Daily News, New York, Real Estate Column
By Phyllis Furman, Daily News, New York
Oct. 17–Consider it an omen: “Hot Properties,” a new ABC TV show about New York City real estate brokers is getting panned by critics just as the red hot broker biz is showing the first signs of cooling down.
The sitcom features four sexy sales agents — and for the past four years, selling coops and condos in New York has been the sexiest profession on the street.
With dreams of earning fat commissions on multimillion-dollar apartment sales, thousands of New Yorkers rushed to grab a real estate license. In the last two years, Manhattan added more than 5,000 agents and brokers, bringing the total to 27,346, according the most recent figures from the New York Department of State.
But a sudden drop in prices — Manhattan apartments came down nearly 13 percent in the third quarter — coupled with a glut of hungry real estate salespeople — could herald the end of the broker boom.
“It’s not a good time for anyone who has to depend on this as their sole pay check,” said Marsha Mack Frances, executive vice president at Prudential Douglas Elliman.
“There are too many brokers,” said Michele Kleier, president of Gumley Haft Kleier.
That’s bad news for droves of would-be broker moguls — everyone from finance execs and attorneys to actresses and athletes. Richard Levine, president of the New York Real Estate Institute, which preps students for the New York State-required real estate test, said he still sees many clamoring to get in.
Three years ago, “we used to have 35 people per class, now it’s 100,” Levine said. The school charges $265 for the 45-hour course required by law.
It’s unclear whether the real estate job market can keep up with the influx of brokers, or whether in tougher times brokers will continue to command 6 percent sales commissions. Commissions are split between agents and their firms with more seasoned salespeople taking a larger share.
“It’s rarely good to go into anything when it’s been booming for a couple of years,” said James Brown, labor market analyst for the New York City Bureau of Labor Statistics. “This is a cyclical business.”
Dottie Herman, chief executive of Prudential Douglas Elliman, said her firm “increased tremendously,” in the last three years, adding about 150 jobs in the last year alone. When asked about her current hiring plans, she said the firm “will increase selectively.”
Kleier said she receives about ten resumes a week, but is highly conservative when it comes to adding people.
“I’m not hiring inexperienced brokers unless they are brought in by an experienced broker,” Kleier said.
Kleier said the flood of brokers has created a new generation of inexperienced sales people. Unlike years past when new recruits were willing to start out slowly selling studios, “now they come in and want to sell $1 million, $2 million apartments.”
“A lot of these brokers don’t the know first thing about (coop) boards, they don’t know the difference between a postwar and prewar,” Kleier said.
Not everyone is slowing down on hiring. Mark Fromm, president of real estate firm Mark David & Co. has just opened a second office, in SoHo and is trolling for sales people. “We are hiring 50 sales agents,” Fromm said.
Experts note that while some prices are down, they are still higher than they were a year ago, boding well for brokers.
It’s easy to understand the industry’s appeal, especially following years of staggering gains where some agents out-earned lawyers and investment bankers. New York magazine just reported that “super-broker” Dolly Lenz of Prudential Douglas Elliman earns $6.95 million a year.
In good times, real estate salaries are solid even at the low end. First year agents are able to command between $45,000 and $80,000 a year, Fromm said. A more seasoned broker can make about $200,000 a year.
Some newly-minted agents say they are fully aware of the real estate market’s ups and downs and are still digging in their heals.
Lenny Silvia, 34, a former amateur basketball player left a career managing bars to join Mark David as an agent.
After just 100 days on the job he scored big: he has a signed contract for a $3.45 million sale on E. 23rd Street. After splitting the commission with another firm, he will take home $45,000. “Not bad,” Silvia said.
Is he worried about the real estate bubble bursting?
“Real estate is different from the stock market,” he responded. “Even if sales dip, people still need a place to live.”
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