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Looking at the Agencies
The Hamptons real estate market can be divided into haves and have-nots. I’m not talking about money. Only people who have money would bother to look here. Prices in the second home market, and even most of the primary home market in the area, are sky high. Buyers know it takes significant money, sometimes stupendous amounts of it.
I was thinking of the “haves” as the people who have real estate licenses and the “have nots” as those who do not hand out their cards at parties. It’s not as odd a division as you might imagine at first. There are at least a couple of thousand people on the East End working actively in real estate, and there are quite a few with licenses who put occasional deals together but whose names are not on the daily up-board of their offices.
When you look at the number of sales and rentals, the business is spread pretty thin among the agents. But it is not spread uniformly. The biggest sales tend to stay within a group of recognizable and highly successful agents.
Part of the reason there are so many agents is that there is so much money in commissions—both selling and listing commissions. They are all chasing it. Some are catching it. The other part is that the real estate business in the Hamptons has become overwhelmingly corporate. And the corporate structure for real estate sales favors a hierarchy of people in different management levels who naturally have to have a business and workers to manage.
The corporate behemoth of real estate is Cendant Corporation, owner of such brands as Avis, Budget, Days Inn, Ramada, and Super 8, Travelodge, Orbitz, and a myriad of other travel and hospitality companies. Cendant is the parent of such lucrative real estate names as Coldwell Banker, Century 21, ERA and Sunshine Group. Their Hamptons empire includes the Corcoran Group and Sotheby’s International Realty.
The NRT division of Cendant, not then known for luxury brands, acquired Sotheby’s International Realty from Sotheby’s Holdings in February 2004 for $100 million. At the time, they got 15 company owned offices, 147 broker affiliates, and the tremendously important franchising rights to the Sotheby’s name under a licensing agreement. The European and international realty business were not in the deal—but they all kept the same public name.
The top executive levels of Corcoran and Sotheby’s International Realty are not even based on this side of the Shinnecock Canal. The center of power has shifted to NRT headquarters in Parsippany, N.J.
Cendant is currently planning to separate and spin off divisions, including NRT. For details, check with chairman and CEO Henry R. Silverman, who summers in Southampton.
Terra Holdings, controlled by the Zeckendorf family and their associates, owns Brown Harris Stevens in New York, and in 2004 acquired a majority interest in the Hamptons offices of Dunemere Associates, now renamed Brown Harris Stevens. They are also the parent company of Halstead Property, and Halstead/FeatheredNest, and have interests in William B. May, all in New York.
For years people wondered if Douglas Elliman, the huge, very establishment New York real estate brokerage firm, would buy a Hamptons office. Then a funny thing happened. A Hamptons company bought them.
Prudential Long Island Realty, which had offices in Nassau and Western Suffolk, started in 1997 to open a series of East End offices. The smart money said then that corporate brands would never work in the Hamptons, but it turned out that Dottie Herman was smarter—and a step ahead. With her investment partner, Howard Lorber, she continued to open offices, and then in 2003 surprised even the insiders by buying Douglas Elliman and merging the businesses.
Allan M. Schneider Associates is now the only truly large scale brokerage that is independent and local. In a counter trend, the handful of small agencies still left seem to be doing well.
And Listening to the Brokers
I left the real estate brokerage business in 1998. After having sold my offices to Sotheby’s International Realty I worked for a year on a corporate level for Sotheby’s, helping to plan the expansion of their real estate business in the United States and in Europe.
Since then, in most ways, I’ve never looked back. I’ve never wanted to recapture the heady days of building and then selling my business. And I certainly have never wanted to be back in the trenches as an active broker. My connection in recent years has been as commentator, a journalist who writes about the intricate, immoderate, indulgent, extravagant and sometimes wacky world of real estate in the Hamptons. It’s an easy target for sarcasm and lampooning, and I don’t maintain a reporter’s distance from my subject. I include myself. I’m as besotted and moonstruck by real estate as everyone else. I share the madness.
Curiosity got the better of me recently and I went underground—where you speak in whispers and nothing said is directly attributable—to interview some of the real estate pros who were around when I was there, in the salad days of locally run shops, and are still here now that the business is largely corporate and branded. How much has it really changed since I used to show up for work every day on Main Street?
It’s changed considerably. One broker told me, “We went from being a friendly and odd little family of agents—who willingly helped and supported one another—back in the 80s, to what is now a corporate-owned, overcrowded office of over-stimulated brokers who feel they must lock their desks each and every night.”
Another said, “When we saw the movie ‘Glengarry Glen Ross’ we said ‘Thank God real estate the way we do it is civilized.’ Now, 15 years later, we’re competing against one another for ‘steak knives.’” She might have been exaggerating but she made the point that the tone of the business has shifted radically.
There were consistent themes from different agents at different offices. One was the overabundance of everything except listings. “We now have more brokers than customers, more brokers than houses. We have too many co- and tri-exclusives. We have systems and procedures. We have meetings on top of meetings. We have sales experts who give us pep talks on how to sell. We’re inundated with paperwork. It takes twenty minutes to delete all our junk mail and another twenty to listen to our cell phone, land phone, Blackberry messages and get all our corporate memos.”
Rentals used to be a significant part of our earnings. Many agents and even offices now will not do rentals, choosing to focus instead on the lucrative sales commissions. Referring to way it used to be, one agent told me, “We did ten to twenty summer rentals every winter and spring weekend, and at the end of these frantic weekends, we went out for drinks, exchanged weekend war stories, experienced catharsis, and couldn’t wait to get back to work early Monday morning.”
The people I spoke to are the last of a generation of brokers. They are fellow dinosaurs with institutional memories. There is a new generation now that knows nothing and cares nothing about the camaraderie of the old days. Nor should they. They belong to a brave new world of real estate—regulated, orderly, standardized, straight and steady.