It’s been two years since the Real Estate Board of New York declared it was officially setting up shop in Brooklyn.
But the results of its outer-borough expansion are mixed. The powerful Manhattan-based trade organization has managed to recruit new members in Brooklyn, but its methods are finding limited enthusiasm in some quarters. Its mandated co-broking and shared listings approach hasn’t been fully embraced. That’s largely because when it comes to brokering, the Brooklyn market could be diagnosed as schizophrenic.
REBNY has clearly made inroads. Some of its biggest broker members — Brown Harris Stevens, Prudential Douglas Elliman and Halstead — have started doing business in the borough in the last two years, following in the footsteps of the Corcoran Group, which arrived there in the late 1990s.
The trade organization has also recruited new members based in Brooklyn.
Sixty percent of REBNY’s Brooklyn committee, or 21 of 35 total firms, is now made up of independent Brooklyn firms. There are also eight Manhattan-based firms with Brooklyn offices that are part of the committee and six Brooklyn firms bought by REBNY members.
Still, in the end it’s about business, and what works for REBNY in Manhattan isn’t necessarily a template for success in Brooklyn.
Going for co-broke
In Manhattan, property listings must be shared with other brokers by being placed on REBNY’s listing system within three days under the group’s 72-hour rule. Sharing information about listings allows other brokers to bring in potential buyers, and to co-broke deals instead of the agent bringing in both the buyer and seller.
Also in Manhattan, around 90 percent of properties are sold through exclusive listings, where a seller signs a contract with a broker to exclusively represent a property. But in Brooklyn there is a mix of open listings, where any broker can sell the property, and exclusive listings, though the borough is slowly moving toward exclusive listings only.
Yet an investigation by The Real Deal has shown that some Brooklyn brokers who are members of REBNY still do not hew to the trade group’s regulation of co-broking their exclusive listings in Brooklyn.
“We pay our dues, but we’re basically mavericks,” one broker, whose company belongs to REBNY and who operates in the brownstone area of the borough, said off the record. “I don’t really have to co-broke,” the broker added, noting that sharing listings is only necessary for selling a property faster.
Other firms say REBNY’s co-broking system has significantly altered their business for the better, despite decades of running their brokerage under a different business model.
“REBNY changed my life,” said Jean Austin, president of Brooklyn Bridge Realty and a REBNY member. Because her agents have access to listings from the bigger firms, “now they can show their customers all of the listings that the big guys have. It has made us David to their Goliaths.”
REBNY president Steven Spinola said there haven’t been major problems with Brooklyn members not co-broking and that co-broking has been a boon to small firms like Austin’s.
“I have gotten no complaints from the members, and we have some real activity so I think overwhelmingly, the system is working,” he said. “Nobody is forcing anybody to do anything they don’t want to do.” He added that the system of universal co-brokerage is “a tremendous advantage to the small firms.”
Results mixed in big borough
Still, most of REBNY’s reach is confined to the brownstone parts of the borough where the Manhattan-based firms have offices — Brooklyn Heights, Carroll Gardens, Park Slope, Cobble Hill, Fort Greene and Dumbo.
Most Brooklyn brokers appear satisfied not to co-broke listings, even if this is starting to change.
“In the old days, if a broker from another company was holding an open house, and you showed up with a customer, you were taking your life in your hands,” said Bill Ross, who sold his firm William S. Ross Real Estate to the Manhattan-based Halstead Property in 2004, and is now executive director of sales at Halstead.
John Reinhardt, president and CEO of Fillmore Real Estate, leads a company with 500 brokers — a number equal to all the Brooklyn REBNY brokers — with 20 offices across the borough. The firm operates mostly in the outer areas of Brooklyn to the south and to the east — outside of brownstone Brooklyn.
In the areas where he does business, Reinhardt said he and other Brooklyn brokers have the majority, if not all, the listings, and it would be a long stretch for them to share with their Manhattan counterparts, who have none. Fillmore has more than 150 listings in Canarsie; REBNY has zero, he said. “I don’t think they have a chance in middle Brooklyn,” said Reinhardt. But “in Downtown Brooklyn, they offer tremendous value. It’s a very good, strong, professional organization.”
Multiple listings already in place
Another good reason to ignore REBNY’s listing system is that two MLS services already dominate in the southern and eastern sections of the borough: the Brooklyn New York Multiple Listing Service (www.bnymls.com) and the Brooklyn MLS (www.brooklynmls.com). Many brokers paid $15,000 to $20,000 for membership in those trade groups years ago, said Reinhardt, and they’re not about to switch.
Other brokers point out that REBNY’s co-brokering system has been pushed simply as a means for the bigger Manhattan-based brokers to crack into what some perceived as an insular, protected market, dominated by a handful of brokers with powerful market share and a huge portfolio of exclusive listings from neighbors they had worked for years to cultivate, including firms like Warren Lewis Realty and Aguayo & Huebener Realty.
Some see the Manhattan-based firms as being heavy-handed in their approach.
“There is a lot of bullying going on, like a Wal-Mart or CVS coming into a neighborhood,” said a Brooklyn broker who preferred anonymity. Many noted that the bigger brokers often send their clients to an exclusive apartment listing expecting to be able to co-broke the deal. According to them, it would be OK if the REBNY brokers called and asked permission to send their clients, but they often do not.
Though all of the big Manhattan-based brokers tout the co-broker system as being best for both the buyer and the seller, some Brooklyn brokers said that there is room for both systems.
“A lot of people prefer the Corcoran-Douglas Elliman thing,” said Marc Garstein, president of Warren Lewis. “Some people call them interlopers and carpetbaggers, and other people love them,” he noted, adding that he had many takeover offers for his business that he turned down because he prefers doing business the traditional Brooklyn way — not co-brokering.
Some clients can attest to the ease of going to one broker instead of, as is often the case in Brooklyn, running around to several brokers who will try and bring in the buyer and seller themselves, where none of the brokers have an exclusive on the property.
Eric Deutsch, president of the Downtown Alliance, a business improvement district in Manhattan, sold his first apartment in 1998 in Brooklyn by offering a short-term, two-week exclusive to a broker. He had planned to open it up to three other brokers if it did not sell quickly, but he never had to. He thinks the REBNY system works well in Brooklyn Heights, where there is a lot of competition and a lot of brokers, but less so in neighborhoods like Park Slope, where there are a handful of very strong independents, making for a more fractured market.
Now that he is selling a property in Brooklyn again, he hopes selling through an exclusive will help him: “The other way was like the Wild West. It meant a whole lot of legwork,” he said.
The bottom line
Some observers argue that the co-broke system can artificially drive up sales prices by an increment that wouldn’t exist if the property were brokered by one agent, thereby helping the seller but not necessarily the buyer. The result is an overall loftier market, an increment above where experts might argue lie “market-based prices.”
But Manhattan-based brokers argue in favor of co-broking, saying the fact that the property listing is widely disseminated allows it to fetch a better price.
“Eventually the seller is going to realize they are not maximizing their investment under the old system,” said Michael Moran of Douglas Elliman, who is heading up the firm’s new Williamsburg office.
But a declining market could have an effect on whether more Brooklyn properties are entered into a listing system and co-brokered, Reinhardt said.
“In a hot market, a company of our size, having market share dominance, it’s a good strategy to keep listings exclusive,” because they can qualify all of their buyers, and offer pre-qualification services to sellers, he said. “Now, because the market is stabilizing and returning to the normalcy of a few years ago, the agents are motivated [to share their listings] by the factor that it takes longer to sell it in the market.”
When REBNY first officially entered Brooklyn in 2004, Reinhardt said, 75 percent of his listings were not co-brokered: Now it’s a lot less, and “we do more multiple listings,” Reinhardt added.
Spinola said co-broking should take place whether the market is strong or weak.
“There is a theory that if it is going to be more difficult to sell, you need to get the information out,” said Spinola. “But the whole concept is that it should not change whether it is a hot market or a cool market.”
As Manhattan-based brokerages gain power in parts of Brooklyn, that may be the case.
“I would expect traditional brownstone Brooklyn to be majority REBNY members within a year or two,” said Ross, the once independent broker who is now part of Halstead.