experience in the market, it may not be apparent to them how a real estate agent gets compensated and how that coincides with the buyer’s interest,” he says. “It’s important for people who are selling to get customer expectations at a level where they can be met.”

But if real estate agents are sometimes portrayed through a somewhat skewed lens, the real estate business is also increasingly depicted as a field where savvy investors can prosper. Fortune magazine’s Dec. 27 issue featured an article profiling five successful small real estate investors with cover line: “Real Estate: How Real People Get Rich.”

The Real Deal

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