That 6% Is Getting Harder to Earn
IN any real estate market, the question is asked, in voices both low and loud: What exactly do those brokers do for their 6 percent commission?
The wondering seems especially relevant now, when both buyers and sellers are tense, not knowing if prices will continue their upward move or if they are headed down.
On a typical sale, the broker gets 6 percent of the sales price, with 50 to 75 percent of this amount going to the broker or being shared with the broker and the company representing the buyer. The remaining 25 to 50 percent goes to the company representing the seller.
The broker’s part of the commission isn’t just gravy; it is used to cover some of the selling expenses. “Our agents pay for things a lot,” said Pamela Liebman, president of the Corcoran Group. “Being an agent is really running your own business, and if you’re not willing to invest money yourself, you’re probably in the wrong business.”
Brokers say that the current market is requiring them to be more creative, to spend not only more money but also more time and effort to make a sale.
Joan Goldberg, a broker at Brown Harris Stevens in Brooklyn Heights, sees herself as a sort of broker-contractor. She has a team of people — painters, contractors, gardeners, stagers, house cleaners, handymen, haulers — at the ready to whip her listings into shape.
“People are often overwhelmed by the prospect of selling, and it’s my job to get them to see that their home will show better and sell for more if we can just take away some of the layers and layers of personal items and grime they’ve accumulated,” Ms. Goldberg said.
For the most part, she does the hiring and scheduling, and she said that she tries to get each client as fair and economical a deal as possible. Sometimes, she winds up paying for some work herself or simply doing it herself.
“I like to plant flower boxes, and I change them weekly and water them if the owner forgets to,” she said. “I often go to the flower district early in the mornings or out to the big nurseries on Long Island to get just the right thing to put in a pot on a brownstone stoop. But, then, I’m a bit of a perfectionist.”
Ms. Goldman also routinely buys new trash cans and paints the street address on them in an effort to make the best impression when prospective buyers arrive to see a listing. “Some people carry plastic bags for dogs,” she said. “I carry them so I can pass by my listings and pick up trash.”
Other brokers emphasize luxury services.
Karen Heyman, a broker in the SoHo office of Sotheby’s International Realty, always hires car services to ferry potential buyers to see her Brooklyn listings. She says it’s worth it to her, in the end, to cover this expense herself.
“The bottom line is that we’re all independent contractors,” she said. “Our offices have certain budget formulas, but I find those restrictive. If I think there’s something I can do to increase the likelihood of a sale, I’ll do it, no matter what.”
Agents also use their commissions as leverage in making deals happen.
“Say a seller’s at $900,000, and a buyer won’t go higher than $895,000,” said Michael Signet, director of sales at Bond New York, which has five offices in Manhattan. “Our broker might call the other broker and say, ‘You pick up $2,500, and we’ll pick up $2,500.’ That way we don’t lose the deal.”
Because the New York City market is growing increasingly stressful — sellers worry the peak has been reached and potential buyers are reluctant to commit for fear of paying too much — more is being asked of brokers.
Juliana Brown, the managing director of Corcoran’s office in Fort Greene, Brooklyn, said she’s starting to see a pattern, with sellers asking for more as the economy weakens. At a sales meeting late last month, she said, one agent after another raised an example of being pressured to pay for something that he or she felt was unreasonable.
“In one case a seller asked the broker to pay off a tenant who didn’t want to move,” Ms. Brown said. “The owner said: ‘Hey, you’re making all this money off me. You should contribute.’ In other cases sellers have been asking us to pay for staging, cleaning, removing clutter, things that are a little outrageous. I mean, these are things we recommend doing, but sellers are the ones who are going to ultimately benefit.”
Nichole Thompson-Adams, one of Ms. Brown’s agents at Corcoran, said her colleagues think she’s insane when they hear what she does for sellers. Paying for cleaning, painting and decluttering, for example. When her efforts pay off, “I absolutely feel like I’ve done the right thing,” she said.
Nichole Thompson-Adams, of the Corcoran Group, has been known to pay for cleaning, painting and decluttering.
When the client changed her mind a few months later and put her house back on the market, she gave the listing to another broker.
“She said she had forgotten my name, which really hurt my feelings,” Ms. Thompson-Adams said. She added that the client was very slow in paying the contractor — she even had a hard time getting back the pillows and rugs she had lent to make the listing look more appealing.
While some sellers don’t like hearing that their homes need a professional’s decorating touch, Jeannine Hahn was happy to follow the advice of her broker, Elaine Clayman, a senior vice president in the Midtown East office of Brown Harris Stevens. Ms. Clayman suggested that she hire a stager when she put her one-bedroom apartment on the market six months ago.
The stager didn’t think the place needed much but did move some furniture around and strategically placed mirrors to maximize the light and space. Best of all, Ms. Clayman found someone who charged a mere $200 for his services.
"My broker organized everything and thought of things that never would have occurred to me," said Ms. Hahn, an executive at a nonprofit organization. "My apartment sold so quickly, and I bet — just because of her advice — for $50,000 or $100,000 more than it would have."
Another seller, who asked not to be identified for fear of angering her former broker, had the opposite experience with a stager. She said that when she put her Brooklyn town house on the market last year, her broker told her she needed a stager. The seller agreed to pay half the $8,000 fee.
But what she got, she said, was a nightmare.
“It was so extreme — when I came home there was nothing left,” she said. “They had completely erased the charm and made it look like a hotel. In the end, I never did find all the stuff they removed — nor did my house sell.”
Sometimes, it’s a matter of finding the right broker for the property being sold. Nell Scharff, who was selling a 510-square-foot one-bedroom on the Upper East Side, hired Jack Caputo, an agent at Bond New York who focuses on the smaller, less expensive end of the Manhattan market. For her, she said, it was all about finding “the right fit” for her apartment.
"I wanted someone who would be enthusiastic about it and get on it right away," Ms. Scharff said.
Mr. Caputo priced it at $450,000. “He knew the right people and made the right calls,” Ms. Scharff said, “and it sold, for the asking price, before we’d even put it on the market.”
