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Cody Vichinsky, co-founder of Bespoke Real Estate.
Bespoke Real Estate, a brokerage in Manhattan, the Hamptons and Miami specializing in listings priced at $10 million and up, is offering clients a new benefit: listings commissions of just 1 percent in luxury markets where fees of 2 percent or more are common.
Cody Vichinsky, who co-founded Bespoke in 2014 with his brother, Zach Vichinsky, said in an interview Friday that the move aligns Bespoke’s fees with current market conditions and with what is fair and reasonable in today’s market.
“This model shift for Bespoke is all about putting the client first,” he said.
Gross commission typically ranges between 4 and 6 percent, split between the list side and buy side, he explained. “Bottom barrel for most folks is 4 percent.”
Under Bespoke’s 1 percent listing commission model, only Bespoke’s commission is reduced.
“Our clients obviously retain the right to promote the property to the buy side or the purchasing public at industry standard rates,” Vichinsky said.
The seller can pocket the list side savings or put it toward the buy side, to incentive agents even further, he suggested.
And he noted that part of the commission the listing agent collects is passed on to the agent’s brokerage. “They’re getting a large chunk of the commission themselves for providing support to agents,” he said. But Bespoke has no independent agents.
“Because we have no splits with independent agents, we could pass on that savings,” Vichinsky said. “… We’re going to give it back to our clients because we feel that we are amply compensated at our price point for the work that we do.”
He said it’s not until sellers have to cut a check to the real estate brokers that they say, “Wow, you know, that’s a lot of money relative to the value that that person provided.”
Bespoke is trying to demystify a concept that is 100 years old, Vichinsky said. The commission construct was based on properties that cost $10,000, $20,000, maybe $40,000, he said. “I don’t think you could buy a subscription to a car wash here for $40,000 a year,” he added.
For a $20 million listing with a standard commission of 6 percent, that’s a $1.2 million fee that the seller pays, Vichinsky pointed out. With the list-side commission reduced to 1 percent, the overall fee becomes $800,000.
“Out of the gate, we’re going to save you $400,000 of your hard earned money,” Vichinsky said.
He acknowledged that, at the price points he is talking about, the average gross commission today is between 4 and 5 percent. “Six is a little bit more unusual these days,” he said.
According to Vichinsky, in the past, it was common practice for a buy-side agent to not present certain properties to clients because the commissions were lower, but he added that that’s no longer the case.
“Now, we live in a pretty transparent democratized marketplace that gives buyers the opportunity to find product on their own and be much more aggressive and proactive with coming to the table,” he said.
