In August 2021, brothers Cody and Zach Vichinsky made waves in the real estate industry when their company, Bespoke Real Estate, went into escrow on the $45 million beach house which appeared in the HBO show Succession. While the brothers credit their data-driven marketing and predictive buyer analysis for the success of the sale, what wasn't made public was the fact that Bespoke had cut their seller's commission rate down to 1% before closing this deal. This somewhat controversial approach has been met by a mixed response. Here's what they had to say on the matter.
The Vichinsky brothers set up their real estate company, Bespoke, in Water Mill, New York, in 2014. Representing both the sellers and buyers, their unique selling point is their extensive research and vast database, which helps them to quickly identify and advertise to potential clients. More recently, they have adopted a new practice, which they hope will help them bring in more business and increase profits overall. Moving away from the typical seller commission rate of 2% to 3%, Bespoke has been testing a 1% rate for the past year. Having brought in over $8 billion in real estate transactions since its establishment, the brothers clearly know a thing or two about the property market. But, is this unprecedented move a sustainable approach for the company?
So far, things are going smoothly, as Bespoke claims to have sold numerous homes at this rate in high-value areas such as Hamptons, Manhattan, and South Florida. "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," Vischinsky explained, maintaining that the company still offers the same high-quality service as its more expensive competitors. "On the high end, there is nothing like us. No one is providing a 1% standardized list fee."
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Of course, this tactic does not come without a cost to the company, which sells homes at an average of $27 million - but they're hoping it will pay off in the long run as they bring in more listings and clients as a result. With high-value properties on their roster, Bespoke will be adequately compensated for their work at a 1% seller commission fee and 2-3% buyer commission fee when additionally representing the buyer. Although the brothers have been described as a "disruption" to the market, they may be pioneering a new era of real estate.
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