The Real Estate Board of New York will ring in the New Year with some big changes for residential brokers.
The powerful industry trade organization, which counts around 3,000 residential salespeople as members, passed resolutions for 2005 to boost membership, change how listings are distributed, and increase sanctions on members who don’t co-broke listings in a timely fashion.
The Real Deal recently sat down with REBNY president Steven Spinola to talk about the push for membership, procedures for handling ethics issues and the group’s future, including expansion to Brooklyn.
REBNY’s Residential Board of Directors, consisting of the heads of several brokerage firms, approved changes this autumn.
As of Jan. 1, member firms are required to have 100 percent of their agents and brokers pay dues a minimum of $230 for a salesperson and up to $900 for a top-level broker, Spinola said. The membership requirement was on the books before the new rules, but not enforced until the recent resolutions were passed.
There will also now be fines for those who don’t share their listings with other brokers within 72 hours, from $250 for a first offense going up to $5,000 for a third offense.
Firms had until Oct. 15 to agree to the changes, and Spinola said the response has been “overwhelming.”
But the organization also has its critics.
Earlier this year, REBNY purchased the R.O.L.E.X. database system, which distributes listings between firms.
Some point out that REBNY’s control of the listings system gives it more leverage in terms of requiring brokers to join the organization. Some others are grumbling about additional dues, such as those imposed on part-time agents. Others say they expect more services if REBNY collects more dues.
Lala Wang, who heads the multiple listings service company BrokersNYC, sued the trade association in October, charging REBNY with breaking federal and state antitrust laws. The suit argues that it’s unfair to make access to listings contingent upon using REBNY’s proprietary technology.
Spinola said earlier that not enough members want to use Wang’s system to make it available to members, but said he couldn’t discuss details of the lawsuit during the interview.
But despite critics, REBNY’s last major initiative, the 72-hour rule, which mandated that members share their listings with one another within that time period, was viewed as a major step ahead for co-brokerage and cooperation among brokers.
“What we have today is probably a more unified, united division that feels comfortable with itself, and trusts each other more than they have ever Trusted before,” Spinola said.
The Real Deal: Your organization is at a critical point now, as it gets ready to start a year in which all the brokers at your member firms will be required to join and pay dues. Why make this mandatory?
Steven Spinola : Members themselves the board of directors of the residential division said that everybody should be required to be a member. It’s wrong for people who are benefiting from the hard work that the members do through the board not to carry their own weight in terms of the small amount of dues they would be asked to pay. There were 30 to 40 firms that [already] have 100 percent membership [Including Corcoran, Douglas Elliman, Warburg and Stribling, Spinola said, ed.] and now we’ll have 240 firms.
TRD: If you’re increasing the number of firms, what sort of membership are you going to have?
SS: I don’t know. It will be a nice number. Lots of the other firms are very small firms.
TRD: What about the small agencies, or firms that have a lot of part-time people or rental agents, and are concerned they might not benefit as much as a sales agent? Also, if an individual agent doesn’t join, does the owner have to cover costs?
SS: Firms agreed that if their agent doesn’t pay their dues within 60 days, then the firm will pay. I can only answer that the board of directors decided that if they are holding a license, they should be members of the Real Estate Board of New York. Every agent benefits from the varied activities of the board, whether that is the creation of better opportunities for new housing units to be built around the city, or holding the line on taxes, or encouraging new zoning, as well as the classes and free seminars that we run for the residential division.
TRD: Mandating co-brokerage and the 72-hour rule at the beginning of 2003 was widely viewed as a huge step. Now it seems the organization is consolidating its clout in terms of enforcing this. Does that mean you’ll have greater power to impose monetary penalties? Did you have that capacity beforehand?
SS: There were never monetary penalties and in fact, the board prior to this amendment probably couldn’t have fined any of its members. What we could have done before was to file an ethics complaint that someone was not adhering to the rules and regulations, and it’s a longer process than what we set up for January 1.
TRD: Why impose the fines when you weren’t able to before?
SS: It’s not automatic fines. There is a due process there, but it’s an expedited process. It’s what the membership wanted. I don’t sit in this office and say, “OK, tomorrow I’m going to have the ability to fine people.” I don’t fine them. The decision as to whether someone is violating the 72-hour rule will be decided by a committee of at least three people from the board of directors and/or the ethics committee.
TRD: Are violations of the 72-hour rule an issue, and does the change to the listings system give you more leverage?
SS: We have not received a formal complaint to date about the 72-hour rule. Some people are concerned that depending upon the state of the market that there might people that would hold out a little bit.
I don’t believe we have any more leverage today than we had before. The only thing we have today is probably a more unified, united division that feels comfortable with itself, trusts each other more than they have ever trusted before, and recognizes that in today’s fast-paced real estate market, the need to function in the most professional way that they can.
TRD: Are there any new, tougher approaches to REBNY’s role in professional ethics, or should there be?
SS: I don’t think somebody said we had to get tougher. I think if there is an ethics violation, we’ll deal with it. We made this decision almost a year ago that anybody who is a new member will have to attend a 90-minute ethics class. That was a decision made, once again, by the residential board of directors, saying that these new people coming in here, some may have very good prep from some of their firms about the ethics rules of the board as well as state law, while others may not.
TRD: When [top-producing broker] Michael Shvo left Douglas Elliman recently, you said that REBNY doesn’t discuss whether complaints have been filed against a broker. Do brokers find out if there’s an ethics complaint, even if the public or the press does not?
SS: If you are asking me, did somebody file a complaint about somebody, I’m not going to answer that. The decision as to ethics complaints is always reported to the interfirm forum [a group consisting of one representative from each firm]. Any discussion with the brokers beyond that is done on a case-by-case basis.
TRD: If you are adding members and increasing the dues, which a few people have said they are unhappy about, are there any plans to add services?
SS: I have to think $230 a year is pretty reasonable dues and it might be even insulting to charge something less than that. Second, we are always increasing services. Today, we ran a free seminar for our government affairs division in the residential side we brought [Deputy Mayor] Dan Doctoroff, we provided breakfast. And so having additional dollars available will permit us to do that kind of thing. Obviously, if we have members paying more dues, we’ll be able to do very popular programs, such as [a recent] 1,000-person seminar featuring a motivational speaker that we paid a significant dollar amount about $50,000 to fly to New York and do this. If we are successful, more money is coming in, and it will permit us to charge less.
SS: What are you doing to expand REBNY into Brooklyn, and what do you think about the gentrification and development there?
TRD: I think the borough is doing great. They seem to be setting all new records in terms of sale prices and rentals. My membership has clearly decided to more than pay attention to Brooklyn and they’re out there in big numbers from Corcoran, Brown Harris to Elliman and others. We have a Brooklyn committee made up of the residential firms that are members of the board, and we’ve reached out to the firms that are not and have encouraged them to join.
TRD: So in terms of total membership, I understand that you’re now at about 5,500 dues payers.
SS: No, we’ve got close to 7,000.
TRD: How much of that comes from the residential side?
SS: Probably close to 3,000.
TRD: Growth in the membership on the residential side seems very significant, since it only started as a formal division in the mid-1990s, and REBNY as a whole has been around for more than 100 years. Do you think the residential brokerage community feels they have a bigger stake in REBNY?
SS: They have the stake now and they have as much say as they would like. They are probably more active in setting their own direction than other divisions. We also have a couple of thousand commercial brokers as well as hundreds of management people and lawyers and architects. And then I’ve got a good number of owners and builder/owners, who are very active here as well. But the brokers and the salespeople make up the bulk of our membership in total numbers.
TRD: Why do you say the residential division is more active than other divisions?
SS: Well, I think in part because it’s newer, and it was an opportunity to set a direction. They are the most actively democratic of the divisions, though all the divisions are clearly involved. I’ll say this, in total numbers, we have clearly been doing well in the residential.