“The problem with the commercial industry is it’s fragmented and dysfunctional,” Derek Lobo, the founder of Rock Advisors Inc., which sells apartment buildings, told The Financial Post, announcing he is about to unveil a deal for the exclusive rights to operate under the Sperry Van Ness International Corp. brand in Canada.
The new company will operate under the name SVN Canada Inc. and sell commercial property among multiple asset classes, such as office buildings and industrial land in addition to apartments.
He said the way the industry works today, most brokerages will try to sell a client’s property on their own stable of clients. “I don’t typically co-operate with other brokers,” Lobo said.
Lobo wants to introduce more competition and by splitting the sale between the selling and buying brokers, there will be an incentive for them to find more interested buyers and therefore raise the price and commissions.
While the idea of co-brokering may not make sense for many deals, it will definitely be worth it for some, said Kevin Maggiacomo, the chief executive of Boston-based Sperry Van Ness.
“There is no way any broker can know who all the buyers for a property are, because most people come from out of state,” said Maggiacomo, about the need to share listings. “No matter how successful you are as an individual or how large a firm you work (at), you are simply not going to get listing information in front of all prospective buyers if you seek to identify the buyer on your own.”
Commission splitting is a common occurrence for residential real estate agents, but their commercial counterparts generally eschew sharing, so the introduction of a commercial brokerage focused on co-operation is turning heads in the industry.