Small Hamptons firms lure big agents

While Corcoran shrinks and Elliman treads water, local East End upstarts woo their brokers 

Two Trees Farm
At $75 million, Two Trees Farm in Bridgehampton is Sotheby’s International Realty’s priciest East End listing.

As the Hamptons real estate market claws its way back to life, competition between brokerage firms is stiffer than ever.

But these days, the most intense competition isn’t between the large Manhattan-based firms that have battled for East End dominance in recent years. Instead, as these large firms cut services and reduce commissions, local upstarts are luring away their agents with promises of higher pay and better working conditions.

“Just like [the Hamptons] changed in ’03 and ’04, when the mom-and-pops got bought up, it is changing again in a significant way,” said Andrew Saunders, founder of two-year-old Bridgehampton-based brokerage Saunders & Associates, which has doubled in size in the past year. “We have stripped away significant talent from these other firms.”

In 2009, the Corcoran Group was the largest brokerage on Long Island’s East End, with 333 agents. Since then, however, it’s lost almost 30 agents, dropping below its chief rival, Prudential Douglas Elliman, in The Real Deal‘s annual rankings of the biggest real estate firms (click here or scroll down to see the rankings).

But Corcoran agents don’t appear to be moving en masse to Elliman, which has virtually the same number of brokers as it did last year. Rather, a number of them have moved to Saunders & Associates, which has snapped up agents from other firms as well.

One of the defectors from Corcoran was top Hamptons agent Diane Saatchi, who moved to Saunders in late 2009 with her assistant and three other members of her team. Saunders also hired Gary Nolan, Corcoran’s former director of marketing and advertising, and his team, whom Andrew Saunders calls “the black belts of advertising for the Hamptons.”

Saunders formed the new high-end brokerage in 2008 with just two agents. At this time last year, he had around 25, he said. Now he has 43, with eight more on the way.

Saunders, a former Sotheby’s International Realty broker, has poured millions into the company’s branding and Web site. He said he has been offering agents better splits and services than they’re used to, which is attractive in a market where other firms have been cutting back. Corcoran, for example, recently started dropping some agents’ commission splits below 50 percent, he said.

“A number of firms have been cutting back on agents’ splits, which is one of the problems out here,” Saunders said, noting that his agents take home between 50 and 70 percent of their commissions. “We offer better service and better splits.”

So far, his approach seems to be working: The firm broke even in the fourth quarter of 2009, turned a profit in the first quarter of 2010, and has already earned the equivalent of 69 percent of its 2010 operating budget, he said.

Corcoran CEO Pamela Liebman declined to comment specifically on her company’s commission splits. But she conceded that “there were some advantageous deals offered to some brokers to make a switch.”

She said the difficult real estate market of the past year makes agents more vulnerable to poaching. “In a market that’s struggling, more agents are likely to leave,” she added.

But she said she isn’t concerned about Saunders’ attempts to make inroads into Corcoran’s market share in the Hamptons.

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“Andrew Saunders has a new business and he’s very aggressively recruiting talent and spending a lot of money and trying to build his brand,” she said. “I wish him well. But there’s a lot of business out there, and there’s plenty of room for new competitors.”

In the first quarter of this year, Liebman said, there were 13 deals over $10 million in the Hamptons, and nine of them were done by Corcoran. “We’ve got a very strong roster of brokers in the Hamptons,” she said. “I don’t think anyone can compete with Corcoran when you consider the powerhouse agents we have out there, even with [our] losing agents here and there.”

Dottie Herman, the president and CEO of Elliman, said while Saunders is “a good salesman,” she, too, is unconcerned about the impact of the new company on her business. She said she hasn’t changed her brokerage splits, either in the Hamptons or in Manhattan.

While Elliman hasn’t lost agents in the Hamptons, it hasn’t been untouched by the downturn. The company has reduced the ranks of its staff and management by about 20 people, said Paul Brennan, Elliman’s regional manager for the East End.

The company also closed its Amagansett office at the end of last year, leaving it with nine offices in the Hamptons and one on the North Fork.

“We decided that Amagansett could be covered from Montauk or East Hampton, and that’s proven to be the case,” Brennan said.

In contrast, up-and-coming brokerage Town & Country Real Estate recently announced the opening of a new Montauk storefront, bringing its total to eight offices.

Town & Country has grown steadily since its founding in 2007 by Judi Desiderio, the founder of longtime Hamptons firm Cook Pony Farm. The company now has nearly 100 agents. While the growth this year wasn’t as dramatic as the first few years after the company’s founding, “it was a year when good companies were losing people, and we were adding people,” Desiderio said.

Desiderio said the firm has attracted brokers — from Elliman and other companies — who prefer a homegrown feel. Saunders also emphasizes a homegrown, anticorporate ethos.

But the firms said their business models are different. Town & Country has small offices all over the East End, Desiderio said, and deals with “farmers and fishermen” as well as Wall Street tycoons.

Saunders, by contrast, focuses almost exclusively on the high end, and wants only two offices in addition to his Bridgehampton headquarters — in Southampton and East Hampton.

Another independent firm, Century 21 Albertson Realty, is having a harder time. Still reeling from a nasty split from Agawam Realty in 2008, the North Fork company lost a large number of agents and closed its Cutchogue office.

Owner Tom Scalia said a number of the agents who quit were part-time brokers who left the business when the economy soured. Now that the market is improving, he said, things are looking up. “It’s been a very long year and a half, but things are getting much better,” Scalia said.