Having clawed its way to the top of the Hamptons market, Bespoke Real Estate has set its sights on an even bigger prize: Manhattan.
The firm, which ranked sixth in The Real Deal’s recent ranking of Hamptons brokerages with nearly $880 million across 53 deals, is betting its approach to commissions will yield translate its results Out East to the high end of the metropolitan market.
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.”
But not everyone is sold on the firm’s approach
“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.
Bespoke rolled out its 1 percent commission policy last year after beta testing it for more than a year, according to a 2022 Forbes report on its debut. The rate applies specifically to the sell-side of a transaction, so buyer’s agents, including Bespoke, would still likely earn the usual 2 to 3 percent.
“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.
The firm launched in New York shortly after the infusion. At the time, the company charged $3,200 to list a property but later bumped it up to $3,600.
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.
Purplebricks shuttered its U.S. operations in 2019, reporting a nearly $43 million operating loss in the 12 months leading up to its closure. The firm’s valuation had dropped 75 percent from when it opened stateside in September 2017. In March, the company announced its intentions to sell.
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.
Boutique brokerage LG Fairmont cut its commissions to 4.5 percent in 2017, but the reduction didn’t stave off financial distress. Compass absorbed the 60-person company last year, and though the firm called it a merger, sources told TRD at the time that the deal allowed LG Fairmont to “save face while keeping the lights on.”
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.
“I have zero concerns about Bespoke,” he said.
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.
In the downtown Manhattan and Brooklyn markets where Kantha works, he said the norm has shifted more toward 5 percent but are always subject to negotiation based on the property, price point and market at the time.
“The reality is, fees are always going to adjust,” Kantha said.