DISRUPTOR: Brothers behind $8 Billion luxury real estate firm cut commission to 1%

PHOTO: Cody and Zach Vichinsky. Business Jet Traveller.

Cody and Zach Vichinsky changed the luxury real estate game on Long Island by specializing in properties worth more than $10 million, including homes seen on Succession and in Wall Street. So why is greed no longer good?

In August 2021, Bespoke Real Estate in Water Mill, New York, secured the exclusive rights to sell a dazzling contemporary oceanfront 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 been using its extensive research and vast database to identify and pitch other owners of multimillion-dollar homes in the Hamptons. Within two months, the property, which had a glamorous cameo as a beach house belonging to a billionaire played by Adrien Brody in an episode of HBO’s Succession, went into contract for $45 million.

Cody Vichinsky, whose firm represented both the buyer and seller, credits Bespoke’s data-driven marketing and predictive analysis of potential buyers specifically interested in such modern homes for the quick sale. One other aspect of this transaction that wasn’t publicly disclosed at the time: Bespoke had reduced the seller’s commission rate to 1%, down from the typical 2% to 3%.

“We didn’t grow up in this world,” says Cody Vichinsky, 35, who came to the Hamptons a decade ago to flip houses and now runs one the the top residential real estate firms in the Hamptons.

BESPOKE REAL ESTATE

Lowering its commission is a practice that Bespoke, which claims more than $8 billion in real estate transactions since its founding, 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 firm, which sells properties mostly in the Hamptons, Manhattan and South Florida, has already sold a handful of homes at the 1% rate. “Our entire ethos is to streamline the business and challenge the status quo of why people have settled for the existing framework. We think the whole industry is on the tipping edge,” says the 35-year-old Vichinsky, who insists that his firm offers the same high level of service despite the lower fee.

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So beginning this month, Bespoke is going where few high-end real estate firms have dared and is officially cutting its seller’s commission to 1% on every transaction. According to Vichinsky, Bespoke has already signed up 18 customers, most still to be announced, who will only be charged the 1% rate.

“On the high end, there is nothing like us. No one is providing a 1% standardized list fee,” he says. It will likely cost the firm, whose average sale price is more than $27 million, many millions of dollars, but it could also help it win new listings not just in the Hamptons but in newer markets like Manhattan and South Florida.

Glass House: In an episode of Succession, the Roy family pays a visit to this spectacular Hamptons home, which features a 22-foot-high great room framed by floor-to-ceiling windows. In real life, it sold for $45 million last year.

BESPOKE REAL ESTATE

According to Vichinsky, his firm is amply compensated at 1% given the high prices of the homes they sell. (The buyer’s agent, which is often Bespoke as well, will still typically receive 2% to 3%). The other reason to lower the commission: while few high-end firms advertise it, a number have already been quietly lowering their fees.

“Luxury real estate firms often end up at that price [1%] behind closed doors,” says Glenn Kelman, CEO of Redfin, one of the first discount brokerage firms to offer sellers a 1% fee. “To advertise it as they are shows how they are embracing it and helping destigmatize it.”

“I told them you are going to have a lot of unhappy competitors, but I love this model. I love disruptors”

—Ken Austin, the former president of Marquis Jet

Naturally, some well-heeled clients are fans of the move. “I told them you are going to have a lot of unhappy competitors, but I love this model. I love disruptors,” says Ken Austin, the former vice chairman and president of Marquis Jet, who founded Avion Tequila; cofounded Conor McGregor’s Proper No. 12 Irish whiskey; and cofounded Teremana Tequila with Dwayne “The Rock” Johnson. He sold one home with Bespoke at the 1% rate (plus the 2% buyer’s fee) and bought two others through the firm: “I don’t want to go back and forth with a broker.”

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Adds longtime Bespoke client Gary Garrabrant: “Cody isn’t afraid to change. I think what they are doing is disruptive. It’s going to be so upsetting to 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 home in Southampton in 2019.