Ditching The Hamptons Real Estate Commission

The story has been circulating recently of how two men interested in a summer rental in the Hamptons enticed a Rosehip Partners real estate agent into showing them properties and then left notes for the landlords attempting to circumvent the agent in order to avoid paying a commission. According to Rosehip, it was the homeowners the notes were written to who alerted them.

I contacted a number of real estate brokers in the Hamptons and asked for their reactions and Judi Desiderio, Chief Executive Officer of Town & Country responded, “I read that and saw the hand-written note. It was the most blatant display of inconsiderate unprofessional behavior by two immature boys who will most certainly see what goes around comes around.”

The experience that most agents seem to share is tenants trying to negotiate directly with the landlord on lease renewals.

Ed Reale, Senior Managing Director of Brown Harris Stevens and a New York attorney shared the following: “With respect to rentals, I have never encountered anything as egregious as the recent Rosehip experience. We have seen tenants attempting to negotiate directly with a landlord on the renewal of a lease, and generally the landlord will report to their agent. Last year our agent had shown a buyer one of our exclusive listings twice but he did not make an offer. We learned shortly thereafter, when the seller stopped returning our calls, that the same buyer made a deal directly with the seller and purchased the property. We had to bring suit as the owner would not pay the commission voluntarily. Needless to say, the seller’s attorney recognized the futility of defending the case and convinced the seller he had to pay. We collected the full commission.”

In a recent New York Supreme Court case involving a real estate broker and a tenant, Hunter Realty v. A.O. Textiles, the court found in favor of the real estate broker when the tenant refused to pay the broker’s commission. In fact, the tenant had to also compensate another broker for the same rental.

The situation regarding Rosehips and the two individuals they showed the properties to may have constituted an unlawful act of interference with a business relationship. Ironically, the hand-written notes would seem to provide the necessary evidence for a court to find them guilty.

The conduct of these two individuals was clearly despicable. Fortunately I think we should find encouragement in the reactions of the homeowners who thought so too.