23 at Once Skip to Rival : Disgruntled Agents Desert Realty Firm
Many a fuming employee has stalked off to lunch with an executive from a competing company to discuss defection to the enemy, relishing the prospect of telling the boss, “I quit.”
In that respect, the business lunch at the Valley Hilton on Monday of last week was ordinary enough. But the number involved was not.
Three dozen real estate agents from the Jerry Berns Agency of Sherman Oaks, one of the biggest in the Valley, went to a lunch in a banquet room of the hotel, hosted by Fred Sands, owner of a giant agency headquartered in Brentwood, who had heard they were unhappy with Berns.
They were.
In an action rare in its size even for the turnover-hardened real estate business, 23 of the agents, including the top 14 earners of the Berns agency’s residential resale division, resigned en masse and went to work this week for Sands, who at one stroke acquired a sizable staff for the office he plans to open in Studio City.
Not a Friendly Divorce
The divorce between Berns and his agents was not friendly.
One of the group that made the switch, who asked not to be identified, said the mass walkout followed weeks of bitter wrangling over Berns’ insistence that the agents take a temporary cut in commissions, culminating in what amounted to a strike by some agents who refused to go out on sales calls.
Berns accused his former employees of being vindictive because they have publicly disputed the amount of business he says his agency does. He said they do not appreciate the contribution he made to their incomes.
“These are good sales people, but they think they did it without me,” Berns said. “They weren’t top producers when they came here, and they don’t realize that.”
Sands said he is delighted to acquire the group, which he called “the cream of Ventura Boulevard.” The group includes a large number of “stars,” agents who sell at least $2 million to $3 million worth of real estate a year, and together accounted for $100 million in sales last year, he said.
“There’s one who did $9 million last year and another who did almost $11 million,” Sands said.
At the usual sales commission on a private home of about 6% of the sales price, the commission on $2 million would be $120,000. The commission on $10 million would be $600,000.
Sales agents, who under state law must work for brokers who are legally responsible for their actions, usually get from 60% to 90% of their commissions, with the rest going to the broker, industry sources said. The split varies, with more successful agents commanding a greater share.
Berns said he had to take a “temporary, 45-day retroactive surcharge of 3% of all earnings” to pay for increased premiums on his errors and omissions insurance, which covers the agency against claims by clients who lose money because of a mistake by one of its agents.
Berns said his company had 98 employees and would not be severely hurt by the walkout. He said the company listed or sold “about $500 million” in real estate last year, which he said was more than any other one-office real estate firm in the Valley.
The former employee disputed his claim, saying that the true figure was closer to $150 million, and that the departed agents represented almost half the sales force.
30 Sands Locations
Berns is far smaller, however, than the Sands agency, which has offices in 30 locations, including Westlake, Woodland Hills, Northridge and Sherman Oaks. Sands describes his agency as “perhaps the largest one-owner (real estate) company in the nation.”
Other Valley real estate brokers said they could recall only one similar mass walkout, which occurred in May, 1981. About 35 agents, annoyed at their employer, resigned and set up their own agency, Bradbury & Co. of Encino.
They also came from Berns agency.
