The news of TOWN Residential closing its doors came as a shock & was the focus of a very candid discussion at an event today hosted by the Real Deal. LandlordsNY attended this afternoon's event as Amir Korangy, CEO of the Real Deal, sat down for a one-on-one with TOWN’s Founder & CEO Andrew Heiberger …along with and a standing room only crowd of brokers & real estate professionals. The first question: WHY?
Mr Heiberger responded quite candidly that “the business model is not sustainable”. He went even further to state that “owners of traditional brokerage firms cannot make sustained profits” with the current structure of commissions, rents, salary, etc as they are. “We have been disrupted.”
There have been billions of Venture Capitalist dollars invested in Real Estate Technology, the so-called “disrupters.” It’s no secret that while the industry may be slow to adapt, it is happening at warp speed. Companies like StreetEasy, Zillow, Apartments.com, REZI, are offering solutions that meet the needs of today’s clients. Which raises the question on the minds of many in the room, what happens to brokers? While he did emphatically state that “the brokerage business is not dead”, it certainly is changing rapidly.
Mr Heiberger noted that Landlords themselves have become a bigger competitor than StreetEasy, now that owners can upload properties and vacancies themselves. Landlords can pay someone within the building or a family member to show units, handle leases and perform many of the functions of a broker while simultaneously acting as a part-time property manager.
The discussion ended with a mutual thank-you and some colorful language from Amir Korangy noting the “courage” that it took for Andrew Heiberger to take that stage mere weeks after the news broke of TOWN’s closing. To our members we ask, do you agree?