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I am so proud and pleased to have joined Sotheby’s International Realty in Sag Harbor, New York.
Sotheby’s is a world class brand and brokerage, whom every brokerage compares themselves to, but none actually do.
Michael F Daly
22 Spring Street
Sag Harbor, New York 11963
Tel 631 525 6000
It’s reported that the $50M Corzine to Tepper deal in Sagaponack is being done sans broker.
I can hear the “Aw, shucks” (or something similar) being exclaimed at every bar and pilates class on the East End, not that I have been to either during this wicked allergy season.
So, how much does an agent make on a $50,000,000 transaction? I’m sure many of you imagine MILLIONS!
The reality depends on a several factors:
1- The agreed upon commission between the seller and the listing agent.
Every agent enters a listing presentation aiming for the highest commission they can get the seller to agree to.
6% commission is common in many places, but never guaranteed. Some markets go as high as 7 or 8%. It’s not uncommon for the higher priced home owners to negotiate the commission down to, lets say 4 or 5%.
2- The agreed upon “offer of compensation” between the listing Broker and the Broker that brings the buyer.
In the Hamptons and Manhattan, the commission is typically split 50/50 between the listing Broker and the Broker who brings the buyer. In other areas of Long Island, the listing Broker usually keeps a larger amount of the commission and offers out less than 50% to the Broker that brings the buyer. Why? Greed, and they get away with it. Saps!
3- The “Split” between the agent and the Brokerage they are working for.
Note that the commissions on any transaction are paid to the Brokerage the agent works for. The Brokerage keeps their share and pays out the split to the agent who did the work on the transaction. Most agents start out at 50% (although we hear that one major Brokerage out here has started a new 45% tier) and as they gain experience and increase their gross commissions to the Brokerage, their split increases to, say 70% or greater in some cases. See an interesting chat on Hamptons Brokerage splits here.
4- Was the customer or a client a Referral or are you working on a Team?
It is not uncommon for big clients or customers to be referred by their family members or best friends who have a real estate license. And the referral fee is usually 20 – 25% of the commission your Brokerage earns on the deal. Many are very justifiable and from hard working professionals that have been working with these clients for years, but don’t have the local expertise or connections needed to complete the transaction in an area outside their own market (common with second homes), but when they are “just the result of a phone call”, they can sting a bit.
Regarding teams, with the 24-7 nature of the real estate business today, many professionals have formed teams so someone can always be available to their clients. Often team members share in all commissions that come into the team.
5- Our Dear Uncle Sam
Most Agents are 1099 contractors and pay their own taxes.
Now for the reality
So, take a $50,000,000 sale and apply the above reduction mechanisms to it and I bet the number that spits out is less than you thought it would be!
Best case scenario:
One agent @ 5% commission: $2, 500,000
@ 70% split w Broker: $1,750,000
- 35% US taxes: $1,137,500
Not a bad take!
Listing agent and Selling agent @ 4% comission; $1,000,000 each
@ 65% split w Broker: $650,000
- 35% US Taxes : $422,500
Still enough for a one-bedroom in The Springs, but…
add a referral fee of $25% and split it with a team member and the final commission on that $50M sale is about $160,000.
STILL A GREAT PAYDAY, but less than your imagination led you to believe.
And remember, there were approximately 10 sales of this magnitude in the US in 2008 and there are approximately 1.3M agents in the US.
It ain’t easy folks and I admire any agent who gets the opportunity to be part of a deal of this size. It’s rarely “dumb luck” and often the result of years of hard work, building relationships, planting seeds and weeding the gardens of their business that results in this good fortune.
At Redfin, we’ve long been opposed to dual agency, where the same agent represents both seller and buyer. This hasn’t always been an easy call because in some ways it’s more efficient. But it’s hard to represent both sides in a negotiation simultaneously, and the big problem is that it encourages the listing agent to market the property selectively to his own clients rather than broadly, to every possible buyer.
see entire post here
Yes, there hasn’t been much news about Hamptons real estate to write about lately. We’ve all been “under the weather” with these last 3-4 weeks of constant rain.
This Improper.com piece came my way and I thought it was refreshing to hear some local agents speak the truth about the market…now, if the more sellers will listen, we might see an uptick in business.
“It’s like trying to catch a falling knife,” Mala Sander, of the Corcoran Group in Sag Harbor told the magazine. “Listings that were $6 million last year which should have been $4 million, now they’re going for three and a half.”
“This is beyond anything I’ve seen in 22 years,” says Tara Newman, also with Corcoran. “I’ve gone from low expectations to no expectations.”
“Where is the market?” said Peter Turino, of Brown Harris Stevens in East Hampton. “At all levels we’re struggling to understand. We’re still in shock. We’ve left a period behind. A period of history that’s well behind us, it’s gone.”
See TheImproper.com article below:
Simspon suit against heavy-hitters continues
27east.com – Southampton,NY,USA
The two companies at the core of the battle, realnet Solutions and Hamptons Real Estate Online Inc.—both owned by Nicholas Khuri—filed a motion to dismiss …
The following East End agents have been recognized as being in the Top 100 Agents in the US for 2008.
Congrats to them, well done in a tough market!
Rank – -Name- – - - – -Company- – - – Location- – - – - – - – -Volume
5 Harald Grant Sotheby’s Southampton, NY $191,922,500
6 Beate Moore Sotheby’s Bridgehampton, NY $177,101,799
41 Susan Breitenbach Corcoran Bridgehampton, NY $ 92, 187,500
42 Gary DePersia Corcoran East Hampton, NY $ 92,065,002
59 Sherri Winter Clarry Corcoran Southold, NY $ 76,262,500
69 Paul Brennan Prudential Bridgehampton, NY $ 69,974,162
87 Timothy Davis Corcoran Southampton, NY $ 60,920,000
see the WSJ article here
As I was reading The E-Mail Handshake in yesterday’s New York Times, I found myself – a fairly tech-savvy real estate agent- with mixed emotions about the concept of conducting negotiations via Blackberry/iPhone email.
I believe that too often agents, clients and customers use email as a way of avoiding contact and the tough conversations they need to have about a property or the negotiating process. It’s easier to be a hard-ass with a few thumb strokes than it is on the phone, having to listen to the other persons advice. That being said, perhaps some buyers don’t trust their agents and don’t even want to listen to their advice, so they just shoot ‘em instructions and see where it lands. On the flip side, perhaps some agents don’t have the confidence to stand toe to toe with their client and tell them the things they don;t want to hear that just might get the deal done.
I wonder how many deals don’t get done because the wrong method of communicating was chosen?
I’d like to think that today’s most prominent agents know when to “e” and when to “c” their clients and have established a relationship with their clients that they know when a “c” is coming in, it’s important enough to take it.
Knowing when to use technology and when to use personal contact is a combination of art, science and style…
So, with the number of sales down over 70% from the peak of 2006, what are many of the Realtors (agents) that are not selling real estate doing now? There was that cheeky article about Wall Street and Real Estate brokers dancing at Gentlemens Clubs in the NYPost a while back, but I haven’t heard, nor seen any of my colleagues doing that. But there’s a research project I might take on…
National Association of Realtors membership is down, nearly 20% from the 2006 peak. That being said, we really don’t know how many agents are still in the business and just not members, saving the $300 -$500 annual dues, or how many agents have paid their dues just to stay connected but aren’t really working the business.
It’s safe to say that the 80/20 rule applies here, too – only I sense the rule has gone to 90/10 in the last two years. I think that 10% of the agents are doing 90% of the business today. You can see those walking around with dazed eyes, looking for a park bench or a bargain at TJMaxx compared to those who are on the ball, working with motivated sellers and buyers, REO’s, short sales (the absolute WORST) and just basically making their own business. Or, some of us are getting into new business models.
Some recent membership numbers below. Don’t be suprised to see it drop another 10% in 2009/10.
These numbers are year…………#of Associations……………# of Realtors
see the complete chart, starting in 1908 here
see this complete report, covering the US here
See the Inman News report – Life After Real Estate here
While the market is down, it’s clearly not out (all together).
Someone who might have been in the market to buy an oceanfront home for $30, $40 or $50 million might see it as a wise investment to rent for the summer and buy later..
And, if there’s any two agents that are going to be involved in that deal, it’s Beate and Susan…two of the best! Nice going girls! Also, kudos to the Ex-Mrs Corzine for a terrific investment.
Susan Breitenbach of The Corcoran Group brought the renter, says a spokeswoman for the agent. She declined to identify the customer’s identity, but did say that it might be a record-setting price for a seasonal rental in the Hamptons. Beate Moore of Sotheby’s International Realty, the listing agent for the property, agrees. “It is a big number,” she says.
The lease is for Memorial Day to October.
The 6,200-square-foot, six-bedroom, 5.5-bath home is on a gated property. The 6.64-acre estate includes a heated gunite pool, a Har-tru tennis court and more than 500 feet of ocean frontage along Gibson Beach.
The house was signed over to Joanne Corzine in 2002 as part of her divorce settlement from Gov. Corzine.
REAL LI Blog – Newsday.com