Here comes the 1% commission for Boston condo sellers
Having clawed its way to the top of the Hamptons market, Bespoke Real Estate has set its sights on an even bigger prize: Manhattan. Could the Boston condo for sale market follow?
The firm, which ranked sixth in a recent ranking of Hamptons brokerages with nearly $880 million across 53 deals, is betting its approach to commissions will yield translate its results. To the high end of the metropolitan markets such as NYC and the downtown Boston condo market for high priced areas such as Back Bay, Seaport and Beacon Hill.
One year after opening its first office in the city, Bespoke has a handful of listings: a $38 million mansion in Carnegie Hill, a $15 million triplex penthouse on Central Park North and a $14 million pad at 60 Collister Street in Tribeca. And co-founder Cody Vichinsky said the firm, which centers its business on homes asking $10 million or more, is gearing up for more.
“We’re early on. We’re just out of the gates,” Vichinsky said. “People should definitely be paying attention to us.”
“New York City is its own beast,” Leslie J. Garfield’s Ravi Kantha said.
Sellers on the high end of Manhattan’s luxury market are on the hunt for connections, expertise and top-notch service — and they’re willing to pay for it, he said.
“The only question is can you offer discounted fees and still offer all of that,” he said. “In my experience, the answer is no.”
But Vichinsky begs to differ. He said any brokers who are “up in arms” about their commission rate often claim Bespoke is skimping on service.
“People want to equate [our model] to discount,” Vichinsky said. “It’s anything but.”
To those asking how Bespoke is able to offer “Hermes but at Burlington Coat Factory prices,” Vichinsky said the industry is too saturated with “overpaid” brokers who “don’t justify their value.”
In Manhattan, other brokerages’ attempts to embrace the low commission model have fallen flat.
Investors shelled out hefty sums to discount brokerages in the mid-2010’s. In 2018, German media conglomerate Axel Springer provided $117 million to Purplebricks, a U.K.-based startup that charges a flat fee whether a property is sold or not.
When the four-year-old company made its debut in New York, it had a market cap of around $1 billion, but just a year later, the once-lofty prospects for the startup collapsed.
The startup’s demise came more than a decade after a fellow U.K. company, Foxtons, failed to gain a stronghold in the city with discounted broker fees. The firm filed for bankruptcy in 2007 following a market downturn.
But the trail of failed discount brokerages was largely centered on the lower end of the market, below where Bespoke says it will pick up business.
Despite its unconventional commission policy, the brokerage doesn’t seem to be drawing much attention from the city’s largest players. Brown Harris Stevens CEO Bess Freedman said she wasn’t aware the firm had officially opened for business in Manhattan.
“I haven’t heard much about them here in New York at all,” Freedman said. “I think I heard of one listing or something they were sharing.”
When asked about Bespoke and its low commission structure’s entry into Manhattan, Compass’ Leonard Steinberg similarly shrugged off the firm.
But Bespoke’s 1 percent commission rollout wasn’t met with the same indifference in the Hamptons, where a longtime client advised the firm not to advertise the lower commission.
“I told [Cody] I don’t mind paying if I get really great service,” the customer told Forbes last year. “Whether it’s 1 percent or 4 percent is not going to change who I go with.”
Commission structures are also shifting across the board, at least in New York City.
While 6 percent has been considered a historical standard, commissions are fluid and often up for negotiation, especially at higher price points, Kantha said.
“The reality is, fees are always going to adjust,” Kantha said.
