Native New Yorker columnist Jake Dobkin is passing the mic to real estate broker Luke Constantino this week, after Jake hurt his feelings by describing brokers as parasites in an essay last month. Their correspondence began thus:
Like you, I was born and raised here in Brooklyn, even played stickball on Carroll Street as a kid.
Question to you:
"Parasite Real Estate Brokers"
Why do you hate us successful real estate Brokers/Realtors?
I have helped many families move in, move out, downsize, upsize, 1031, estates and short sales so they won't go through the foreclosure process. After 18 years in the business, I should be praised for doing exceptional work, not thought of as a used car salesman or parasite.
I have to admit, the parasites in this business ruin it for all of us, like the guy who goes to a funeral to get the dead man's listing...lol!
Dear Native Real Estate Broker,
Recently you objected to a post in which I wrote: "talking about real estate makes everyone miserable except for parasite real estate brokers and blood-sucking lawyers, who profit from everyone else's pain."
Jake makes a friend. (Courtesy Jake Dobkin Private Collection)
I feel that the word "parasite" is fair here, as it literally means "an organism that lives in or on another organism (its host) and benefits by deriving nutrients at the host's expense." This seems like a very solid definition of what a real estate broker does: profits from the housing shortage by trading on information asymmetries to skim off an unreasonable percentage (15% on rentals! 6% on sales!?) from human organisms who are required by nature to find shelter or else perish from exposure to the elements.
I understand that real estate brokers provide some useful services in terms of finding properties, completing paperwork, negotiating terms, etc. My contention is that the price for these services is kept artificially high by the shortage of housing and by the real estate industry's still successful opposition to technology innovations like Multiple Listings Services and internet startups.
I am open to being proved wrong here, if you can demonstrate why being a real estate broker is actually morally defensible, and a net positive to society, and not a tax borne by everyone who needs to find housing in this city. Do you ever think of going into a different line of work? Say teaching, or social work, or really anything that doesn't involve charging desperate people a lot of money for a basic requirement of human life?
To which Luke replied:
Teacher or parasite: Hmmm… Decisions, decisions. Let’s go directly to class Jake:
Let’s just say, you got a deep gash on your body, and, well, maybe you read somewhere that you yourself can stitch it: would you? Say you want to buy a couch, would you go to a quality place like Raymour and Flanigan or Craigslist? How much would it be worth to you to go to a Professional?
Selling: Say you want to sell your house on your own. How would you price it? Get it “show ready”? Know if it qualifies for a mortgage? Know who is coming into your house and if they are qualified to buy it? Negotiate price? How long have you been doing this? Are you reputable?
Example: An FSBO (For Sale By Owner) who works all day (like most of us do) opens his/her door to a total stranger to look at the house… Do you see where I’m going with this Jake? Hey, this might be the guy… You never know, but at the same time, you’re putting your family/possessions at risk. I KNOW WHO WOULD BE COMING INTO YOUR HOME and if they are qualified to buy it. This person found your ad on Craigslist, or another site knowing you’re a FSBO.
Say I sell your house: I have 18 years experience; I’ll know how much your house is worth probably by looking at it. I also have numerous utilities and tools at my disposal that help me get the highest amount of money for it. Do you know that most property appraisal companies come to me for information, AND CHARGE YOU FOR THE SAME INFORMATION? I don’t… my market analysis is free.
Statistically, 94% of all home buyers go through a reputable company like mine... That brings us back to that number, 6%.
My 6%: Most Realtors work with a split with their office: 50/50 - 60/40, etc. So, in reality, that 6% goes to 3%. Along with all the advertising, staging, let’s say that’s a little more money along with phone calls I field, screening and negotiating on your behalf till your place sells. For example, let’s take a 6% commission at $30,000, split that with buyer/seller agent (gotta give them half, REBNY rules) = $15,000: split that with office? Turns into $7,500 minus staging costs, advertising, time worked to sell your property. (On average, it takes 150 working hours for a Realtor to sell a house.) How much is minimum wage Jake? Oh, and did I mention I’m 1099, and independent contractor? Yes, that means Uncle Sam takes a big chunk too.
There are many other things I do, but for this conversation, let’s stick to the basic selling aspect. I haven’t even touched on the crap I have to put up with from some of these attorneys! And what about rental scams? You pay a filing fee, don't get a rental, pay a fee and the person disappears or the sub lease is from a person who is out of country, etc.
Sellers getting scammed: Buyer says they are paying your price "all cash" and lessens the amount at the closing table. Or the Buyer comes with fake pre-approval papers.
Buyers getting scammed: Seller will go into contract with one buyer and break contract for a larger bid, seller will take contract to the bank showing somebody will pay a certain amount for their property and use that to get a loan on that property and keep it.
Sometimes a person will go into contract on a desired property just to sell that contract off for a higher price.
If you have the protection of being with a licensed, skilled professional, these things and more will not happen. I saw a lot of the rental scams last year in Williamsburg and Brownsville. One guy who was supposedly the real estate agent invited a girl to see an apartment at 9 p.m. with a bottle of wine in hand. He was found to be unlicensed and asked the girl out, not knowing her at all.
So, in closing, a Realtor ( a skilled one) isn’t such a parasite at all. It’s more like protection for you, against parasites and thieves who take advantage of people selling/buying renting. How much is that worth to you? I probably know more about your house than you do Jake—I’d want a “parasite” like that with the proper skillset and world renowned company behind me… wouldn’t you?
Update: A commercial broker, who would like to remain anonymous, emailed in with the following comments on his end of the profession:
My job as a commercial broker is to sell buildings, lease retail space (in my case mostly fashion), and to help owners understand the value of their assets in a given market by paying attention to the daily changes - often on one specific block of a shopping submarket… tedious to say the least and often dreadfully boring on a daily basis - to call it thankless on most days is not a stretch, albeit also very lucrative if successful.
This job, as a profession, relates directly to the NYC economy on a state and city level. In attracting foreign investment, the transfer and rental tax alone helps our government’s coffers a great deal.
Fashion brands who may have thought of the idea of coming here to open flagship stores are activated by my enthusiasm for NYC. They then open and hire sales people, managers, etc. In certain instances, I actually feel responsible for driving very small parts of the economy forward as an ambassador of our great city.
Foreign investors, who could otherwise very easily decide to buy in any number of other international cities, also generate taxes on transfers, however the construction and architecture work this stimulates is yet another economic sector which my actions feed.
When a transaction takes place, attorneys of course are needed - and without the broker initiating most of these commercial deals, we are talking about NONE OF THIS ECONOMIC ACTIVITY OCCURRING.
Your opinions are valid, based on the residential rental market’s bizarre middlemen, which admittedly does feel like a “money grab” to many, many people. However, your article seems to throw the baby out with the bath water!
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