Inside Ryan Serhant’s new brokerage

Ryan Serhant (Getty Images)
Ryan Serhant (Getty Images)

Ryan Serhant’s decision to launch his own brokerage last month reignited a popular debate in the residential real estate industry: What’s the best way to harness an agent’s star power?

Though Serhant’s breakaway embodies what brokerage leaders fear when a superstar agent and lead-generation machine needs the firm less than it needs him, it is the exception rather than rule. Most celebrity agents reject the idea of founding their own firm and dealing with the red tape that involves.

“What’s the benefit? I can’t even see it,” said Josh Altman, a top producer at Douglas Elliman and cast member of “Million Dollar Listing Los Angeles.”

Altman, who runs a 20-person team at Elliman with his brother Matt, cited a number of reasons not to leave the nest. From not having the liability of owning a business to the burden of hiring and managing a vast number of agents, Altman said paying his team’s split to Elliman was worth every cent.

“We’re going to leave that to Ryan Serhant,” agreed Tracy Tutor, a fellow “MDLLA” cast member.

Read related story: What Ryan Serhant’s new venture says about the future of brokerage

In 2017, Serhant had ruled out joining a competitor, saying that at Nest Seekers he had “a situation that I wouldn’t be able to have anywhere else.” But three years down the road, with an even greater following and a bigger book of business, he’s setting out to build what he hopes will be the future of the industry — a firm that’s equal parts brokerage, film studio and startup incubator, with business generated from his mass following.

“I think the age old way of getting a desk and you have to drive all your own business and it’s the brokerage’s brand first and your brand second … it will not last, it cannot last,” said Serhant. “Our model really exists to amplify our agents’ brands and create them.”

For example, Serhant envisions that his in-house production studio will give agents the opportunity to meet with sellers and developers and “say that they have their own show, which is something that I’ve been able to say for 10 years.” His venture-capital division will fund startups his staffers pitch him, which he hopes will enable them to build businesses to generate ancillary income.

That said, Serhant admitted that he expects 85 percent of his firm’s business to come through him, which, after all, is why it’s his name on the door.

“My last name is the franchise. It is synonymous with luxury real estate,” he said. “I am here for other people, to help them with that exposure.”

Stuart Siegel, who runs Engel & Völkers NYC, called the move ironic because the digital-first firm actually harkens back to “the old school where the top producer is basically the guy driving the revenues, and he’s saying he’d like to do that under his own shingle, his own brand.”

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Siegel wondered whether Serhant is merely building a platform to support his own book of business or a true company that will be profitable in its own right. If it’s the latter, will Serhant recruit agents and build teams à la traditional firms, or will he follow a different path?

In the first year of business, Serhant expects the firm to pull in $18 million in gross commission income — about what the Serhant Team made in 2019 — plus another $9 million coming from his speaking engagements, licensing and endorsement deals and his new Ventures arm, which runs his real estate course. (Ventures also invests in a handful of other companies, such as office space search firm SquareFoot.)

Serhant also debuted ADX, a tool that tracks how his followers engage with his content, using location data to pinpoint his audience and show where they are most active. And he’s filed trademarks for a title insurance business and an IDX system, which allows websites to display listings from participating multiple listing services. His plans for those businesses and services remain unclear.

So far, Serhant is recruiting seasoned agents with a minimum of five years of experience and who’ve earned at least $500,000 in gross commission income over the past 12 months. He is self-funding all startup costs, which he says have already crossed $1.5 million, including the buildout of his new Tribeca office at 155 Duane Street.

Brokerage leaders — at least, the few who would talk — expressed enthusiasm for Serhant joining them in the executive trenches.

“I think this was a long time coming and that it was a great decision for him,” said Andrew Heiberger, founder of the now-shuttered Town Residential.

Heiberger doesn’t expect Serhant to follow a traditional brokerage model, however.

“The only way to be profitable on a national level is if he’s going to franchise,” he said. Heiberger pointed to discount brokerages such as Redfin, technology platforms like Zillow and Keller Williams’ profit-sharing model as the only residential firms that “work and make money” at scale.

Serhant “just took on a lot of busy work,” Heiberger said. “So I’m sure that he’s got a bigger plan.”

Serhant was cagey on his long-term plans but confirmed that replicating the Serhant Team on his own dime was the “last thing” he wanted to do.

“I do so many other things outside of just pure brokerage that influence the brokerage that it just didn’t make sense for me to do them all separately,” he said. “I’m not building this for today. I’m building this for 2030, and 2040, and beyond.”