How's It Going at 98 St. Marks Place Avenue?

With which firm did A&H do your co-broke deal, Anon 10:40? Perhaps they are selective there — all I can say is in my personal experience I have been refused entry to several A&H open houses once I mentioned that I was an agent and the name of the firm for which I work. Most recently A&H was selling a co-op at 277 Washington Ave over the summer and their open house posters even said “No Brokers.”

Now let’s see about the other part — you managed to persuade Corcoran to lower their commission to 4% from 5%, thus saving yourself how much money? If your property was selling for $500K, that 1% would be $5000 — not a tremendous amount at all to you. However, to the broker whose livelihood depends on commissions, $2500 (assuming a co-broke), or even $1250 (the actual agent’s usual share of the agency’s take is 50%, although it can go higher), could represent half of a mortgage or rent payment.

At the same time, the agent involved is much less enthused about working on your property — agents actually invest money in these things, as the brokerage firms themselves pay for only a limited amount of advertising, if any at all. So there’s $1250 less in advertising budget for the agent to work with, even if he or she didn’t need the money for personal reasons.

And then your place didn’t sell, and when the agent suggested you lower the price, you refused and went to A&H where you immediately lowered the price, and wound up with several offers above your original asking price. How do you know the exact same thing wouldn’t have happened if you’d lowered the price with Corcoran?

And, furthermore, I know for a fact through colleagues that Corcoran agents are specifically told that, as a matter of policy, they do not negotiate commissions below 6% on properties selling for under $1 million, except in very special cases (the agent lives in the building, etc.). This is as of six months ago, and I assume your experience was earlier (considering your property “sat on the market for four months”), or perhaps your property was over $1 million, in which case, did you really need that extra $10,000?

And no agent I know would allow a property to sit on the market for four months without changing the price; faced with an unreasonable client I know of many agents who have terminated the association themselves because the headache of working with someone like that just isn’t worth it — especially at 4%!

I’m glad for you that you are happy with your A&H experience, and I guess some people just enjoy thinking they’ve saved themselves some money, regardless of the less-obvious costs (property takes longer to sell, agent is not as invested in the sale, company has lesser resources in terms of attracting buyers). But in the end it’s the old time vs. money trade-off, isn’t it?

And I’m not spitting fire at anyone — just relating my personal experiences in dealing with certain firms. I’ve even said I understand their rationale, although in the long run I don’t believe this strategy will save them. I haven’t unjustifiably criticised anyones’ methods, marketing materials, or management, merely commented that, in my opinion and based on personal observation and experience, a reufsal to co-broke does a disservice to the client by cutting out an increasingly large portion of the buying public.

That’s right, Anon 1:48 – half of 6% is 3%. The problem is if all you’re getting is 3% you’re not going to share it with anyone, hence the refusal to co-broke. I’d rather have a half piece of pie than none at all. I’d also rather pay the broker who’s selling my house more money to sell it faster, at a better price, and to better-qualified buyers.

Going with A&H, Fillmore, etc., means not nearly as many people are going to see your property and those that do will very often be ignorant of the buying process and unprepared for what’s required. Buyers working with a broker are better-prepared and supported throughout the (often arduous and complicated, especially for a co-op) journey from offer to closing.

Ben,

It’s maybe not their fault, but many of the projects they’ve taken on as sponsors have had major problems — witness 191-209 Spencer St., sold by the the Developer’s Group in 2003 – 2004. Apart from numerous construction problems (including the last building that still isn’t finished), it turns out that the developers (3M Construction) lied on their zoning variance application — first saying it was going to be housing for students and their families at a Hassidic girls’ school, then changing it to faculty housing for a boys’ school, then selling them on the open market. When the city caught on to this, it revoked all the buildings’ Cs of O, meaning that the buyers can’t sell them and could have their leases challenged by tenants on the units that have been rented out. They tried to do the same thing with another behemoth they built two blocks over, but have been stopped before any unsuspecting people plunked down any money on the places (and the Developers Group is not involved in this one).

See the NYT’s coverage:
http://www.nytimes.com/2005/08/28/realestate/28deal.html?ex=1129867200&en=f6b0ff2f7f236134&ei=5070

http://www.nytimes.com/2005/09/04/realestate/04deal.html?ex=1129867200&en=0d7d3bedaccd65b5&ei=5070

The Kent is another horror show — at this time last year, supposedly everything was already pre-sold, after numerous price increases. Then construction stopped for months, contracts fell through, etc., etc. Construction has recently started again, but initially delivery was supposed to be early last spring.

The other problem is that when buying a sponsor unit from anyone you’re going to pay all of their closing costs in addition to your own — in the case of the Developers Group these costs seem rather incredibly high. I had one buyer who was initially told that for the Prospect Place apartment she wanted to buy 10% down was fine and there was no mention of their closing costs. I wan’t working with her at the time, so she was on her own in this, or I would have warned her about the closing costs, and it turned out they wanted 20% down and her closing costs were to be $10,000 more than she’d at first thought. She walked away and that’s when I started with her — we signed a contract last week on a Corcoran-sponsored 6% co-broke new construction condo on the edge of Park Slope between 4 and 5 Aves.

As I said, sponsors can’t control the developers, but it seems to me that The Developers Group should have conducted better due diligence before taking on at least The Spencer.

And this is not to say that The Developers Group hasn’t done some nice things — witness 50 Bridge St in Dumbo. The Toy Factory lofts, another Developers Group-sponsored development, are also very nice — although the surrounding area is not great and residents there have complained about the lack of amenities. Again, this is not the fault of the Developers Group at all, but just a caveat emptor in general.

I haven’t followed up lately with how things are going at the Nexus in Dumbo, and I’ve only heard second-hand about ther various Williamsburg-area porjects, although what I have heard has been that they’re overpriced, poorly located, and less-than-great construction…If anyone has any other thoughts I’d love to hear them.

Actually, there are several smaller reputable Brooklyn firms that are REBNY members and do co-broke. And the Developer’s Group is not known as being particularly reputable and act only as a sponsor; you can’t ask them to sell your co-op for you. An entirely different business model, and, having clients who’ve bought or bid on Developer’s Group properties (The Kent, Spencer St., Prospect Pl.), I wouldn’t touch anything they were selling!

And my experience in the real estate crisis in the late 1980’s – early 1990’s was on the client side, as both a buyer and seller, in Cobble Hill, but I remember it very well. It was before the big firms really moved into Brooklyn. All I’m saying is that if the small guys don’t co-broke with other firms they will be driven out of business. “Co-broke or go broke.”

And, by the way, I’ve closed on three Brooklyn properties (two in Clinton Hill and one in Prospect Heights), all co-brokes with Corcoran, Halstead, or Elliman; two had 6% commissions and on had 5 1/2%. So I don’t know where your 4% norm is coming from. And it’s especially important, in this difficult market, that your broker expose your property to the maximum number of potential buyers, which isn’t going to happen if he or she refuses to co-broke.