Dan's Papers - June 27, 2008 -Undercover

Their success often hinges on trusted relationships with colleagues in the industry.

Their failure is often the result of unscrupulous dealings with colleagues in the industry.

Real estate agents walk a tightrope when it comes to collaboration. As independent contractors, they are in direct competition not only with the agents across the street, but across the aisle. Walk down Main Street in any Hampton and you'll see real estate agents pacing, on their cell phones, trying to solidify offers, advise sellers and generally close deals.

Why not do this from the comfort of their offices? For one, if an aggressive colleague hears there's a bid on the so-and-so house for $1.2, he might call his buyer and say, "They have a $1.2 offer, it's yours for $1.25." If an agent, chitchatting to a friend, mentions a house that may be coming on the market, an industrious colleague may beat her to the punch to court the seller to secure the coveted exclusive.

And there are the legendary stories. The agencies where it was de rigueur to lock your Rolodex (back in the day) and any other contact information in your desk - and take the key. The office on the East End where two top producing agents were paying off the receptionist to funnel "ups" (potentially new customers who call in randomly) directly to them rather than follow the pecking order. (The receptionist was fired. Ironically, the power brokers were not.) Agents even have to be protective in their personal lives against colleagues who are always on the prowl, seeing any social situation - from a bar mitzvah to a funeral - as a networking opportunity. One East End agent had a Christmas party and invited a colleague who worked the room, handing out business cards as freely as glasses of eggnog to every guest in the house.

It would seem that, to have any success, agents needs to operate from soundproof booths at the office, and make party guests sign confidentiality/non-compete forms before entering their homes. While it may seem that the reason for more aggressive strategies is a result of increased competition, veteran brokers in the field point to other reasons that are surprising.

Prior to the boom of the '80s, the East End real estate business was a different, much gentler animal. Agencies were mom-and-pops, set up in their hometowns. "Agencies had their own territories," said Paul Brennan, VP and Hamptons Regional Manager at Prudential Douglas Elliman in Bridgehampton. "Allan Schneider was in Bridgehampton. Southampton was Lyda Barclay. If you needed something in East Hampton, you went to Boots Lamb. Then everyone expanded. Allan (Schneider) was first. He went to Sag Harbor, then East Hampton, and Southampton."

Then came the boom and more buyers, more money, higher home prices, and more people wanting to become agents and cash in. And that led to even more offices. "Everyone realized they had to expand outward. The biggest reason for the change in the real estate community was the concept of multiple offices within the organization," said Brennan.

Judi Desiderio, President and CEO of Town & Country Real Estate, one of the few independently owned agencies on the East End, had similar insight. "Years ago, before corporate America, we all knew each other. Our kids were in the same school system," she said. "We were helpful to one another - even with people across the street. With the new corporate structure here, there's little cooperation. But people in the business who are serious about it are still cooperative with one another. But it's a guarded cooperation."

Desiderio was an owner of the independent agency Cook Pony Farm, which was bought by Corcoran. Shortly after, she started Town & Country. "I've been in situations where cooperation and trust didn't exist," she said. "When we started this agency, my partners and I handpicked personalities - selecting the people you want to break bread with minimizes that exposure."

But Desiderio cautioned that trust is one thing, naiveté another. "As much as we are a family, I tell my people that, at the end of the day, they're independent contractors and technically in competition with each other. I counsel my agents to do their negotiating in private. That avoids a situation that might look bad on the surface, but was just coincidental. After all, in reality, it's entirely possible that one agency has more than one buyer interested in a property."

"Loose lips sink ships," laughed Beau Hulse, principal and managing broker of four Coldwell Banker/Prestigious Properties offices on the East End. "Sometimes agents say things they shouldn't. That might give other agents information that would make them do something they wouldn't have if they hadn't known. Bottom line, keep the offer to yourself."

In real estate negotiations and transactions between buyers and sellers, if it isn't in writing, it doesn't count. Hulse takes that practice a step further with his own agents. "I tell them to document in writing everything they do with another agent in the office, like percentages of commissions for referrals, shared listings, et cetera. We all have good intentions, but when the money comes in everyone forgets what they said. I won't get in the middle of a dispute between agents unless there's a paper trail."

Yet with all the caveats, Brennan, Desiderio and Hulse - three highly accomplished real estate veterans with more than 20 years in the business - agreed that not only is it possible for agents to work together, it is essential to building a successful career in the longterm. According to Brennan, "If you're going to survive in this business, you have to have alliances with people you can work with. It's not about playing nice, it's about being intelligent and thinking longterm."

Hulse pointed to another factor in helping agents work within a more cooperative, less threatening environment. "A fish stinks from the head down," he said. "The managing broker sets the tone and mood of the office. I don't like negative people in my office. I won't tolerate dissentions. There are people who thrive on that, but I won't keep an agent like that around."

"The moment you have a seed like that - coveting, disregarding others, disrespectful - it's like a cancer," said Desiderio. "I learned the hard way. Now, as soon as I find a person is like that, his days are numbered." As operators of their own agencies, Hulse and Desiderio have instituted another practice that helps avoid paranoia and the desperation it may bring on among their agents. At Town & Country and Coldwell/Prestigious, managers don't compete with their agents. "None of our managers get 'ups' or take random phone calls from new customers," said Hulse. "Leads are given out fairly as they come in. Our managers help drive the business and support agents."

Hulse said this approach also avoids the "star" mentality, and minimizes a certain amount of brown-nosing (not his term) by agents desperate for their manager to "throw them a crumb."

Competition within the office just adds to the stress of competition among offices, which Brennan still identified as the main problem. "The companies got bigger to keep the customers in the framework. But that eventually created a new situation: Now they had their own agents going after the same customer - it made it a little more cutthroat. The company didn't care which agent got the sale - it still got its half [of the commission]," he said. "Now, it's just about getting business done - not who gets it done."