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A Turf War for the Lords of Flatbush

By Erin Chambers For increasing numbers of Manhattanites weary of the big-city hustle and bustle, the quiet, tree-lined streets of Brooklyn have become a welcome alternative. The Flatbush neighborhood brownstones that set the backdrop for The Cosby Show -- the actual home in the show's title sequence can still be seen at 10 Leroy Street -- remain a much-sought destination for families in search of space and value. What's changing, however, is the way local real estate agents and much larger newcomers are competing for the district's business.

With the new year comes a whole new way of doing business. On Jan. 3, the big Manhattan brokerages that have increasingly staked their claim across the East River instituted MLS, a computerized database that allows them to share listings. For brokers who subscribe, it means access to thousands more listings -- that's the upside. But it also means co-brokering those sales, which halves commissions -- a fundamental change that represents a disproportionate blow to smaller firms moving fewer properties.

LOCATION, LOCATION...REPUTATION. In this storied section of New York City, most brokerages operate with exclusive listings, with a single agent having sole rights to represent an individual seller for a specified time. That means one commission for the agent, and often more personalized service for the seller. But because those agents don't share listings, it can also mean a lot more legwork for buyers, since no single broker has access to all potential properties in any given area. It's not uncommon for prospective homeowners to work with half a dozen agents before deals close.

Critics say the old system was inconvenient for customers. Its defenders argue that a neighborhood benefits from a mosaic of small brokers who know it best. "That's how we've been doing business for almost 20 years," says Ali Young, a sales agent with Cobble Heights Realty, which also operates Heights Berkeley Realty, each with about 10 agents per office. "We have great locations, an established office, and a word-of-mouth reputation within the community."

Now a seismic shift is in store for these old-style brokers, who share a unique, small-business culture in one of the last surviving enclaves of independent real-estate brokering in the U.S. Young calls it, "a small, genuine, little brownstone community." These firms are having to adjust as bigger kids move onto the block. Large outfits like Corcoran and Brown Harris Stevens (owned by Terra Holdings) have made a strong push into Brooklyn over the past several years, as the spillover from Manhattan has increased. In the face of takeovers and stepped-up competition, the David-and-Goliath metaphor has become popular in Brooklyn real estate circles.

CUSTOMER FIRST. The corporate firms say they are simply providing potential buyers with more, easier-at-hand choices, and sellers with a deeper pool of potential customers. "The advantages are not for the brokerage firms -- the advantages are for the consumer," says Pamela Liebman, president and CEO of Corcoran, which has operated in Brooklyn since 1998 and now boasts 144 agents there. "The seller wants to expose his home to the widest audience possible, and the best way to do that is to co-broke. And if you're a customer looking for a place in Brooklyn, you might find it very frustrating to see four or five different brokers."

Rather than subscribe to the new listing service and take significant cuts in commission, many smaller firms are ready -- and in some cases, eager -- to defend their niche with personalized service, which they say the heavy hitters have trouble matching.

As with many small businesses facing bigger competitors, the customer-driven method has thrived in Brooklyn, with its unique, high-end properties and "upscale bohemian" residents and would-be residents, says Laurie Bleier, owner and president of local portal For potential buyers, small agencies with exclusive listings can mean more traipsing from neighborhood to neighborhood, looking for just the right fit, but independent shops like Cobble Heights say their reputation and long-standing relationships with the community overcome that disadvantage, making for happier buyers and sellers in the end.

"If you walk down Carlton Street in Prospect Heights, the perception of older people, the real neighborhood people, is that these larger agencies are opportunists," says Young, who has lived in Brooklyn for years and won't be subscribing to the shared-listing database. "I'm certainly not worried."

OLD HANDS. While some firms are mulling buyout offers, Warren Lewis Realty Associates' president, Marc Garstein, just finished a major renovation to his 18-year-old office and plans to continue the same personalized customer service that he credits with the referrals that he says have helped to improve his bottom line every year for the past five years. "We're neighborhood people," he says of his nine agents, whose combined experience amounts to some 117 years. "We work this neighborhood."

"They may say 'we know the neighborhood better,' but that's a bunch of nonsense," counters Corcoran's Liebman. "The brokers who work for Corcoran in Brooklyn have been there for years."

Michael Burke, director of the Downtown Brooklyn Council, a local economic development group, says Brooklyn residents are accustomed to dealing with certain brokerages, and despite the recent influx of Manhattan brokers, "there is still a strong sense of locals promoting locals."

At Cobble Heights and Heights Berkeley, Young makes sure that listed clients are on a first-name basis with almost the entire staff, saying that a personal relationship with the professionals who will be leading strangers in and out of the sellers' homes on inspection tours makes the process less disruptive.

GETTING ALONG. The microculture within the brokerages is also different at smaller agencies. For one, brokers at smaller outfits rely on sharing information and being open about each other's client's, listings, and needs. At larger firms, rife with competition, agents often have to fight to get listings and hold on to clients.

"And besides, which agent is going to work harder for you," asks Young "the one who's working for a 5% commission or the one who's working for half of a 5% commission?" According to Young, collaboration is a key aspect of the sales culture in her office.

For decades, brownstone Brooklyn has been a boutique business, and at least some smaller firms are committed to keeping it that way. Young admits that the larger agencies may work better in certain cases, and her office sometimes refers clients with specific, hard-to-satisfy needs. "Sometimes you go to Target (TGT) for a pair of jeans, and sometimes you go to Kiwi to get that special pair," says Young. "They both work." As they adjust to life with a new system and new competition, the small brokerages are hoping there's enough room in Brooklyn for both David and Goliath. Chambers is a reporter for BusinessWeek Online in New York

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