time for big real estate firms is over

The OP is either a recruiting for William B. May, or an ungrammatical fake ad intended to discredit May's new business model. Nonetheless, the topic is an interesting one, because it highlights a shift in the industry as a whole.

The 0% commission split is less revolutionary than it looks. The big firms are essentially franchising operations that provide branding and some infrastructure. The associate brokers are mostly independent contractors who run their own businesses. The "franchise fee" usually includes a percentage of sales - a commission split of up to 50% that is a matter of negotiation between the broker and the firm. Whether the fees are fixed or variable, The broker is paying for the same basic services: the use of a letterhead and templates, a website and some office services. The firms don't SELL anything. Their function is marketing. The brokers sell, using the firm's brand.

So, does the shift by firms toward relatively stable, fee-based revenue - and the acceleration of this shift in response to lower transaction volume - really matter to consumers? It might, and the impact could be positive or negative.

On the positive side, a firm less dependent on transactional revenue sources could focus more on quality-control activities to protect and enhance the value of its brand. More importantly, a lower (or zero) split for the firm means more flexibility for brokers to negotiate commissions and compete directly with each other for business. Meanwhile, the less dependent the firms are on commission income, the less motivated they will be to protect the status quo.

On the negative side, if the firms thin out too much as they try to survive lean times, their brand names could provide ccredibility and cover to unscrupulous brokers operating with minimal supervision. My impression is that the firms do a poor job of oversight already, so there isn't much to worry about on this front.

By the way, I think the OP oversimplifies W.B. May's deal. The basic package might be $6K, but brokers should read the fine print; I believe there are other unbundled charges associated with specific services.

No ad for Wm B. May...I was hoping to create and interesting conversation.

The "branding" of the big firms has homogenized the business.
I have predicted their break up.
Brokers flocked to them not for branding but because of the cost of the websites.
Now that the creation of a good website is within reach, we will be seeing more independent brokers.

I think bad, sleazy and unscrupulous brokers hid behind the brand of a big company.
The would never be able to stand on their own. People would find them out to easily.

Now, I have one question for the owners of this site:
WHY DID YOU BURY THIS POSTING???
Which firm called and asked you to do so???
Whose pocket are you in?

Let's see what happens to this posting in the next few hours...

postings age based on comments or no comments. what's your point?

the topic is hot because of trouble in the RE industry
recent headlines turned some heads here in London, too
.
Not too familiar with Apollo Mgmt but normally these overleveraged guys are sucking the last quid/dollar out of their holdings to pay for their huge debt load.

Corcoran and Citi Habitats - wondering if they went already through some serious belt tightening...

Realogy the parent company of Sotheby's International Realty and NRT, itself the parent company of Corcoran and Citi Habitats, posted a $1.9 billion loss in 2008, the company announced. The company's CEO, Richard Smith, denied rumors the company would file for bankruptcy protection, and said the company's day-to-day operations would not be affected. Equity firm Apollo Management has promised financial assistance if necessary.

Or they are buried when they are distasteful to one of their advertisers.
This posting was not where it should have been based on when it was posted and how often it was commented upon.
Prediction time: NRT will try to sell the Corcoran name. They will not be able to so even the name will be gone.

One of the things Barbara Corcoran did best was to bring small firms under her umbrella. She ran a company they was virtually free of constraints. Everyone was free to flourish and they did.
When she left the company, as it was disappeared. Every sleazy broker was hired. The worst of them were the "Top Producers." This was always an aka for me, meaning most sleazy, after Barbara left the company.

Elliman: Not sure how rich Dottie is? Truth be told, she got into this mess of Manhattan Real Estate too late to be blamed for anything.

Terraholdings (aka Halstead and BHS): Cheap and small minded as ever, they just may survive, albeit with a skeleton crew.

Now powers that be...bury this posting...:-)

Not buried yet?

I have to go, but couldn't resist a quickie. Think about what a real estate transaction is, a buyer, seller and in Manhattan usually a broker with the lawyers wrapping it up at the end. What really is the point of an expensive front office? What role does it play in facilitating the transaction? All the money spent on branding and the large expense of maintaining an office where brokers do what?

If the big firms accepted less of a rip from the commission that brokers generate, fees could come down across the board. If big firms utilized technology in an efficient way, overhead would fall drastically. Let me just spell it out again.

clearly we can all understand that if a broker is representing a buyer, he could work out of a box on west 58th street. As long as he had an Internet connection, mobile or otherwise. That is ALL you need, well and taxi fare and a somewhat functioning body/brain. :)

Now what does the listing broker do, in short sit in an apartment from 12-2pm every Sunday. Unless you have a real hoity toity broker who doesn't work Sundays, then you get the assistant; Agent Rachel anyone? (sorry couldn't resist).

The listing broker is nothing more than a conduit to the rest of the brokerage/civilian population. Does BHS or Elliman list their apartments in some top secret space that makes them sell at astronomically higher prices than say...the burkhardt group? No.

The listings go into the RLS database, NYT's, OLR, this is where all brokers search...ALL.
Then we send out the highly technical "e-blast".....Fill in form, add pictures, push button and off it goes to 8000 brokers in Manhattan, most use OLR for this.

All that money spent on an office, PR,spreads in glossy regional social publications etc....is so you will list your property with them, or utilize there buyer services. Does any of this "extra" stuff help sell your apartment? Does any of this extra stuff help you buy a better apartment. No.

Pricing: This is the most important thing to get right. Miss on this and all the other stuff is just conversation.

Listing the apartment in a database where brokers can find it.

Advertising in the NYT's online (print is dead, but you could kill a few trees if it makes you feel better).

E-blasts that go directly to the brokers in-box with an appropriate subject line so it gets read!

Open houses every Sunday that the listing broker attends. If not the listing broker then an worthy associate, not a disinterested student checking twitter feeds and facebook.

A broker open house is always nice and spring for a nice spread.

Oh yeah, and a broker who has had a few original thoughts, can add, doesn't smell and is an all around decent fellow. Someone you can work with and trust. (D.Pipe,Admin- please refrain, thanks).

Well this was a hastily written mess...but you get the point. Things will change, some well financed broker will launch this properly with the right backers; hope it's me.

http://www.theburkhardtgroup.com/about.php

OP, this sounds like a good idea in theory, but "Foxtons-like" models just don't seem to work well in the U.S. (though it may work elsewhere).

On big purchases like real estate, Americans simply appear to prefer to deal with full-service agencies w/ solid brand status and pay more, rather than save some $ by dealing with penny-pinching firms...

Duv. typical "broker" response. Foxtons tryed to go it alone and exclude the brokerage community at large. What exactly does a "full service" firm provide outside of what I have listed above? What does that mean "full service"?

Look I sold a loft to David Schwimmer, I worked at the then lowly Citi-Habitats (as far as sales went). He was referred to me because of a bad experience at a "big firm". He like me, I liked him. he knows acting, I know NYC real estate...I could have sold him if my office was in a tunnel on the west side highway, as long as I had wi-fi.

What was my biggest hurdle, Barrie Mandel at Corcoran makes everyone comeback twice before she will let you sign, no exceptions. Schwim, he's a hell of a nice guy.

the burkhart group
You are a smart, very reasonable person.
I worked at rental firm years and years ago.
I did big sales to high end customers. Like you, I did it with no listing system, no online listings, just the NY Times and the trust of the buyers. When I sold it was the trust of the seller's I had.

It has become too easy to sell real estate...I see this little agents running around, you know, the ones with 20 listings, who have never seen a bad market...
the burkhart group...you will be around, as I will.

I STILL SAY...BYE BYE BIG FIRMS...BETTER CUT YOUR BOTTOM LINE FAST...BEFORE WE ALL LEAVE YOU AS QUICKLY AS WE CAME................:-)...CAN'T WAIT TO SEE IT HAPPEN.

I don't think the "gig firms" will be the ones most hurt, it will be medium size companies that have been able to hyper-grow through the bubble expansion. If they are not well capitalized, have large fixed costs as well as debt; it ain't gonna be easy.

I don't want to see big firms collapse, without them my alternative model is no longer alternative.

Regarding the "penny pinching" comment. It's not just about being cheap, it's about being innovative, offering the consumer an alternative as well as effective model. Some folks like to drive a Benz, some a Volkswagen; at the end of the day both get you from point a to b.

One of the basic principle of my model is that "one size" does not fit all, each deal has different sets of circumstances. I am able to adapt on the run so to speak, I can adjust and tinker to make every almost every transaction that is desired work. At most big firms you are unable to do this. In the year I have been practicing this I have many stories of just how deals were done because I could adapt quickly.

Not only has it been good for business, it has been liberating on a personal level.

"big"

The penny pinching comment was meat sardonically. I have always believed they (terra) could have been a much bigger and better company had they not had that corporate persona. I can't tell you how many top brokers would never have thought of working for them. Their rep is counter to Barbara C...manage every detail and every penny...the result, they got the dregs of the dregs in terms of the last crop of (sleazy) brokers, who are now making the top sellers group and teaching classes to new brokers.

One thing the big firms forgot about, it's not just about the branding, it's about the broker...the individual.
As you and I said earlier, a good broker doesn't need anything but the earned trust of the customer, to do a good job. Brand does nothing for that. I don't mean to be mean...I just used to resent work my tail off to build my business, only to have it cut off by the branded firm fight me at every turn.

Interesting discussion burkhardt...

meat=meant

>What exactly does a "full service" firm provide outside of what I have listed above?

Brand power to ride on. Lexus has it while Toyota doesn't. Infiniti has it while Nissan doesn't. Audi has it while VW doesn't--although they are made by the same people using (mostly) the same parts.

If David Schwimmer buys a Toyota over a Lexus, great. It just isn't the norm in the luxury market, and developing a business plan based on this N=1 would be silly.

A full service firm provides nothing but the brokers who work their tails off.
Branding? I hate that word. In our business branding means, according the individual agent/broker, less value than they should have and shifting that value to the firm. The FIRM takes the credit for everything.
The FIRM make policy or should I say dictates policy.
THE FIRM'S NAME HAS TO BE THIS BIG, but the broker's name can barely be legible.
Haven't any of you other brokers out there noticed, just how little esteem, the people you are earning money for really hold you in?.

Brokerage101
Yes, the penny pinching comment was meant sardonically.

Burckhart
There are no medium sized firms anymore.

big firms can work for people with a lot of high end connections and tons of money to buy, because those agents, do not work their tails off for nothing and their exposure is huge, they get high splits and secretaries to help them open their eyelids when they wake up in the morning, then again, there are only a few of those agents around, so the big firms have to cover their overhead by hiring the people who will pay the yearly fees and bring in a couple of bucks, anyway, it doesn't matter, it is a numbers game when it comes to the lil guys