Town drops 25% referral fee
Facing agent backlash, firm will release listings for free
Town Residential has dropped plans to charge former agents and their new firms a 25 percent referral fee for exclusive listings they take with them.
The brokerage, which ceased its resales and leasing operations last week, will now assign the listings to the new firms at no cost.
“We will happily assign their listings to you for no referral fee at all,” Andrew Heiberger, Town’s founder and CEO, said in an email sent Wednesday to the Real Estate Board of New York’s residential board of directors.
Related: Listings in limbo: What’s to come
for Town agents’ millions in exclusives?
In the email, Heiberger also forfeited his seat on the residential board in light of last week’s decision. He said he could continue to serve on REBNY’s board of governors under Buttonwood Development LLC, the boutique firm he started before launching Town in 2010.
Following the closure of those two divisions, Town had previously said it would release exclusive listings to agents and their new firms — but only for a 25 percent referral fee. The fee was payable to Town within three business days of the agent receiving a commission check, according to a “Release Agreement” given to agents, a copy of which was obtained by The Real Deal.
“Upon further thought and reflection, we have decided that the fair thing to do for our clients and representatives is to release the exclusive listings,” Heiberger said in a statement. Town will also release all marketing materials, photos and floor plans.
From a legal standpoint, it was unclear if Town ever had a claim to any referral fees. And several agents and brokerage heads, who spoke on the condition of anonymity, said that the referral fee was a form of highway robbery.
“Andrew Heiberger came out and said, ‘I’m no longer doing residential resales. I’m giving cartons to my agents so they can pack up and leave,'” said one real estate attorney, who said the scenario fell under a section of contract law called “impossibility of performance.” So, if one party is unable to perform under the contract, the lawyer said, the other party has the right to get out.
“An assignment agreement and release agreement, when a brokerage is dissolved, is unusual,” said Terrence Oved, a partner at law firm Oved & Oved. “However, a major brokerage going out of business is also fairly unusual, as well.”
Over the past few days, multiple Town agents and managers from other firms have contacted REBNY for guidance on the issue.
“We are in communication with Town regarding an orderly transition for the REBNY members affected by the closing of its residential resale operation,” John Banks, REBNY’s president, said in a statement. The organization plans to address any issues related to the disposition of exclusive listings, he said, to ensure they abide by REBNY’s universal co-brokerage agreement, which governs how its members share listings.
On April 21, Heiberger said in a LinkedIn post that fierce competition for agents and increasing commissions made it “simply impossible” for Town to sustain a profit.
The brokerage has said it will continue to run its international sales business out of its new flagship at 888 Seventh Avenue. But on Monday, Luciane Serifovic, the division’s director, announced she would be leaving Town. “It was a mutual decision between me and Andrew [Heiberger] because we do have a very good relationship,” she said at the time.
As of Wednesday, two of Town’s former managers landed at new firms. Ryan Fitzpatrick, manager of Town Flatiron, joined the Corcoran Group. Dan Marrello, managing director of leasing, landed at Compass. Compass is also in late-stage talks to take over Town Flatiron’s lease at 110 Fifth Avenue. The 16,600-square-foot office was Town’s first location.