The View from the Inside

As 2010 winds down, I am reflecting on the 19 years during which I have been the President of Warburg Realty (formerly Ashforth Warburg, before that Albert B. Ashforth, Inc) where I came to work in January of 1986 as the Associate Director of the Residential Sales Division. While the business has changed in many ways, the fundamental structure of how real estate firms operate has remained pretty much the same.

Our agents are all independent contractors. They earn commissions, which we divide with them in percentages based on their earnings history (the more they earn, the bigger the percentage). We provide desks, phones, computer and IT services, marketing and PR. We maintain our website and our iPhone application, making sure that both remain state of the art. And increasingly we provide training in both the traditional areas such as negotiating, working with customers, or handling an exclusive and the newer but equally necessary topics like the intricacies of Web 2.0 and getting the most out of Outlook 2010. As the head of any brokerage firm will tell you, this is a narrow margin business. While the established Manhattan firms have staying power, many of our smaller colleagues have been plowed under during the recession; nationwide, brokerages have folded, consolidated, or downsized in huge numbers since the national real estate downturn began in 2006. Many of the business owners I spoke to at the National Association of Realtors conference last week in New Orleans told me that they are losing money on their brokerage operations, and it is the offering of ancillary services, such as mortgages or title  insurance, which keeps them afloat. 

The rallying cry at the NAR conventions is “retention.”  Seminar after seminar is directed at how to keep your top agents from jumping ship. For those of us who are lucky enough to direct and work at New York’s top companies, the answer is relationships. In the end, I think it is the same in any business. My agents, and those working for my top competitors, stick around because the powerful internal network of relationships which they have built . Many of the agents at Warburg have worked with us for 20 years or more, and I hope and believe  it is more than money which keeps them here. They are a second family to me. I have enormous admiration for these highly skilled, hard working, unsalaried professionals, who rarely get credit when things go right but are almost always blamed when they go wrong. And I hope I am communicating that every day.