Real Estate’s New Power Brokers

Lead Agent Dottie Herman.Photo: Len Irish

It’s the kind of July night brides pray for, perfectly balmy with a slight wind. Outside Sagaponack’s Wolffer Estate, valets in crisp white jackets whisk away SUVs and offer glasses of chilled champagne. While negotiating the massive stone staircase, more than a few guests wonder what they could get for the German-style mansion. At least $50 million, whispers one. It would hardly be surprising if themanic broker in the yellow Dolce & Gabbana Capri pants showing off her new magnetic business cards had slapped them on any and every metallic surface.

“This is now the hot spot for weddings,” says Alan Rogers, chairman of Douglas Elliman, standing on the back terrace overlooking 55 acres of vineyard. “And this is a wedding.”

The marriage being celebrated joins the fortunes of Elliman, the venerable Manhattan real-estate firm, and Prudential, the Long Island residential giant run by powerhouse Dorothy “Dottie” Herman. Last spring, Herman snagged Elliman for $71.75 million with her partner, entrepreneur Howard (Nathan’s hot dogs) Lorber. And they’re not finished playing, either: Lorber’s got $150 million more earmarked for expansion.

“Everyone told me I was crazy, buying during the war,” says Herman, who at 50 vaguely resembles a tougher, taller Goldie Hawn with a flawless French manicure. “They were saying there was going to be another terrorist attack.”

Four months later, Herman’s ruling over a $6.5 billion empire and throwing quite a party—real crab!—for brokers from the megafirm’s 51 offices. Among other things, it’s certainly an upgrade from previous Elliman parties, held in Rogers’s Southampton backyard. Four years ago, caterers were feeding 250; since the nuptials, the combined head count tops 2,000, which makes the firm New York’s biggest.

“I had my sights on doing New York for the last eight years,” says Herman, in a white sundress and a deep salon tan. Though she says she loves the East End for its natural beauty, the brassy blonde with a pronounced mid-Island accent has no time for the beach. With daily workouts at 5:30 a.m., she does lunch only if she has a meeting at a restaurant, and fields up to 800 e-mails a day. Her cell phone never stops ringing, though most of her calls are directed to her assistant, RuthAnn Fay, who rarely leaves her side and sports a matching manicure.

“I told people from the day I opened in the Hamptons, I will be in New York City,” says Herman, who broke into the East End in 1997. Now she has six Hamptons offices and branches on the North Fork. “Well before I had Douglas Elliman, I had my Website say ‘from Montauk to Manhattan.’ ”

Even her competitors can’t deny she’s got a catchy, synergistic slogan. “It’s a nice ticket to have,” Corcoran CEO Pam Liebman admits perhaps a little too quickly.

A few years ago, before Barbara Corcoran cracked open the stodgy, discreet real-estate industry by transforming her firm into the industry’s answer to Starbucks, Liebman and Herman would have been unlikely picks to run the city’s two biggest brokerages. Neither is from Manhattan, much less Park Avenue. Liebman lives in New Jersey, and Herman has two homes on Long Island, and she recently rented a furnished apartment in Central Park South’s Essex House. Two decades ago, they might have made it as condo brokers, but they would never have been ruling over fiercely competitive firms jockeying to be the industry’s Goliath. Back then, it was a boys’ club, and the firms were more boarding schools than corporations.

“Douglas Elliman would roll over in his grave if he knew his company had become Costco so quickly,” says a member of the Old Guard. “He was the first great real-estate man.”

Herman’s not the new face of real estate, but she’s the official changing of the guard. It is no longer enough to be bred on Park Avenue—or work for someone who was—to sell $10 million–plus apartments. These days, a high-end buyer cares more about the quality of the digital photos on a firm’s Website than about whether the broker is toting a Kelly bag. The fabled Gold Coast—the obscenely expensive and exclusive stretch of real estate on Fifth and Park Avenues—has been colonized by outsiders like Herman and Liebman who twenty years ago probably wouldn’t have passed the co-op board at 820 Fifth.

“It’s much more democratic now,” says Brown Harris Stevens (BHS) broker Michele Conte, who specializes in marketing new condos. “The elite groups of brokers have been diluted. The profile has changed.”

“The industry is consolidating,” says Herman. “New York City is one of the last holdouts. It’s happening because the cost of doing business has drastically increased: It’s the technology, and top agents demanding much greater splits. Ten or fifteen years ago, they all got 50 percent. Now good agents require a larger percentage of dollars. Consumers expect a lot more advertising. Smaller companies end up getting bought out by bigger companies; they can’t survive and provide the services.”

The big firms, emboldened, are poaching listings and brokers from the Old Guard—as well as from each other. Take Edward Lee Cave, who owns an eponymous firm with 25 brokers and lunches at Doubles, the private club in the Sherry Netherland (where, incidentally, Lorber has a pied-à-terre). Last year, he started talks with BHS to forge a partnership; even if he remains independent, Cave will have to work hard to hold on to his top-producing brokers. He’s already lost one of his stars, Linda Stein—whose clients have included Sting and Steven Spielberg—to Elliman.

“It’s not as personal as Cave,” says Stein about Elliman. “There are people from all walks of life. Cave was like a family. There was real ethics and trust. You didn’t have to be afraid of your colleagues.”

The new paradigm is not widows or empty-nesters taking on real estate as a second or third career but young, ambitious college grads. With women like Herman at the helm, real estate is being run like a business. And the boys’ club is getting swallowed by corporate America, a place where firms have softball teams and massages at the office. It might as well be Silicon Valley circa 1999.

Barbara Corcoran was the radical. Ever since she began plastering her face on billboards three years ago, the industry has been infiltrated by the entrepreneurial New Guard, backed by corporate cash. Two years ago, Corcoran sold her company to NRT, Inc., the largest private real-estate-holding company in the country, for $70 million, but she remains Corcoran’s chairwoman.

“Dottie is driving Barbara crazy,” says a Corcoran executive. “She’s already tired of hearing about her as the new Barbara Corcoran.”

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“I am not trying to be the next Barbara Corcoran,” Herman counters sternly.

“It’s not a bad comparison,” says Corcoran, ever the self-promoter and politician. “She’s self-made, and she’s a great competitor. She succeeded in coming into New York City from the suburbs when everyone else has failed.”

Corcoran even sent an inscribed copy of her book to Herman’s welcome-to-Manhattan party—in lieu of attending—in May at an Elliman manager’s Upper East Side apartment. Herman was 45 minutes late to the party, which didn’t make the best impression on women who are particularly prickly about punctuality. And looking for a reason to hate her.

“A couple of people thought that was very rude,” one guest says before adding, somewhat begrudgingly, “but she was very over-the-top, very friendly.” To the members of the Old Guard, over-the-top friendliness and rudeness are to be avoided in equal measure. They pride themselves on secrecy, service, and experience. Alice Mason, who owns a firm with eighteen brokers, once lured clients with her A-list dinner parties, attended by everyone from Marilyn Monroe to Jimmy Carter. Now she’s cut back her signature evenings to just once a year—but swears she’d no more sell out to a big corporation than move out of her legendary rental. “My firm will be in business at least the rest of my life,” says Mason, who founded the company over 40 years ago and runs it with her daughter, Dominique Richard. “I would think we will always have very special clients. What we do is quite different from what the big firms do.”

The new-look brokers say, however, that they won’t be doing it for long. “I don’t think Edward Cave and Alice Mason will survive,” Liebman says without any hesitation. “Real estate is not about chatting at a dinner party anymore. It’s a big business, and you’re talking about big numbers.”

This year, Corcoran poached four of Mason’s top brokers, including Deborah Grubman (“Lizzie’s stepmother”), who recently sold Tommy Mottola’s townhouse for just under $20 million. Grubman denies that she jumped ship for a hefty bonus, saying she joined Corcoran for its effective marketing and advertising assets: “Someone in advertising can set a page for me better than I can do it.” She recently scored a hot exclusive with a high-tech presentation, which “at a small firm would have been difficult.” Now that Corcoran’s fancy Website features her exclusives, friends at dinner parties, self-proclaimed “real-estate junkies,” say, “ ‘Deborah, you have a new exclusive! It looks fabulous!’ That didn’t used to happen.”

Grubman says that in her thirteen years of working with Mason, she learned the business the old-fashioned way: studying the tenants and history of every top building and keeping the insider information in card files. “It was very effective,” says Grubman, “but the mentality was a more twentieth-century way of doing business.”

“Dottie is driving Barbara Corcoran crazy,” says a Corcoran executive. “She’s tired of hearing about her as the next Barbara Corcoran.” “I am not trying to be the next Barbara Corcoran,” says Herman.

“It doesn’t matter,” Mason says about the defections. “Whoever was with me in 1960 is not with me now. Nobody stays in a firm anymore in this age. They don’t even stay in a marriage.”

Herman and Lorber are just as confident as their Corcoran counterparts that the small firms will be swallowed by the giants, and are already plotting to acquire a few—though they wouldn’t name any targets. “I think if you look at trends, if you go to the West Coast, long-term brokers have sold out,” says Herman. “They don’t have any new brokers,” adds Lorber. “They don’t have the advertising and marketing budgets we have. And most of them are smart enough to sell their company before it becomes worthless, so they’ll try to make a deal with us, or with someone like us, to become part of something so it does survive.”

“Our industry has changed substantially in the last year and a half,” says Elliman vice-president Steven James, who’s back with the firm after a brief jump to Corcoran. “We’ve brought in a much more educated, younger group right out of college. They realize there’s no retirement, there’s no downsizing. You can take home millions of dollars.”

“A high-end real-estate agent is more important than an investment banker,” says Corcoran COO Scott Durkin. “The size of the portfolio is much bigger, and the return on the investment is much greater. A top broker takes home $1 million to $3.5 million a year.” This year alone, Corcoran averaged twenty new brokers a month, 40 percent men and 60 percent women. The average age was the mid-thirties, and they came from banking, retail, failed dot-coms, and advertising. “Five years ago, it was more female and more third careers,” says Liebman.

Since Herman bought Elliman, she’s also been poaching star brokers from smaller firms. Her most recent hire was Sachiko Goodman, from Sumitomo (21 brokers), who earned more than $2 million in commissions last year and has sold condos to the likes of Howard Stern. She also has an Upper West Side penthouse decorated with an Andy Warhol silkscreen of herself and a $30 million–plus estate in Greenwich, Connecticut. “Elliman has a great support system that I never had,” she says. Top broker Roberta Title jumped from Gumley Haft Kleier (25 brokers). She’s impressed that she no longer has to stuff her own envelopes and deal with clients complaining about a bare-bones Website.

But the Old Guard is not about to go quietly. “Someone at 960 Fifth Avenue isn’t going to call a stranger to sell their apartment,” says the director of Stribling’s private brokerage, Kirk Henckels, who often wears bow ties and is married to socialite Fernanda Kellogg, about the home of Edgar Bronfman Sr. and Gustavo Cisneros. “Let the big boys battle for the market share. We do what we do, and we like to think we do it better than anyone else and provide a higher level of service.”

“Do Harry Winston and Laurence Graff worry about Woolworth’s?” asks A. Laurance Kaiser IV, president of the twenty-broker firm Key Ventures Realty, who grew up on Park Avenue and has sold apartments to the likes of John D. Rockefeller III.

“I wouldn’t say that’s a good analogy,” says Herman about the Woolworth’s comparison, sounding slightly annoyed. “Douglas Elliman is a brand name,” adds Lorber—and he has a good point.

In 1911, Douglas Elliman founded the firm in a basement store at 421 Madison Avenue, back when uptown was still considered “the country.” He lived at 485 Park Avenue, apartment 1A, which was actually the second floor. Elliman is most famous for persuading the city’s elite to move from their dusty townhouses to luxury co-ops. His first major project was 998 Fifth Avenue, a towering twelve-story fortress built by McKim, Mead & White—complete with wine rooms and jewelry safes. In an influential coup, Elliman lured Elihu Root, a Nobel Prize–winning statesman, to rent there for $25,000 a year. Guggenheims and Astors soon followed. Now apartments in the building sell for more than $15 million to people like financier Steve Rattner of the Quadrangle Group and socialite Ann Slater. Elliman died in 1972, and the company changed hands several times. In 1999, Insignia Financial Group, led by Andrew Farkas (son of the retired chairman of the Alexanders retail chain), paid $65 million for the firm, then sold it to Herman and Lorber, who are nothing like any of its previous owners.

Elliman brokers welcomed their driven new leader, who they say is more personally invested in the firm than Farkas was.

“The only thing the company was missing was vision and a heart,” says Elliman’s top broker, Dolly Lenz. “The people who owned it before were too short-term. You know Dottie’s going to own this conceivably forever.”

A few days after the firm’s annual party, Herman fired Elliman CEO Jeff Wharton and moved into his sprawling office, with 180-degree views from walls of windows, at Elliman’s headquarters at 575 Madison Avenue. But she’s not getting too comfortable, since she’s close to signing a deal to move to a swanker office nearby.

“I’m sure it was traumatic to him, but what the company needed was a Dottie,” says Lorber, whose screen saver flashes photos of show dogs, including his beloved prize-winning cocker spaniel. “I think what the company needs is a real hands-on person who is a broker.”

“I am a big person who focuses on going from good to great!” Herman likes to say. Part of getting great is winning the city’s No. 1 slot, hotly contested by Corcoran. Each firm accuses the other of being unethical, particularly of padding sales numbers and luring star brokers with lucrative commission cuts and perks. In the past eighteen months, Corcoran has poached 50 Elliman brokers, bringing Corcoran’s Manhattan head count to 638. Last month, Herman started evening the score, wining and dining three Corcoran brokers, whom she persuaded to jump ship. She also poached Corcoran’s publicist. “I’m the most competitive person you ever want to meet,” says Herman, who carries a photocopy of Jack Welch’s golden rules in her wallet. “We have our own business plan, and we don’t need to take people from Corcoran just to take people from Corcoran. We want really good people.”

There is probably no cattier industry on this island than residential real estate. For one thing, Manhattan is the only city in the country that doesn’t have a Multiple Listing Service (MLS) that forces brokers to share their listings, a situation most brokers blame on the city’s exclusive and secretive co-ops. As of January, the Real Estate Board made it mandatory to share listings within 72 hours of getting them, and as of April 1, brokers had to share them electronically. “Yeah, go and enforce it,” says an executive. “In 72 hours, you can call every client before the public sees it. People are able to manipulate this rule to their own benefit.”

No one name conjures nearly as much gossip as Dolly Lenz—the industry’s most legendarily aggressive player—and her relationship with Herman is being scrutinized as closely as, say, Sam Waksal and Martha Stewart’s. The prospect of an alliance between the two tough operators, “Dolly and Dottie,” immediately had the industry buzzing. Elliman brokers were wary that Lenz, who says she takes home about $4 million in commissions a year and has sold more than $3 billion in real estate in her twenty-year career, might get special treatment. Routinely selling $15 million apartments to people like Calvin Klein and Bruce Willis has made Lenz a target of resentment, exacerbated by her high-profile deals often ending up in the newspapers.

Not only has Lenz taken off the white gloves, but she is utterly no-nonsense in her presentation: She wears no makeup and little jewelry, and pulls her brown hair into a girlish ponytail with a scrunchie. But she also speaks five languages and loves real estate so much she’s moved ten times in eight years. And she never, ever stops working. She’s so tough that her client Dennis Kozlowski, Tyco’s toppled titan, sometimes calls her Jaws. Her rivals swear she uses dirty tactics, like stealing clients. A Corcoran executive says Lenz tried to jump ship to Corcoran when she heard Elliman was sold. “She said she would like to get everyone in a room who doesn’t like her and make nice and then join the firm,” says the executive. “We said no way.”

Lenz says she lunched with Liebman, who came armed with complaints from Corcoran brokers who claim Lenz has stolen their clients. “I said, ‘Name me one client; I compel you to bring me one!’ ” says Lenz. “First of all, the word steal. What does that mean? Sharon Baum sold an apartment to a client of mine. They chose to work with her. They’re allowed to, that’s their choice, and she made a $10 million deal that I did all the work for. And did I ever say she stole the client?” Lenz also loves to mention that when she began her career, not even Barbara Corcoran would hire her. “She says it was the only mistake she ever made,” says Lenz.

Herman has been hearing plenty of stories like this, but she insists that Lenz’s earning power is the only thing making her a VIP. “A lot of stuff about Dolly, that I was going to give her more—which is absolutely untrue—was said by the competition to scare people,” says Herman. “I met Dolly not even a year and a half ago.”

Lenz and Herman are both New Guard success stories. While Lenz’s rivals gossip about her déclassé decorum (“She chews gum with her mouth open in the lobby of the San Remo!”), Herman’s competitors play up her “up-island” background.

“I think there’s native snobbery everywhere,” says Herman, who shares her various homes—Syosset, Southampton, and Manhattan—with her attorney husband, Jay, and their three dogs. Jay Herman sounds warmly supportive of the wife he sees only once or twice a week, though he doesn’t have a business card that reads SPOUSE, like the ones Barbara Corcoran’s househusband used to hand out. “From day one, I knew she would be successful,” he says. “She was always driven. It’s pretty much 24 hours a day. I can come in and go to the answering machine and there are 40 calls for her. She loves this company more than anybody can love a company. It’s a major reason for her success. People know she’s doing this from her heart.”

Herman traces that relentless ambition back to a childhood tragedy. When she was 10 years old, her father was driving the family home from a ski vacation in Vermont in a snowstorm. He skidded on the ice, and Herman and her mother were thrown out of the car. Her mother was killed. After the accident, she took care of her two younger siblings and her father, who almost lost his hand in the crash. “He just wasn’t ever right,” she says. “What I understood at an early age is, life isn’t forever. In having no one to nurture me, I pretty much did it for myself. I was always an achiever. I was willing to do whatever it takes to be successful.”

No one could say that Herman isn’t successful. Whether she will fit into the rarefied upscale real-estate market is another question. Whether it matters is a much more important one. However, since she bought the company, she’s slowly morphing into a modern New Yorker. She’s started wearing more black and shopping at Chanel. She cruises around the city in a big, black, chauffeured Ford SUV—more Puffy than broker Patricia Burnham, who bought Mercedeses to chauffeur around her clients.

“Now I do what everyone else in New York does—go to the Hamptons on the weekend,” says Herman. “Except I work.”

“You know what I want to be in my next life?” she asks, sinking into the leather seat a bit. “A weatherman. You don’t have to always be right. People expect you to be wrong.” And that’s the only comment she’s made that’s anything but bullish. Now she probably wishes she’d never said it.

Real Estate’s New Power Brokers