By Al Barbarino
The efforts of two respected residential brokerage veterans and their leap of faith into an untraditional business model has helped Rutenberg Realty “snowball” into a top New York City brokerage.
Kathy Braddock and Paul Purcell co-founded the Charles Rutenberg Realty Manhattan office in 2006, at the time employing just one broker. They recently employed agent number 500.
Brokers pay $99 per month to work for the firm, as well as a transaction fee of no more than $2,000 on sales and $800 on rentals. The brokers keep the rest.
“What has made us successful is clearly the financial model and the fact that Paul and I have such strong roots in the industry,” Braddock said in an interview with Real Estate Weekly. “This model is not a unique concept, but that combination became a win-win.”
“When we first explain how our business works, brokers think it must be too good to be true,” Purcell added. But there are no hidden costs, no hidden fees, and “no surprises.”
In 1980, Braddock started an employee relocation company, helping to move people, from entry-level to executives, into New York City.
At the time, Purcell was at Corcoran, and the two worked together from time-to-time to find homes for executives, a relationship that continued when Purcell became president at Douglas Elliman.
“He was so excellent at finding a good match,” Braddock recalled.
By 2000, Braddock was looking for a change and Purcell courted her to be general sales manager at Elliman. The following year they launched the consulting firm Braddock and Purcell, and in early 2006, they founded Rutenberg, at a time when Braddock said the technology available put her brokers on a level playing field with all of the city’s brokers.
“Before, I couldn’t offer the agents a listing system that was comparable to Elliman, Corcoran and everyone else,” she said. “But by 2006, we were at the right place at the right time.”
From the On Line Residential listing platform, or OLR, to the video conferencing calls and meetings, the website StreetEasy.com and other programs and devices that have become part of every broker’s repertoire, the firm’s pay scale made more and more sense.
The business model reduces costly tangible resources, making it unnecessary to bog the company down with fees and rents associated with running a huge office space. Rutenberg invests in the latest technology and tools, providing workstations that can be used as often, or as little, as agents want.
“It’s very much like a gym,” with agents rotating in and out of the space, Braddock said. “If a real estate agent is in an office too much, they’re not doing what they should be doing.”
“We’re beholden to nobody,” she added, noting that other brokerages are often heavily reliant on top performers.
The 500-agent milestone comes just after the company was named one of “New York’s City’s Best Firms to Work for” in a September 2012 survey of residential brokerages by the The Real Deal.
“It kept snowballing and snowballing,” Braddock said of the growth the company has experienced.
“The word of mouth from our satisfied and well-compensated brokers is the reason we are at nearly 500 agents and counting,” Purcell added. “They are our best recruiters. Whether it’s at open houses, closings or industry events, our brokers are spreading the word about how our firm differs from that of a traditional brokerage and how the Rutenberg business model has helped them to thrive.”
The firm has an “open door” policy, whereby brokers have access to Rutenberg’s principals and top management to facilitate deals.
“At other firms, we were constantly at these meetings and budget presentations, but not necessarily working with agents,” Braddock said. “Here, because it’s such a simple model, we get to do what we really like doing — and that’s helping agents with deals. Not to be sappy, but if you start a business that creates positive changes in people’s lives, that’s really a nice thing.”
The first Rutenberg brokerage, named after Charles Rutenberg, a Florida developer and homebuilder, was founded in Clearwater, Florida in 1999.
Since then, several incarnations of the company have sprouted up in the New York metro area, creating dissonance among its founding members.
In January, Joseph Moshe, a broker who controls the Rutenberg family trust and runs separate Rutenberg businesses in Westchester, Queens and Long Island, sued the company’s partners — Purcell, Braddock, Richard Friedman and Jeffrey Markowitz – alleging that they excluded him from consulting payments.
Friedman, a partner at the Rutenberg Manhattan office, filed a cross-complaint in July, alleging that “Markowitz, Purcell, and Braddock wrongfully usurped control” of Rutenberg, “converting its assets for their own use and benefit through a pattern of fraud, breaches of fiduciary duty, mismanagement, and utter disregard for the interests of Rutenberg and its members,” in part by using an invalid operating agreement, court documents provided by his lawyers at Arkin Solbakken LLP show.
Friedman is asking the court to validate a separate operating agreement executed by all the partners, calling it “the effective operating agreement,” giving him “full rights as a Member, Voting Member, and Manager of Rutenberg.”
Braddock called the ongoing lawsuit “unfortunate,” adding, “Paul (Purcell) and I are sane and rational people and we’re trying to get everyone in a round room to figure it out… this won’t have any effect on the business.”