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No MLS means no enforcement to pay agents in NYC?

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The Wild Wild East

It is well known that practicing real estate in New York City is a world of its own, not governed by an official MLS and running by its own rules. The young and rapidly growing real estate brokerage CondoDomain.com in preparation for opening an office in NYC brought current President Hoyt Morgan from California to the Big Apple and after an extended period in temporary housing, he decided to move to a more permanent location downtown.

Morgan isn’t an agent or licensed, so he used a CondoDomain Realtor as his agent who Morgan acknowledges did a tremendous amount of hard work getting the deal closed which advertised a one month OP and after moving in, the management company denied payment. Morgan notes that this is yet another reason the city needs an MLS.

Payment denied

Morgan said, “Rose’s onsite manager denied paying, so I followed up with a manager at a main office. He acknowledged that my agent “went above and beyond” for me and did facilitate the transaction as required to receive a commission. I was, however, very politely and professionally informed by this manager that no NYC brokerage pays when there is any affiliation between the brokerage and the client, a stated “fact” I had not come across before and one that seems, quite frankly, like a pretty poor way to do business.”

In many areas, Realtors cannot represent themselves on an apartment lease, so the standard practice is to use their broker as a buffer third party to the deal, but in this situation, the manager denying payment seems to imply the same nepotism rule should apply despite Morgan not being licensed, rather playing an executive role at a brokerage.

We’ve known Morgan for some time, even prior to their advertising on AG, and we know him to be a level headed, very fair person, so we took note of his detailed post outlining the story of his still unpaid agent. When he pressed the issue, he was “gruffly informed [by Rose] that they reserve the right NOT to pay for any reason, even though an OP is published as in this case, and they were not going to pay. They also suggested that if I want to be a part of NYC real estate I should leave this alone. (hmm, should I take this as a threat?)”

Threats and no accountability

The bottom line for Morgan is summed up in one of his final statements. “This is crazy, right? When Rose publishes their commission rates for cooperating brokers, should we ever believe them? Is there anyone that can hold them accountable to their published rates?”

The Real Estate Board of New York (REBNY) didn’t look kindly on the situation but claimed they couldn’t really take action. This is why CondoDomain is calling for a legitimate MLS as one possible solution to the unethical practice of blatantly refusing to pay agents simply because a property management company “reserve[s] the right NOT to pay for any reason.”

What can be done? Weigh in.

What do you think? Is New York just the Wild Wild East and it is to be expected, or could real steps be made toward implementing an actual MLS? What makes NYC so different from the rest of the world that it cannot progress to the modernity of the rest of the real estate world that functions with Codes of Ethics, MLSs and grievance committees that have the power to do more than face the other direction? Is there hope for NYC?

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13 Comments

13 Comments

  1. Pat Hallesy

    June 9, 2011 at 5:46 am

    It's simple, just make the commission agreement part of the contract – it's done in the commercial world (so is not paying co-op brokers, which is why it becomes part of the contract in commercial). If there's an issue, then the courts can get involved.

  2. Tony Green, Winston Salem Realtor

    June 9, 2011 at 7:31 am

    I would have to agree with Pat that the commission agreement should be made a part of the contract. However, it's a deeper issue, and again shows the ethical and moral decline of America. If the agent worked hard to ratify the contract, and the management company acknowledges the fact, then the RIGHT thing to do is pay the agent. But just as GREED caused the market crash of '06, it once again has risen it's ugly head. It really shouldn't be so hard to live by the GOLDEN RULE. Just treat others they way you would like to be treated.

  3. herman chan

    June 9, 2011 at 10:44 am

    i wanna echo pat's comment. maybe the condodomain.com agent didnt know the prevailing nyc rules? submitting a commission agreement is not just in commercial but even in residential. for example, on a 'for sale by owner' listing thats not on mls, agents still include a commission agreement.

  4. Diana Hoyt

    June 9, 2011 at 10:48 am

    Uh, the comment "no NYC brokerage pays when there is any affiliation between the brokerage and the client" sounds like a HUGE anti-trust violation to me. Is that not price fixing??? Assuming and stating that no brokerage in NYC pays. How could he possibly have known that? Had he stated that it was HIS policy it would be one thing but I am surprised that the courts didn't pick up on that. That said, it's sad that they refused to pay. I have always believed and conducted my business in the "we are all each other's bread and butter" mantra. What goes around comes around folks. They may have paid this agent when otherwise it wouldn't, but some day the shoe could be on the other foot. If I had an agent that went "above and beyond", I would be jumping all over myself to pay him/her for a job well done. Those are the kind of people you want to surround yourself with – hard working, honest people who can get the job done!!! At the very least, a referral could have been offered. What is wrong with people today???? Especially in this economy. Are there really that many people out there that are that greedy??? Very sad.

  5. Hoyt Morgan

    June 9, 2011 at 12:51 pm

    Thank you all for weighing in. In the NYC rental world, the contracts are currently provided by the owner/manager and are pretty much non-negotiable. So ideally yes the commission could be included in the residential rental contracts, but in practice we are a long way from that in NYC. Having co-broke commission guidelines and/or a specific number in the contract – for all contracts – would be a strong step in the correct direction. Having a "real" and open MLS system, and corresponding governing rules and regs, seems like the universal solution, though.

  6. Liz Benitez

    June 9, 2011 at 1:15 pm

    "I come from New York, where if you fall down they pick you up by your wallet."
    Al McGuire

    It would seem he is correct, but in this instance the Realtor didn't fall down she was knocked down and robbed.

  7. Jim Duncan

    June 9, 2011 at 1:28 pm

    Divorce the commission. Have the buyers pay their representative and have the sellers pay theirs. Admittedly, the solution is more complex than "divorce the commission" but that is where we need to go.

  8. sfvrealestate

    June 9, 2011 at 1:46 pm

    Here in So. Cal., after many years' experience, I say the less MLS's and Realtor boards, the better.

  9. Ted Mackel

    June 9, 2011 at 6:02 pm

    Ha I have to laugh at this discussion. Our whole industry is headed the way of NYC. The constant misunderstanding of an MLS I see the more NYC is coming to a AOR/MLS near you.

    All I hear these days is "give away your MLS data, the consumer deserves it", "If you dont give it away you're a neanderthal."

    The MLS exist for the sole purpose so brokers can cooperate in compensation. Brokers form an MLS so they can pool their listing inventories together and have a set of rules to pay each other. So give away our inventories to anyone who demands, NYC here we come!

  10. James Malanowski

    June 10, 2011 at 1:37 am

    I've got to agree with Jim Duncan, here. If buyers actually hired and had a contract with their agent AND agreed to PAY their own agent out of their pocket, this industry and the public's outlook on this industry would do a 180.

    I'm sorry that the buyer's agent didn't get compensated, but at the same time, he didn't do anything to guarantee his pay, either. If one is aware of the possibility of getting the shaft in NYC, one would be wise to protect their paycheck.

    NYC doesn't need an MLS, they need a buyer/broker agreement.

  11. Sig Buster, III

    June 10, 2011 at 6:41 am

    First of all, any resemblance between Ethics and Morality and New York real estate agents are purely consicential. Having said that: Rule #1. Always, slways, Always get the commission agreement up front and in writing. In the case of New York, get it cast in stone and written in blood. They make up the rules in their favot as they go along.

  12. Chris Trunell

    June 10, 2011 at 10:01 am

    This isn't so cut and dry. The OP is more of an incentive than a "commission." And how much hard work goes into a rental deal in a large building. They don't negotiate the lease, or anything contractual. How much in rent, How long a lease (as simple as 1 or 2 yrs), and when can you move in? They have a leasing office to answer every question, type the lease, run credit and so on. The tenant isn't himself licensed in NY so he could not collect, so he used an agent from his company. The question is would he have paid his agent a commission if the building was not offering the OP? It's only one month, is he paying up the difference to the standard 15%?
    And finally, an MLS in NY would open our market to small companies (and very large ones. Keller Williams has the same no MLS complaint) who know nothing about our market, case in point, this guy looking for his OP from a major landlord. And he still hasn't figured out that they are holding all his cards.

  13. Samantha

    February 6, 2016 at 4:28 pm

    One main mls would be helpful if the rules would be implemented and held by all members.. enough fines to keep brokers and their agents intised to follow rules and respect their fellow agents. Sadly this is still not in sight as it sames the mls administration turns their head to anything other than collecting dues. Brokers and agents advertise for the any reason other than cooperating honestly with other lisenced profesionals. Instead all the excuse in the world is made up to not show or open door. When a simple lock box could make a world of difference. If not disclosed special showing instructions on mls. It’s unethical to subject fellow agents to unreasonable drive by only garbage and so much other garbage..yet nothing being done..I hold my lisence in other states and none but new york has this corrupted mls not giving a hoo attitude. In spite of extensive red tape to file complaints.

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