Do real estate brokerage firms have any intrinsic value?


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I have been saying for a while that I foresee big firms cutting commission splits.
My friends in other markets have always marveled at what splits are like here.I think the pandemic lead a few more people to leave larger brokerages, then you have some newer models finally in this market. I thing the challenge is, many firms have cut back on the services, but not necessarily increased splits - with more teams now as well, I think there is alot of change to come -before the possibly/looming regulatory changes coming around ht econrer

David Goldsmith

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Corcoran shopping its biggest franchise​

Corcoran Global Living’s West Coast expansions doubled headcount since 2020 launch​

Corcoran Global Living is on the market.
The Corcoran Group is shopping its inaugural — and biggest — franchise less than three years after its formation, according to an internal senior executive. The executive said Corcoran will execute a direct deal if it can’t find an outside buyer.
News of the offering comes after more than two years of aggressive growth by Corcoran Global Living, which formed in February 2020 when Zephyr Real Estate, a San Francisco firm, combined with Nevada-based Oliver Luxury Real Estate.
It began expanding almost immediately, purchasing a Northern California firm in August 2020, a Los Angeles firm in November of that year, a Beverly Hills brokerage in May 2021 and a Bay Area firm earlier this year. The acquisitons grew Corcoran Global’s headcount to more than 1,000 brokers, compared to 450 at the time of its inception.

Rumors had been circulating in recent weeks that the firm was going out of business. In response to an inquiry on the matter, a Corcoran Global Living executive said the brokerage is reconsidering the extent of its office footprint.
The affiliate had 80 offices in April, up from its initial 13. Corcoran Group had a total of 122 franchise offices at the end of 2021, according to SEC filings, divided among 23 franchises.
“Like many brokers with the shifting real estate market, we are in the process of evaluating our office space footprint in Southern California,” said chief operations officer Matt Borland. “We are not closing our doors.”
The brokerage did not respond to a request for comment regarding its impending sale.
Corcoran’s parent company Anywhere, then known as Realogy, decided to franchise the Corcoran brand in 2018 amid diminishing margins and slow growth for legacy firms.
The cost of opening a Corcoran franchise at the time was between $153,000 and $518,000, according to documents filed with the Federal Trade Commission. Franchisees paid Corcoran 6 percent royalties initially, and were required to contribute between 1 percent and 0.5 percent of gross revenue to marketing.

David Goldsmith

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Cross posted from this thread:
All Real Estate brokerages profit from the "float" - funds they receive from commissions collected but the haven't paid agents their splits yet. Bellmarc and Sopher were notorious for being slow payers so they could extend their float. They say their cash position is $431 million, but just 2 weeks of float on $6.4 billion revenue is about $250 million.
I'm not surprised at all to see any brokerage firm slow paying agents in the current market slowdown. In this new case against Corcoran Global Living the complaints remind me of the bankruptcy case where I was brought in to be an Expert Witness. LBKaye International Realty had 2 divisions. The residential division becoming a Prudential franchise in 1993. Eventually the companies split, with most assets (including as claimed by agents who had not been paid: their commissions) to the commercial division, and the liabilities to the residential division which declared bankruptcy.

My point being that I think many agents are under the delusion that owners/management at large firms are their best buddies and "will always have their backs." In reality they will do what is in their own best interests and when the chips are down will cut agent's hands off at the wrists if they try to reach for them. See Robert Ringer's "Three Type Theory" in his book Winning Through Intimidation.

Corcoran Global Living CEO awash in lawsuits amid agent pay delay
Agents at Corcoran Global Living have waited on hundreds of thousands of dollars in late commissions thanks to the alleged fraudulent behavior of CEO Michael Mahon, whose leadership has reportedly brought the company so close to the brink of financial disaster that it has failed to keep the lights on and put leases in default at some offices, according to lawsuits and agents who spoke to Inman.
The worsening crisis at the company may also be driving agents away at a critical moment for the broader industry when agent ranks are shrinking and competition for talent is more fierce than ever.

In total, three separate lawsuits have been filed this year. Plaintiffs in the cases include Jessie Rodriguez, Corcoran Group LLC (in this case, a countersuit to a lawsuit initially filed against them by Mahon) and Brighton Way LTD. And collectively, they allege fraud and breach of contract by Mahon, and paint a picture of a company teetering on the edge.
In addition to the lawsuits, four agents told Inman they experienced first-hand, weeks-long delays in getting paid their commissions beginning around April 2022, when normally they received wires for sales within two or three days of closing. Moreover, a member of the management team at one of the affiliate’s Southern California offices, who spoke to Inman on the condition of anonymity, estimated that over the course of the past several months agents have been missing hundreds of thousands of dollars in commissions from the affiliate — which now boasts approximately 2,600 agents across more than 70 offices, making it Corcoran Group’s largest affiliate.
When Inman reached out to Corcoran Global Living for comment, the company attributed the agent pay issues to the changing market.
“Like most brokerages, the shifting market over the last few months has caused cash flow challenges,” Chief Operating Officer Matt Borland said in an emailed statement. “This has impacted some of our regions, and we have made fundamental changes to our accounting processes to ensure they don’t recur. Our finance team is actively working towards resolving any lingering delays as well.”
When Inman reached out to Corcoran Group LLC, the company declined to comment, pointing Inman to Corcoran Global Living’s press contact and noting the affiliate is independently owned and operated from Corcoran Group.

‘Bad management’ or ‘outright stealing’: Agents notice something amiss​

Ultimately, the situation raises questions about Corcoran Global Living’s future, and about how companies treat agents amid a historic housing downturn.

And indeed, agents who spoke to Inman began feeling like something was wrong months ago.
“I started noticing in the springtime, that instead of my wire being in my bank account two to three days later it would take a week,” an agent from one of the affiliate’s Southern California offices, who is not involved in any litigation and wished to remain anonymous, told Inman. “And then I started to overhear phone calls to some of the admins in my office that were rather unpleasant, like, ‘Why has it been two weeks since I’ve been paid?’ That was the start of it, and it never really changed.”
After the agent had pressed the admin for more details about late payments, the administrator explained that corporate offices at Corcoran Global Living had said that due to changes in the accounting department, agents would only get paid twice a month moving forward, the anonymous agent told Inman.
But the payment delays escalated from there, making it clear more was going on in the accounting department than policy shuffling.
“Over the summer is when I had my biggest issue and wasn’t going to get paid for a few weeks,” the same agent told Inman. “So my broker covered my check and waited a month or so for corporate to reimburse him.”

A few months later, the agent left Corcoran Global Living.
Yet another agent who spoke on the condition of anonymity from a different Southern California office, who is also not involved in any litigation, told Inman that as of Nov. 1, pay was yet to come for the source’s last three transactions, and the source would likely be separating from the company soon. When Inman checked in with the agent again the week of Nov. 14, they had departed from the brokerage — and still had not been paid for those three transactions.

Aaron Juarez, an agent who was working at the Corcoran Global Living Claremont North office but recently left the company, told Inman he did not receive his commission checks for over a month after closing. He never received a clear answer about what was happening at the company, whether it was “either bad management on their part or outright stealing,” for instance, but said things seemed to be “going in the wrong direction,” which is what pushed him to leave, he said. Juarez is also not involved in any related litigation.
“A commission check comes in and Realtors want 70, 80, 90 percent of it, and the whole 100 percent goes to the broker, the broker comes to the agent, takes their percentage, says, ‘We borrowed it, I should have it in a couple days, it’s no big deal,’ ” Juarez said.
“But if it takes 30, 40, 50 days, that’s a little ridiculous for the brokerage to be holding onto the majority of your commission for something that should be, if everything’s on the up and up, [quick] … If this is happening to other agents, I think there’s something wrong. Realistically, it could put somebody out of business or at least hurt their business not having funds to pay, not only their household bills but anything they have as far as business bills.”

Inman asked both attorneys and agents involved in the situation how many individuals might have had their commission payments delayed. However, those who spoke to Inman for this story were not willing to speculate how widespread the alleged problem might be.
Out of approximately 40 Corcoran Global Living agents Inman has reached out to across California, four located in Southern California reported that they had experienced significant pay delays, and five located across Southern and Northern California said they had not experienced any problems getting paid on time. Several did not respond to Inman’s queries.
In any case, as of September one of the anonymous sources told Inman that the utilities in the source’s Corcoran Global Living office and some others in the region had been shut off because the affiliate’s corporate offices, which had taken over paying for rent and utilities at the beginning of their contract, had neglected to pay the office’s bills.

A crisis years in the making​

Corcoran Global Living was launched in early 2020 when Mahon’s company ELI Realty entered into a franchise agreement with Corcoran. The agreement involved Corcoran giving loans to ELI Realty to purchase independent brokerages, which would be geographically grouped and made into separate franchises.
At that time, independent brokerages Oliver Luxury Real Estate of Lake Tahoe and Reno and Zephyr Real Estate of San Francisco joined to form Corcoran Global Living’s first franchise under the leadership of Mahon. It brought together 13 offices and 450 real estate agents across these regions in California and Nevada. At that point, Mahon had held a number of leadership positions at other brokerages in years past including as president of both Midwest-based indie brokerage HER Realtors and Southern California’s First Team Real Estate.

Over the next few years, Mahon rapidly grew Corcoran Global Living by acquiring and forming franchise agreements with other independent brokerages across Nevada, California and central Ohio with promises of a profitable business model and fruitful partnerships. By early 2022, the company had about 2,600 agents located in more than 70 offices throughout these regions.

A ‘smokescreen’: The wave of lawsuits​

Mahon’s troubles officially began on June 21 when he sued Corcoran Group via his company ELI Realty Investments LLC. His claims included, among other things, that the parent company had provided his affiliate with faulty transaction reporting technology that cost his firm hundreds of thousands of dollars.
A person who previously worked at Corcoran Global Living, and who spoke with Inman on the condition of anonymity, said they believed this claim to be baseless and essentially a way for Mahon to cover the tracks of his own financial mismanagement and fraud that cost agents time and money, and led Corcoran Global Living franchisees into debt.
Corcoran Group countersued on June 27, stating that these claims were a “smokescreen” for fraud being committed by Mahon and his companies. The countersuit further alleges that after taking out loans from Corcoran Group to purchase brokerages and create new franchises, ELI Realty used some of the loan proceeds — without Corcoran Group’s knowledge — to engage in fraud, including paying bonuses to Mahon, Pamela Mahon (Mahon’s wife and Corcoran Global Living’s vice president of business development in California, Nevada and Ohio), and others.
The suit also accuses Mahon of selling his company’s future receipts at a discount to a company called Libertas Funding while cutting his franchisees out of the loop.

“This controversy has little to do with the allegations contained in the Complaint — which are a smokescreen,” Corcoran Group’s counterclaim states. “This matter really involves the unlawful (and often clandestine) conduct of ELI Realty and its current management.”
Jessie Rodriguez and several other brokers who entered into franchise contracts with Mahon filed a second suit against Mahon on Sept. 26. This suit alleges Mahon deliberately deceived the brokers about the financial state of his company. The suit accuses Mahon of both fraud and breach of contract.
Among other things, the suit describes delays to agent pay, resulting in agent departures — corroborating accounts from agents who spoke to Inman — and mentions Corcoran Global Living’s corporate offices’ failure to pay basic bills, like rent and janitorial services.
The suit also alleges that Mahon commingled funds of Corcoran Global Living’s Southern and Northern California offices, diverted funds to himself and his associates, sold future earnings at a discount to Libertas Funding without consulting franchise owners to cover his own debts and used his corporations as shells for his own financial purposes.

The primary plaintiff, Rodriguez, is a broker and was the owner of Cal American Homes, which was founded in 2005 prior to joining Corcoran Global Living. He entered into a franchise contract with Mahon to become a franchisee of Corcoran Global Living in June 2021.

“Most alarming, in April 2022, despite receiving a cash infusion from Libertas on the 13th of the month, Defendants missed several payments to various real estate agents from escrows — a betrayal that none of the plaintiffs would ever let happen in their own businesses,” the lawsuit states. “Plaintiffs began losing real estate agents, the lifeblood of their businesses. This also resulted in severe reputational harm.”
Finally, Brighton Way LTD sued Mahon on Sept. 30 as Corcoran Global Living [allegedly] continued to fall into financial ruin and was unable to pay rent on its offices in full. Brighton Way is a commercial real estate company that owns offices Mahon’s firms use.
Brighton Way’s suit accuses Mahon of breaking the terms of his lease by not paying the full amount of rent starting at the beginning of September. The suit says Mahon owes Brighton Way over $107,000, but that amount continues to increase as he’s unable to make full rent payments.

A rocky road ahead​

As for the company’s future, a few sources suggested that bankruptcy may be in the cards for Corcoran Global Living at this point, with no foreseeable bailout option for its current debts, having been unable to come to an agreement with Corcoran Group, according to court documents.
“I feel like there’s going to be a battle,” one agent, who spoke on the condition of anonymity, told Inman. “They’re probably going to fire all their employees here pretty soon, file for bankruptcy, and then probably come back and do it all again someday [with a different company].”

However, on Monday, The Real Deal also reported that a Corcoran Group internal senior executive told the news outlet that the company is shopping the affiliate around. The source said if the company fails to find an outside buyer, it will execute a direct deal.
A termination of Corcoran’s franchise agreement with ELI Realty is also a possibility on the horizon. Following ELI Realty’s sale of the company’s future receipts to Libertas Funding (which was outside the bounds of ELI Realty’s contract with Corcoran) Corcoran Group demanded that the company and its franchisees immediately pay back their loans with Corcoran, but have yet to receive payment.
No decisive action has been taken to terminate their franchise agreements as of yet, but in its counterclaim, Corcoran notes it reserves the right to take additional action against ELI Realty and its franchisees, including terminating their contracts.

A wave of defections

Whatever happens to Mahon’s companies, the crisis couldn’t have come at a worse time. Thanks to an ongoing downturn in the housing market, agents are expected to leave the industry — which in turn will make already fierce competition for talent even more intense.
It’s unclear how many agents might have left Corcoran Global Living over the firm’s various struggles. But the sources who spoke to Inman noted that Rodriguez left Corcoran Global Living shortly after filing the lawsuit against Mahon, brought his agents who originally moved to Corcoran Global Living back with him, and is now operating under the Cal American Homes brand once again.

Anthony Morel, who joined Corcoran Global Living as an agent with his brother, Danny Morel (a plaintiff in Jessie Rodriguez vs. Michael Mahon) in December 2020 and then became a regional vice president of education and a coach, has also since left Corcoran Global Living and launched Pak Realty, a revenue-share model real estate company.
All of this is happening against the backdrop of a general belt-tightening in the industry. Despite a tough third quarter which saw profits down year over year and losses growing at many real estate companies, some brokerages are still managing to increase their agent count now. Compass, eXp Realty, RE/MAX, Fathom Realty and Keller Williams all grew their agent ranks in the third quarter of 2022.

David Goldsmith

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Anywhere announces more layoffs, shutters iBuying​

Anywhere Real Estate has kicked off the new year with layoffs.

The company did not say how many employees were laid off, but in an SEC filing Tuesday said its workforce has been reduced by roughly 11 percent since the end of June. The company also said it is ending its iBuying business, RealSure, following in the footsteps of Zillow and Redfin.

Anywhere is the parent firm of Corcoran, Coldwell Banker, Century 21, and Sotheby’s International Realty, and had nearly 200,000 agents across the U.S. as of last year.

“Let me start with the hardest but most important thing: our people. Yesterday we said goodbye to a number of our great people whose roles were eliminated,” Anywhere CEO Ryan Schneider said in a company-wide email Tuesday that it shared with The Real Deal.

Anywhere has been on a cost-cutting campaign since 2019, according to materials previously released by the company. The company announced in late 2021 it planned to cut expenses by $70 million by the end of 2022 and by $300 million through the end of 2026. Anywhere did a round of layoffs in August. The company’s stock is down nearly 60 percent over the past year.

“We have years ahead of us where we have still additional cost savings that we can go get through efficiencies, automation, more systems integration, things like that,” Schneider said during the company’s first-quarter earnings call last year.

“We believe that industry dynamics and customer demands will require simplified and more integrated and digitized offerings, systems and support,” Anywhere said in Tuesday’s filing. “Delivering the company’s business model more digitally is an increasing part of our improving the consumer experience and our ongoing cost focus.”

The filing comes days after Compass announced its third wave of layoffs since June 2022.

Anywhere is the latest to end its iBuying operations, after Zillow and Redfin bowed out of the business in the last year. Opendoor, the company that pioneered the model, said in November it lost $928 million in the third quarter of 2022.

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Watch: 3 resi brokerage shakeups worth knowing about​

Manifest Destiny has given way to focus on the bottom line​

One of the fundamental laws of the universe — what goes up, must come down — is playing out in the residential real estate market.
The heady times of 2021 gave way to the harsh reality in the latter half of 2022, when the market fell back to Earth, sending shockwaves through some of the industry’s biggest brokerages.
Real estate’s own version of Manifest Destiny — seemingly boundless expansion of offices, headcount and market share — has given way to streamlining operations and focusing on the bottom line.

Naturally, the tremors reached firms’ C-suites, with several notable recent shake-ups serving notice of how the industry plans to approach 2023.
Last month, Ryan Gorman, a widely respected industry leader, was pushed out as CEO of Coldwell Banker, a subsidiary of Anywhere Real Estate.

Gorman’s exit is especially notable not only for his 20 years of being affiliated with Anywhere, but also for how he’s being replaced — or rather how he isn’t being replaced.
Instead of naming a successor, Anywhere is divvying up Gorman’s role among other top executives, while saving on CEO compensation. Gorman made $3.5 million last year.

In the first episode of the Resi Rundown, The Real Deal’s Hiten Samtani breaks down three major residential brokerage shifts — at Coldwell Banker, eXp, and Opendoor — worth knowing about and what they mean going forward.


David Goldsmith

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Startup resi brokerages leading NYC firms’ growth​

Casa Blanca, eXp top brokerage growth in 2022: Corofy​

David was hot on Goliath’s heels in 2022.
Despite a downswing in the market, several boutique and startup New York City residential brokerages outpaced growth at the city’s larger firms last year, according to Corofy’s annual brokerage report.
“A lot of these boutique brokerages have a set of clients, a regular clientele, so they felt a little bit less affected by the lower transaction volume that was impacting all the major players,” said Corofy CEO Eddy Boccara. “The question for the past three years was: Is there room for boutique firms to exist?”
Casa Blanca, which bills itself as a “mobile-first” brokerage, grew its headcount by 360 percent, though the startup did so by adding just 58 brokers, placing it in ninth place in terms of new members.
Serhant had the second fastest growth rate and added the third most brokers, according to Corofy. The two-year-old brokerage was the top-growing firm among the industry’s big names, more than doubling its headcount by adding 128 brokers.

Founder Ryan Serhant said it’s evidence that his firm’s brand-centric approach is resonating with brokers, he said the company has no growth teams or recruiters.
“I haven’t even started focusing on growth, to be honest,” he said.
Two boutique firms, Brooklyn Group and Platinum Properties, made their debut in the top 10 with 42 percent and 34 percent headcount growth for seventh and eighth place, respectively.


Highline Residential had a banner recruitment year no matter how you slice it: It added 136 brokers and had the fifth best growth rate. The only NYC brokerage to add more agents last year was eXp, which brought in 382.
“Our recruiting process is simple, we show agents our technology and let them decide if they want to continue the conversation,” Highline President Bilal Khan said. “Experienced agents are offered a mentorship role, and the ability to mentor inexperienced agents for a percentage of their earnings.”

The city’s top major players, Douglas Elliman, Compass, and Corcoran remained in the top three spots in terms of agent count. Compass finished fourth in terms of headcount growth, with 117 added agents, and Compass Greater NY fifth, with 92. The brokerage saw its growth rate drop to just over 4 percent, down from 9 percent in 2021 and 24 percent in 2020.
The Agency made its debut in New York City rankings at 17 after acquiring Triplemint in May 2022.
Casa Blanca scored the top spot for retention at over 93 percent, followed by Serhant in second place at 89 percent.
Looking ahead to the rest of 2023, Boccara said he expects boutique brokerages to keep pulling brokers from major players.
“I think we’re gonna see them gaining more and more market share,” he said. “A smaller environment helps agents be a big fish in a small pond.”

David Goldsmith

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Brokerage bloat: Analysis ranks Compass, Anywhere among least efficient

Compass and Anywhere are among the least efficient publicly traded residential brokerages, an analysis by Mike DelPrete has found.

As residential brokerages look to cut costs, those two may have to make the deepest cuts, the influential real estate tech observer concluded.

DelPrete, a scholar in residence at the University of Colorado Boulder and an investor in real estate startup Side, looked at how brokerages’ revenue compared with their operating expenses.

He found eXp to be one of the most efficient firms: It generates $10.86 in revenue for every dollar of operating expenses, versus Anywhere’s $3.84 and Compass $3.71.

Compass, which by DelPrete’s count has laid off 1,700 employees since June, is looking to trim $600 million from its annual budget. Compass has not released its layoff total. Anywhere was the only firm DelPrete examined with operating expenses over $400 million at the end of the third quarter.

“Cost reductions limit a company’s ability to invest in future growth opportunities,” DelPrete said. “Other companies operating more efficient, low-cost operating models are under less pressure to make big cuts — and may be better placed to invest in future growth.”

According to DelPrete’s analysis, Compass trimmed less than $100 million from its budget between the start of its cost-cutting program announced in August and the end of the third quarter.

It’s unclear how much progress Compass has made since then because it hasn’t released fourth quarter earnings, and its most recent round of layoffs just happened this month. The financial impact won’t be known until the company releases its first quarter earnings in April.

Anywhere and Compass declined to comment.

Compass said after its January layoffs that it wouldn’t need to cut headcount further to reach its cost-cutting goals. The brokerage has sought to reduce expenses to conserve cash and become profitable.

Anywhere, which has been on a years-long odyssey to cut expenses, also announced a round of layoffs earlier this month and let Coldwell Banker CEO Ryan Gorman go in December.

Other companies have cut much higher percentages of their staff. Ribbon, a homebuying startup, has laid off 85 percent of its employees since last June, and Flyhomes, Knock and Homeward have all laid off more than Compass’ 40 percent. Anywhere slashed about 10 percent, according to DelPrete.

David Goldsmith

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The Agency becomes the latest firm to undergo staff cuts​

The boutique brokerage cut 4% of its staff last week in a new round of layoffs
February 3, 2023, 11:06 am By
The Agency is the latest real estate brokerage to be hit by the layoff bug in 2023. According to the firm, The Agency laid off 4% of its work force, or fewer than 15 of its staff members, last week.
“Due to the challenges presented by the current economic climate, we made the difficult decision to reduce less than 15 members of The Agency’s staff this week. We are not immune to the economic environment that all companies, especially real estate companies are facing right now,” Mauricio Umansky, the CEO of The Agency, wrote in an emailed statement.
“We would like to express our deepest gratitude for the contributions of all our employees. While this decision was not made lightly, we believe this positions us for future success. The Agency continues to make efforts to be fiscally responsible and is fundamentally committed to profitability and long-term, sustainable growth.”
Based on LinkedIn posts from former employees of The Agency, this appears to be the firm’s third round of layoffs in the last six months. Employees impacted by the recent rounds of layoffs held administrative and IT positions.
The start of the year has been a tough one for many firms in the real estate industry. Earlier this week, Wells Fargo announced that it had cut 140 jobs due to its exit of the correspondent channel, and in January, Anywhere Real Estate underwent another round of cuts — bringing its head count down 11% since the end of June 2022.
Meanwhile, while Compass announced its fourth round of layoffs since June 2022 just a few days into the new year.


David Goldsmith

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Tyler Whitman pitches The Agency franchise in the Hamptons
Former “Million Dollar Listing: New York” star’s pitch asks $1M for 10% stake

Less than one year after The Agency made its New York City debut, Tyler Whitman is looking to set up shop under the brokerage even farther east.
The broker, a founding member of Triplemint who joined the Los Angeles-based brokerage when it acquired his former firm, is circulating a pitch deck to solicit investors to open a Hamptons franchise of The Agency.

The pitch, according to a copy obtained by The Real Deal, asks for $1 million in exchange for a 10 percent stake. Partners will receive 50 percent of the profits until their investment is paid back, which Whitman estimates will take 14 months.
“I might do it with my own money,” said Whitman, who wouldn’t be personally handling transactions in a potential franchise. “But it would certainly be advantageous to align with the right partners that could really help fuel growth.”

The deck places the franchise fee at $45,000 with a 5 percent royalty fee for founding members, reduced from 7 percent. The Agency, citing a disclosure document filed with the FTC, clarified to TRD its royalty rate is 6 percent.
The pitch estimates $250,000 of legal, office and licensing expenses and sets a goal of a minimum working capital balance of $500,000 at the end of each quarter.
Whitman said his goal is to open an office this summer.
The deck estimates a year one with an income floor of $10 million, an estimated goal of $20 million, equivalent to 6 percent market share, and a “stretch goal” of $30 million, or 8.5 percent market share.

If Whitman’s pitch finds success, he’ll be in good company among The Agency’s franchise model, which has been the platform for 17 new offices since 2021. After the two-year expansion push, the brokerage made cuts among its corporate ranks earlier this month, laying off 15 people, or 4 percent of its staff.

The Agency said at the time of its Triplemint acquisition last year that it had raised $35 million in growth capital for a valuation of $350 million.
Sources told TRD at the time of the layoffs The Agency is fundraising again. Whitman denied that his franchise bid is part of a wider effort to raise money.
The Hamptons market has been constrained by low inventory since the pandemic sent wealthy New Yorkers east from the city, but Whitman said his biggest challenge is finding affordable office space.
“When the market is slower is when a lot of agents are thinking about what a potential move could look like for them,” he said. “I think [the market] will be down for the next year, maybe two, but that’s going to give me the opportunity to potentially get the talent I need.”

David Goldsmith

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40 agents in a 1,000SF office? JI Sopher seemed crowded when we went over 30 in more than twice that amount of space.

Bond New York heads to Brooklyn​

Brokerage set for borough debut with 40-agent Williamsburg office

Bond New York is headed to Brooklyn.
The brokerage is opening its first location in the borough on the border of the Williamsburg and Greenpoint neighborhoods, where co-founder Bruno Ricciotti said much of the company’s business unfolds.

“We do a tremendous number of sales transactions right here in North and West Brooklyn,” Ricciotti said. “We actually have even more buyer side Brooklyn business than we do in Manhattan.”
Bond plans to have 40 agents in the 1,000-square-foot office on the corner of Lorimer Street and Richardson Street. The lease term is for five years.

Walter Steffen, formerly with Corcoran, will head the brokerage’s first office in the borough. A Brooklyn native, Steffen currently oversees about 80 buildings in the area.
Bond has four other offices, located in Midtown, Upper East Side, Union Square and Upper Manhattan.
The brokerage previously had an office in Chelsea but shuttered the location in 2019, citing “management changes.” Just three months later, the firm acquired a 56-person team from Midtown-based brokerage Caliber Associates.

The announcement follows a streak of record sales years in Brooklyn.

The borough gained momentum toward the end of 2020 as buyers flocked to more spacious options in the wake of pandemic lockdown orders. In 2021, Brooklyn’s top 10 brokerages combined for $8.8 billion in sales — more than double the sales recorded in 2020, according to The Real Deal’s ranking of residential brokerages in the borough.
The borough kicked off last year with the same unparalleled sales streak as more homes selling in the first three months of 2022 than in any quarter since 2006. High mortgage rates and low inventory has since cooled the market.
Bond didn’t crack the top 20 residential brokerages in Brooklyn in 2021, but ranked 21st among the top-producing brokerages in Manhattan with $55 million in closed sales across 71 deals. Compass took first place in Brooklyn with $2.7 billion in sell-side transactions across 2,060 deals, followed by Corcoran, with $2.69 in closed sales across 1,940 deals.


David Goldsmith

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CushWake to cut costs as profit plunges 80%​

Commercial brokerage hopes to save $90M this year

Cushman & Wakefield is joining the cost-cutting parade.
The commercial brokerage Thursday reported an 80 percent drop in fourth-quarter profits from a year ago, to $29.8 million, and said it will trim expenses as it grapples with a downturn in transaction revenue.

The brokerage is hoping to save $90 million this year through temporary and permanent cuts, the firm disclosed in its earnings report.
The majority of cuts will be permanent, but the company wouldn’t provide details on the effort — saying only that it would span “all costs and all geographies.”

“So rather than just going in and by just doing temporary cuts or randomly taking up costs, we’ve been very, very focused to make sure that the business stays strong and we continue to drive our efficiency,” Cushman & Wakefield’s CFO Neil Johnston said.
Expense-slashing has become commonplace for public and private companies since the Federal Reserve began pushing up interest rates and investors started demanding firms cut down on spending.
Johnston said the brokerage identified cost-cutting measures late last year and has “already begun executing on these initiatives.”
“We expect these cost savings to more than offset any inflation in our semi-variable and fixed cost base,” he said. “However, they will not completely offset the temporary margin contraction from the anticipated brokerage revenue decline, as we believe it’s important to maintain a strong position to grow share in the recovery.”

Layoffs appear to be one way the firm is looking to save money. The company’s severance-related costs increased year-over-year by 16 percent in the fourth quarter, according to its earnings report.

Cushman’s cost-reduction strategy comes as a dropoff in capital markets and leasing revenue sapped its profits in the final three months of the year. The firm saw net income plummet by 80 percent and revenue fall by 8 percent largely because of lower brokerage activity, particularly in capital markets.
Capital markets revenue dropped by 53 percent and leasing revenue declined by 13 percent, which the brokerage said was representative of a “less constructive macroeconomic environment” caused by higher interest rates and fewer transactions.
For the year, the company’s profit decreased by 21 percent and capital markets revenue fell by 12 percent. But leasing revenue was up 13 percent last year thanks to continued industrial strength and an improvement in the office market during the first nine months, according to the firm. Overall revenue rose by 8 percent.
Despite the downturn in brokerage activity, that segment is “very light cost” and might not be the most ripe for savings, Cushman & Wakefield’s CEO John Forrester said.
“If you are going to drive very, very substantial cost savings to try to cover all the decrement of revenue falls in transactions, you’d actually have to cut hard into the infrastructure that’s driving the growth on the services side,” Forrester said. “So the key for us is to ensure that we focus on stripping out inflation that’s coming through from our own service suppliers and in the work that we do and allow ourselves to maintain a world-class workforce.”

The brokerage expects investment sales and leasing revenue to remain slow in the first half of 2023, but to improve as the year progresses. Forrester said a lot of capital is ready to be deployed but will largely remain on the sidelines until investors have more clarity.


David Goldsmith

All Powerful Moderator
Staff member

Anywhere loses $450M as execs foresee “volatile” 2023​

Real estate giant posts Q4 loss, predicts market will be “meaningfully lower” than 2022

Anywhere Real Estate finished the fourth quarter with a net loss of $453 million as executives theorized the slowed housing market may be near its bottom.
The parent company of Corcoran, Coldwell Banker, Century 21 and Sotheby’s International Realty finished last year with a net loss of $287 million. The company posted an adjusted net income of $32 million in 2022 and its operating EBITDA — earnings before interest, tax, depreciation and amortization — was $449 million for the year.

It finished the quarter with a net loss of $453 million and a net adjusted loss — before expenses like restructuring charges, debt payments and investments — of $93 million. Quarterly EBITDA was $12 million.
The company brought in $6.9 billion in revenue last year, a 13 percent annual decline it said was driven by fewer home sales and the sale of its title insurance underwriter. Revenue last quarter was $1.3 billion, down 33 percent year over year in line with transaction volume decline, according to Chief Financial Officer Charlotte Simonelli.

Chief Executive Officer Ryan Schneider said the company expects market volume in the first quarter “to be down around 30 percent” from last year and while those year-over-year quarterly comparisons could “improve throughout the year,” this year’s market will be “meaningfully lower” than 2022.
“Most importantly and potentially excitingly, right now we may be at or near a bottom already,” Schneider said. “We’re all seeing a number of the housing indicators in the macro economy exhibit more stability.”
Despite the market downturn, Anywhere realized $150 million in cost savings and projected another $200 million in savings this year, with $50 million resulting from measures taken last year.
The projected $350 million in savings by the end of the year put it far ahead of the timeline executives laid out in late 2021, when they projected savings of $70 million by the end of 2022 and $300 million by the end of 2026.

Anywhere conducted an initial round of layoffs in August and another in January, when it also announced the closure of its iBuying business.

Anywhere’s agent count grew 4 percent last year and the company says it posted record retention rates, but a representative declined to provide specific numbers.
“We were able to recruit at better economics than in the past few years,” Schneider said.
Commission costs rose in the fourth quarter as top-end agents with more favorable splits represented a larger share of the company’s sales, Simonelli said. The company expects the trend to continue this year.
Commission splits last year rose 203 basis points annually, but Simonelli said 2023 splits are expected to look like last quarter, when they were up only 130 basis points year over year.
“Even with a tough and likely volatile 2023 market ahead I’m increasingly optimistic about our position and the opportunities in front of us,” Schneider said.


David Goldsmith

All Powerful Moderator
Staff member

JLL eyes layoffs as profits tumble 59%​

Commercial brokerage plans to cut costs by $125M this year while waiting out market slump

JLL plans to rein in spending as a slowdown in investment sales and leasing activity eats into its profits.
The commercial brokerage is eyeing $140 million in annual savings, about $125 million of which it expects to achieve this year, executives said on an earnings call Tuesday morning. JLL reported a 59 percent decline in net income for the fourth quarter, pulling in $175 million compared to $421 million in the same period last year.

The cuts will largely be made through layoffs, CFO Karen Brennan said. Executives did not elaborate on how many have lost or will lose their jobs, nor which divisions will be most affected.
JLL started trimming its workforce last year, and reported Tuesday that severance and other employment-related costs more than tripled to $44.5 million in 2022, compared to $14.3 million in 2021. Additional restructuring costs are expected this year, executives said.

“We have taken steps to drive operational efficiencies across our business and reduce our cost base,” said CEO Christian Ulbrich. “The cost actions we have taken to date occur across business segments and have been focused on non-revenue generating roles.”
The layoffs come as the brokerage’s capital markets and markets advisory arms have been hampered by a slowdown in property sales and commercial leasing.

Capital markets revenue tumbled 38 percent year over year to $608 million and operating income dropped 57 percent to less than $97 million. Leasing revenue declined 13 percent to roughly $1.19 billion and operating income dropped 34 percent to $127 million.
Investment sales and leasing are expected to remain down through the first half of the year, Ulbrich said, but may bounce back in the second half once interest rates and lending spreads normalize. The brokerage pointed to $386 billion in dry powder sitting in closed-end funds at the end of last year, and a higher than normal amount of expiring office leases that should help bolster its 2023 revenues.

Still, JLL does not appear interested in expansion while it pares down its expenses.
“We’re very happy with the footprint we are having in the different business lines,” Ulbrich said. “We feel that pricing is still very high given the environment, so we have been cautious around M&A for some time now and will continue to be.”


David Goldsmith

All Powerful Moderator
Staff member

Commercial brokerages devise battle plans as profits plunge​

Top firms aren’t yet in the red, but most are aggressively cutting costs
Commercial real estate brokerages are preparing for a rough road ahead as declines in property sales and leasing eat into their profits.
The industry’s major firms expressed optimism on earnings calls this month, assuring analysts that business will rebound in the second half of the year as interest rates stabilize and investors gain the confidence they need to start making deals again.

Until then, brokerages are left to strategize about how to weather what is likely to be a continued slowdown over the next few months. Those gameplans vary. Although none of the top commercial firms lost money in the fourth quarter, most say they plan to drastically cut expenses this year.
CBRE, which saw profits plummet 88 percent year over year in the fourth quarter, is moving forward with a $400 million cost-reduction plan it announced last fall. The firm said it cut about $80 million in expenses last quarter and will look to rein in another $300 million this year. The vast majority of that is expected to be achieved through layoffs.

After a quarter in which its profit dropped 59 percent to $175 million, JLL is eyeing $140 million in annual savings, about $125 million of which it expects to reach this year. The cuts will largely be made through layoffs, but the firm did not say how many have lost or will lose their jobs. JLL began reducing its workforce last year, when severance and other employment-related costs more than tripled to $44.5 million compared to 2021.
“We have taken steps to drive operational efficiencies across our business and reduce our cost base,” CEO Christian Ulbrich said on an earnings call this week. “The cost actions we have taken to date occur across business segments and have been focused on non-revenue generating roles.”
Cushman & Wakefield also joined the cost-cutting parade after the brokerage’s profit tumbled 80 percent to $29.8 million last quarter. The firm hopes to save $90 million this year, primarily through permanent cuts. The company didn’t name specifics, saying only that the reductions would span “all costs and all geographies.”

Like at CBRE and JLL, layoffs seem to be one of those avenues. The company’s severance-related costs ticked up 16 percent in the fourth quarter, and CFO Neil Johnston said the firm identified cost-cutting measures late last year and has already begun implementing them. Still, Johnston said the cuts “will not completely offset” an anticipated decline in revenue this year.

“We believe it’s important to maintain a strong position to grow share in the recovery,” he added.
Colliers, which saw its net income drop 38 percent to $62 million in the fourth quarter, said it expects to “maintain disciplined cost control … with tight management of discretionary expenses.”
“We’re doing our best to manage costs,” CFO Christian Mayer said. “We have highly-skilled operators in the field who have done this before. Three years ago, we lived through the pandemic, and we took a very disciplined approach to cost management. We’re doing the same in this situation.”
Newmark appears to be something of an outlier. Despite its fourth-quarter profit tanking by 93 percent to just $9.3 million, the firm is seizing an opportunity to bolster its agent roster in a market downturn, poaching the nation’s top investment sales team, Doug Harmon and Adam Spies, from Cushman & Wakefield. Newmark sees itself as a buyer, aiming to expand this year by picking up companies with reduced valuations.
“The fundamental foundation of our business is built around talent,” CEO Barry Gosin said. “The best talent in every sector, every vertical, every geography. The more talent that we bring on board, the more we elevate our brand, the more top professionals want to be here. It helps us everywhere.”


David Goldsmith

All Powerful Moderator
Staff member
Ranking NYC’s best-selling residential brokerages of 2022

It was the best of times and the worst of times last year for New York’s residential brokerages. The year began on a high carried over from 2021’s record-breaking post-lockdown bonanza, but the spring of hope quickly became a winter of despair as high interest rates froze the market in the third and fourth quarters.
“For the first six months of the year, our business was way up, like most firms’ probably were,” said Richard Ferrari, Douglas Elliman’s New York CEO. “It was the coattails of 2021. And then the slack started coming down.”

As the city’s residential market continued to skyrocket, so did inflation, prompting the Federal Reserve to raise interest rates and, in turn, the cost of obtaining a mortgage. War in Ukraine wreaked havoc on the global economy, and the specter of a recession cast greater uncertainty over the housing market.
By the summer, mass layoffs began, first at mortgage lenders and then at residential brokerages. Compass was among the first to let people go, laying off 10 percent of its workforce in June. It would conduct two more rounds of layoffs by year’s end, but was far from the only firm to do so: Franchise giant Anywhere laid off an undisclosed number of employees, as did white-label brokerage Side.

Manhattan’s top firms hold the line

Despite the market crashing back to Earth around the midpoint of the year, most of the city’s top brokerages improved on their record-breaking 2021 figures, according to an analysis by The Real Deal of closed sell-side transactions for residential properties, excluding off-market deals.
Manhattan’s top five brokerages by sales volume all maintained their spots from last year. Corcoran topped the market again with nearly $6.7 billion in sales in the borough, up from $6.5 billion in 2021.
“We were really prepared for the type of year that ‘22 was,” Corcoran CEO Pam Liebman said. “We knew that ‘21 was a really banner year, and it was not going to be repeated. We didn’t go crazy with overspending or over-hiring like a lot of firms did.”
It was “pretty obvious” that interest rates were likely to rise as the year went on, Liebman added, so Corcoran agents encouraged buyers to move while they still could.

Overall, the top 25 brokerages sold $27.4 billion of real estate in Manhattan, $1 billion more than in 2021.
“We didn’t go crazy with overspending or over-hiring like a lot of firms did.”
Just behind Corcoran was Douglas Elliman, with $6.45 billion in sales, up from just over $6 billion in 2021. Compass rounded out the top three with $6.1 billion in sales, though it was the only brokerage to record over 3,000 transactions.
Compass’ Gordon Golub said the firm emphasized face-to-face meetings, which he believes helped drive business as the market slowed.
Brown Harris Stevens pulled in just under $3.6 billion last year across 1,840 deals, good for fourth on the ranking, though well below the top three.

“The first two quarters was adrenaline left over from 2021,” said BHS CEO Bess Freedman. “[In] May, I started to see less written business, [and] we started to really feel the slowdown.”
Serhant was a new addition among the borough’s top firms. The brokerage, founded in 2020 by former “Million Dollar Listing: New York” star Ryan Serhant, finished sixth with $542 million, nearly doubling its 2021 volume. The upstart came in far behind fifth-place Sotheby’s, which recorded $1.5 billion in volume, but significantly ahead of 2021, when it placed 11th in the rankings.
“We started the company in 2020, that’s when we were born; 2021, we learned to crawl; 2022, we learned to walk, setting up all the systems and processes,” Serhant told attendees at the brokerage’s holiday party in December. “Next year we start to run.”
The Agency made its debut in the Manhattan rankings thanks to its purchase of Triplemint last spring. It finished 11th with $194 million in volume, up slightly from the $189 million Triplemint recorded in 2021. The Agency grew aggressively through its franchise model over the past year, but laid off 4 percent of its staff last month.
Sotheby’s was the only brokerage in the top five to sell less last year than it did the year prior. The brokerage secured $1.5 billion in sales last year, down from $1.6 billion in 2021.

“We’re never looking to have the most agents, and we’re never expecting to be No. 1 on the sales volume list,” said Marissa Ghesquiere, Sotheby’s executive vice president of sales for New York. “What we look to do is to bring on agents who are very strong, very established professionals.”
Corcoran and Douglas Elliman shared the listing on Manhattan’s priciest sale last year. Elliman’s Ryan Stenta and Corcoran’s Carrie Chiang closed the $70.5 million sale of an 8,000-square-foot unit on the 82nd floor of 432 Park Avenue in April. Compass’ Jason Haber brought the anonymous buyer.

While 2022 ended on a sour note, most believe the market will get stronger in the second half of this year as interest rates peak and buyers and sellers adapt.
“Real estate will always be a cyclical business,” Corcoran’s Liebman said. “[In 2023], we’ll see plenty of transactions, it’s just going to be at a lower pace. Then they’ll pick up again, and you definitely will see some people jumping off the sidelines to take advantage of better pricing.”

Brooklyn steps into the spotlight

If 2021 announced Brooklyn’s arrival as a luxury market to rival Manhattan, 2022 proved it’s here to stay.
While most of the top brokerages in the borough saw a slight decrease in sales last year, the market hovered near 2021’s peak, despite higher interest rates and renewed interest in a reopened Manhattan.
“Even though the numbers weren’t what they were in 2021, I think we saw a lot of bright spots,” said BHS’ Freedman.
The top 20 brokerages in Brooklyn last year combined for just under $9 billion in sales volume, according to TRD’s analysis. The vast majority of that was concentrated among the top 10 firms, which combined for $8.2 billion. Still, that was down slightly from the $8.8 billion they produced in 2021.

As in Manhattan, the top four brokerages retained their positions from the year before. The one change among the top five was Serhant’s ousting of RE/MAX Real Estate Professionals, which fell to eighth.
Ryan Serhant’s two-year-old brokerage was also on the rise on this side of the East River, evidence that his brand-centric pitch has resonated with brokers. The firm ended 2022 with $300 million in Brooklyn sales, almost $100 million more than the year prior.
The camera-friendly executive took to the water last summer to launch sales at the Huron, a luxury development in Greenpoint.
Elsewhere, East Williamsburg had a banner year, evidence that affluent buyers are looking deeper into Brooklyn than they have in the past. Luxury developments have been popping up in the area, despite its proximity to industrial yards in Queens and resultant trucks lumbering through the streets.
“There was a sense of buyers not wanting to be in the hustle and bustle of prime, waterfront Williamsburg or close to Bedford, [but rather] wanting to be in an area that was Williamsburg 10 years ago,” Louis Adler, the co-founder of Real New York, which is leading sales at the Milk Factory condo at 850 Metropolitan Avenue, told TRD last summer. “Restaurants, bars, mom-and-pop shops, I think that’s what’s pulling people in.”

Compass took the top spot in the borough again with $2.5 billion in sales, down from $2.7 billion the year prior.
“Brooklyn and Manhattan is a market that many thought would be impossible for a newcomer to rise to the top of the rankings in less than a few decades,” said Compass’ Golub.

He attributed the firm’s success to its end-to-end technology platform.

“Every 12 hours, the pace at which information moves doubles,” he said. “We’re moving at a pace where it’s hard for people to have clarity, so we need to provide that, especially in an industry where the information that’s public is anywhere from three to six months behind.”
Corcoran repeated as runner-up with $2.3 billion in sales, down from just under $2.7 billion the year prior. It also scored the priciest sale in the borough — a Park Slope townhouse that closed for $20 million in July.
“Brooklyn is one of the top destinations in the country,” Liebman said. “To not pay attention to Brooklyn, I wouldn’t be doing my job nor would any of my people. We’re the first Manhattan firm to go to Brooklyn, and I’m glad that we did when we did because all we’ve done there is constantly grow.”
Elliman ranked third again, with nearly $1.5 billion in sales. The firm’s Brooklyn sales volume was on par with its 2021 totals, though it closed about 135 fewer deals.
Single- and multi-family townhouses dominated the borough’s priciest deals, including sales in Brooklyn Heights and Park Slope but also in more far-flung areas like Gravesend.

“Through the years Brooklyn has been in this general upswing,” said Ghesquiere of Sotheby’s. “Coming out of Covid, I think it was really well poised, especially the Brooklyn townhouse market, to grow.”
Nest Seekers finished seventh with $255 million in volume, but brokers Bianca D’Alessio and Mia Calabrese rented a Brooklyn Heights penthouse for a borough-record $40,000 a month — sight unseen. The two “Selling the Hamptons” stars listed the unit for $30,000 a month, a 71 percent increase from what the previous tenants paid.
“I think we got something near 22 inquiries on the first day we put it on the market,” D’Alessio told TRD.
Freedman said BHS brokered the sale of a Brooklyn Heights townhouse for $18.3 million, or $3 million above ask.
“Brooklyn is a place that continues to shine, and people do want to go there,” she said.

New kings of Queens

Mom-and-pop shops can still hang in Queens — for now.
While Brooklyn and Manhattan are dominated by the city’s biggest brokerages, Queens is far less conquered.
Though neighborhoods like Astoria and Long Island City are in demand, prices across the borough haven’t caught up to Manhattan and Brooklyn: Queens’ top brokerage last year was Keller Williams Realty Landmark, with $477.77 million in sales across 649 deals. That would have placed it fifth in Brooklyn and seventh in Manhattan.
Elliman ranked second with $358 million in sales, but another independent firm, Winzone Realty, finished third with over $350 million. Elmhurst-based Winzone boasted the largest army of agents in the borough, with 703 active salespeople at the start of 2022, according to a TRD analysis of state licensing data.

Overall, the top 25 firms in Queens combined for nearly $4.2 billion in sales last year, according to TRD’s analysis. Firms got to the top by focusing on the higher end of the market: The average sale price for the top 25 firms was just under $792,000, beating out the borough-wide average of $724,000.

But the indies’ days may be numbered. After Elliman, Compass finished fourth with just under $307 million in sales volume, and Golub said the firm has its sights set on Queens.
“We’re always looking to expand into other markets, and that includes Queens, where we’ve opened offices within the last two years, in Astoria and Long Island City,” he said. “Traditionally, Queens has been a market that has dozens of players that operate outside of REBNY and outside of New York City proper … Navigating that is something different than navigating Manhattan and Brooklyn.”
Freedman, whose BHS finished 16th in Queens with $103 million, concurred.

“Real estate is so local,” she said. “I think none of the biggies have gotten a big foothold in the area yet. It’s more familial.”
BHS narrowly beat out Manhattan’s top dog, Corcoran, which finished 17th in Queens with $102 million.
Unlike Compass, Freedman said BHS is not actively focused on expanding its presence in Queens.
“Talk to me maybe in six months, a year, who knows,” she said.
Local player Modern Spaces ranked sixth with $298 million across 271 deals. The Long Island City-based firm has shown a willingness to defend its status as a major player in the borough, suing Compass in 2018 over alleged agent poaching and data theft.

Digital brokerage eXp finished seventh in Queens with $263.4 million in sales.
Elliman notched the top sale in the borough: a Long Island City condo that closed for $4.8 million in June. Nest Seekers — which ranked 14th with $105 million in sales across 107 deals — scored the second-priciest deal, a Hunter’s Point condo that went for $4.5 million.
The city’s largest and most diverse borough has hit a growth spurt over the last few years. The borough’s tallest building — Skyline Tower in Long Island City — is aiming for a $1 billion sellout, with some units priced over $3 million.
“The days of looking at New York City as only Manhattan are over,” Ferrari said.


David Goldsmith

All Powerful Moderator
Staff member

Elliman loses $18M in Q4​

Brokerage plans to cut office space and monitor headcount in 2023
Douglas Elliman's Howard Lorber (Getty)

MAR 10, 2023, 11:53 AM
Perhaps no other residential brokerage’s financials better illustrate the market’s fall from 2021 to the end of 2022 than those reported in Douglas Elliman’s fourth-quarter earnings.
Elliman’s net loss jumped to $18.4 million in the fourth quarter from $4 million in the previous period and down from a profit of $20.2 million in the fourth quarter of 2021. Its annual net loss was $5.6 million, a sharp turn from a net income of $98.8 million in 2021.

Chairman and CEO Howard Lorber pointed to “significant headwinds” that cut into real estate’s “generational peak in 2021.”
The company posted a consolidated operating loss of $21.9 million last quarter and its real estate brokerage segment posted an operating loss of $15.6 million, both of which were down year over year from a net operating income of $19.2 million.

Last quarter’s adjusted EBITDA — earnings before interest, taxes, depreciation and amortization — was a loss of $17.1 million for Elliman and a loss of $12.6 million for its brokerage segment, down from income of $21.3 million year over year.
Elliman will look to reduce office space, which Lorber said could begin to reduce rent expenses in 2023 “and more meaningfully in the second half of 2024.”
Headcount so far this year is down as a result of “normal attrition,” and the company may not backfill employee positions in the coming year.
The brokerage’s gross transaction volume last quarter was $7.5 billion, a decrease from $12.6 billion in the fourth quarter of 2021. The brokerage’s annual gross transaction volume was $42.9 billion, down from $51.2 billion in 2021.

Elliman’s annual adjusted EBITDA was $15 million, compared to $110.7 million in 2021. The brokerage segment’s EBITDA in 2022 was $34.5 million.

The company finished the year with $163.9 million cash on hand.
Lorber said Elliman grew its broker headcount by 400 last year and had a retention rate of 87 percent. The brokerage expanded into several new markets, including Las Vegas, Washington D.C. and Dallas last year. It also launched a payday loan business last year.
The company’s new development business grew by $3.5 billion in gross transaction value last year, according to Lorber, across the Florida, New York, California, Massachusetts and Texas markets.
New development is “the only place where there is new inventory,” Lorber said, adding the sector presents more flexibility for buyers contending with elevated mortgage rates.
“When you start selling a new development project, it’s generally around three years until the project is finished and closings are happening,” Lorber said. “That gives people that period of time to hope that interest rates, mortgage rates, will be lower during that three-year period.”