The brothers behind an $8 billion luxury real estate company cut the commission rate to 1%
Cody and Zach Vichinsky have changed the luxury real estate game on Long Island by specializing in properties worth over $10 million, including homes seen on Succession and in Wall Street. So why is greed no longer good?
By Luisa Kroll
In August 2021, Bespoke Real Estate in Water Mill, New York, has secured the exclusive rights to sell a dazzling contemporary beachfront home with an inverted triangle roof in Wainscott, a hamlet of Tony East Hampton. Bespoke, which was founded in 2014 by brothers Cody and Zach Vichinsky, had used its extensive research and extensive database to identify and profile other owners of multimillion-dollar homes in the Hamptons. In two months, the property, which had a glamorous cameo like a beach house owned by a billionaire played by Adrien Brody in an episode of HBO Successionclosed a $45 million contract.
Cody Vichinsky, whose firm represented both buyer and seller, credits Bespoke’s data-driven marketing and predictive analysis of potential buyers specifically interested in these modern homes for the quick sale. Another aspect of this transaction that was not publicly disclosed at the time: Bespoke had reduced the seller’s commission rate to 1%, from the usual 2% to 3%.
Lowering its commission is a practice that Bespoke, which claims more than $8 billion in real estate transactions since its inception, has been beta testing for more than a year. (The $8 billion figure is based on initial listing prices; homes sometimes sell for tens of millions of dollars less than the first asking price.) The company, which sells properties primarily in the Hamptons , Manhattan and South Florida, has already sold a handful of homes at the rate of 1%. “Our whole philosophy is to streamline the business and challenge the status quo of why people moved into the existing framework. We think the whole industry is on the verge of tipping over,” says Vichinsky, 35, who insists his company offers the same high level of service despite lower fees.
So, starting this month, Bespoke is going where few high-end real estate companies have dared and officially reducing its seller’s commission to 1% on each transaction. According to Vichinsky, Bespoke has already signed 18 clients, most of which are yet to be announced, who will only be charged at the 1% rate.
“At the top of the range, there is nothing like us. No one is providing a standardized 1% listing fee,” he says. It will likely cost the business, whose average sale price is over $27 million, several million dollars, but it could also help it win new listings not just in the Hamptons, but in new markets. like Manhattan and South Florida.
According to Vichinsky, his company is amply compensated at 1% given the high prices of the houses they sell. (The buyer’s agent, who is often also bespoke, will still typically receive 2%-3%). The other reason to lower the commission: while few high-end companies advertise it, a number have already quietly lowered their fees.
“Luxury real estate agencies often end up at this price [1%] behind closed doors,” says Glenn Kelman, CEO of Redfin, one of the first discount brokerages to offer sellers a 1% commission. “Bringing it out as it is shows how they embrace it and helps de-stigmatize it.”
“I told them you were going to have a lot of unhappy competitors, but I love this model. I love disruptors”
Naturally, some well-heeled customers are fans of the move. “I told them you were going to have a lot of unhappy competitors, but I love this model. I love disruptors,” says Ken Austin, former vice president and president of Marquis Jet, who founded Avion Tequila; co-founded Conor McGregor’s Proper No. 12 Irish Whiskey; and co-founded Teremana Tequila with Dwayne “The Rock” Johnson. He sold a house with Bespoke at 1% interest (plus 2% buyer’s fee) and bought two more through the company: “I don’t want to go back and forth with a broker.”
Long-time Bespoke customer Gary Garrabrant adds, “Cody is not afraid to change. I think what they are doing is disruptive. It’s going to be so upsetting for traditional brokerage. Bespoke helped Garrabrant, who was billionaire Sam Zell’s partner for many years and is now CEO of investment firm Jaguar Growth Partners, and his wife sell their traditional cedar shingle house in Southampton in 2019.
The Vichinsky brothers have already succeeded in shaking up the status quo in real estate. The couple, who grew up about an hour from the Hamptons in Stony Brook, New York, with their blue-collar father who worked as a project manager on construction jobs, custom-designed as a new kind of brokerage. From the outset, they hired a full-time sales and marketing staff, who work on houses across the entire Bespoke portfolio, avoiding independent brokers who rely on heavy commissions. “Our direct-to-customer sales model is the first and only of its kind in the industry,” says Cody Vichinsky.
To date, they say they have sold hundreds of high-end properties and facilitated billions of dollars in such sales. Notable clients over the years include billionaire Stewart Rahr, whose Burnt Point estate in the Hamptons sold for $47 million last year (his foundation received the proceeds); Paul Fribourg, CEO of Continental Grain; real estate billionaire David Walentas and fashion designers Vera Wang and Vince Camuto. He also sold a historic home known as Kilkare for Eleanora Kennedy, the widow of criminal defense attorney Michael J. Kennedy (d. 2016), who represented Ivana Trump in her divorce from Donald Trump. Kennedy’s 1879 East Hampton beach house, which she and her late husband had owned for decades, has appeared in films such as Wall Street and Eternal sunshine of the spotless mind.
Bespoke’s biggest deal to date was its 2021 sale of Jule Pond (formerly known as Fordune), the 42-acre Southampton estate built for Henry Ford’s grandson and known to many as HBO’s Roy Family “Summer Palace”. Succession; it sold for $105 million, a record price for a detached house on eastern Long Island (though below the original listing price of $175 million and later the $145 million price of dollars).
While wealthy clients might appreciate saving millions on a home sale, not everyone is sold on the Vichinsky’s 1% bet. “I told them I wouldn’t. I said [Cody] I don’t mind paying if I get really good service. Whether it’s 1% or 4% isn’t going to change who I go with,” says a long-time customer who has several deals with Bespoke. “I consider them a high-end luxury brand. When you’re in the luxury business, you don’t want to cut your prices. Bespoke should decide with its clients what the fair commission based on the transaction is,” he adds. “If it’s a tough deal, we might pay more.”
And while Bespoke has undoubtedly been on a roll, even during the pandemic, many trophy homes take years to sell, which means working longer than other companies to earn that lower rate. That’s the point, by the way, says Vichinsky, who insists that the motivation to cut fees to 1% has “nothing to do with economics.” Rather, it’s about retaining those wealthy customers who can afford to wait for the right price. And that’s just one part of a bigger plan. In the works, for example: the company is setting up an invitation-only VIP program called Private Circle that will give members access to exclusive events and experiences like free intravenous treatment at home or access to Art Basel. “We want to be the company that takes those big risks that are in the best interests of customers,” he says.
At least one industry insider is skeptical of 1% at all costs. “Beware of Greeks bringing gifts,” joked Donna Olshan, who runs her own real estate company in Manhattan and writes the weekly Olshan Luxury Market Report. (Forbes asked her what she thought of luxury businesses, not specifically Bespoke, cutting the commission). “No matter what industry you’re in, you’ll always have people trying the discount model. It’s like everything else in life. In for money.”