June 5, 2014
Leveraging their strongest assets, expertise in banking, investment-return modeling, trust law and tax shelters, some Wall Street executives have quit their jobs to sell luxury real estate.
"I'm not just selling the pretty apartment. My financial acumen is my added value," said Jack Drapacz, a former hedge-fund vice president who three months ago took at a job as a broker at Douglas Elliman, a luxury brokerage in Manhattan.
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| Principal Broker @ ERA Henley Real Estate |
Sharran Srivatsaa, president and chief operating officer of Beverly Hills, Calif.-based Teles Properties, was a private wealth adviser at Goldman Sachs GS -0.76% and a private banker at Credit Suisse before leaving Wall Street in 2011 to help run the brokerage in South California. Chris Liem, managing director of luxury brokerage Engel & Völkers in Hong Kong, opened the branch of the Germany-based brokerage in 2010 after running Lehman Brothers' cash-trading division. Tricia Hayes Cole, formerly in equity-derivative trading and sales at Lehman Brothers and Bankers Trust, holds an M.B.A. from University of Pennsylvania's Wharton School. Today she is the executive managing director of Corcoran Sunshine Marketing Group, the new-development division of Manhattan brokerage Corcoran Group.
Homeowner Richard Paicius, left, with Sharran Srivatsaa, center, president of Teles Properties, and Teles broker associate Andy Stavros in Laguna Beach, Calif. Mr. Srivatsaa once worked for Goldman Sachs and Credit Suisse before leaving to help run the luxury brokerage. Sandy Huffaker for The Wall Street Journal
As prices continue to soar at the high end of the property market, part of the draw of real estate is income that, for the highest performers, can rival finance industry pay packages. The top 5% of real-estate agents earn over $250,000 a year, according to the National Association of Realtors, with leading performers in the most expensive markets breaking the million-dollar mark, brokerage owners say. By comparison, vice presidents at hedge funds and investment-banking firms around the world last year averaged $245,000 and $294,000, respectively, according to a report by Wall Street Oasis, an online finance community that collected data from roughly 5,550 members.
"There were always a few Wall Street people" in the real estate world, said Pamela Liebman, president and chief executive of the Corcoran Group, "but after the crash of '08, we saw a real influx," she said. They are drawn to high incomes, but they also like being involved in developing new properties—work that often demands more nuanced knowledge of banking and investing, she said."We have a whole research team who came out of finance," said Ms. Liebman, whose company has 2,200 employees.
Mr. Srivatsaa, who jumped from Credit Suisse to help run Teles with a longtime client in 2011, says that "geeky" knowledge of trusts and tax law helps his firm nail big commissions. Last year, Mr. Srivatsaa, 34 years old, learned about a family in which the six siblings were feuding over 13 Los Angeles properties, some of which were left to them in their father's estate.
Advising wealthy families on estate matters had been one of his specialties in private banking, and this skill enabled him to propose an elaborate plan to sell some of the properties, exchange others and put still others into trusts that would protect the heirs from taxes.
His real-estate job doesn't allow him to offer legal or tax advice. "I have to disclose myself up the wazoo," he said. Instead, he outlined his ideas to the family's various advisers, who carried out the plan, with some adjustments. Grateful for the advice, the family entrusted Teles with selling, buying and exchanging its properties, leading to $410,000 in commissions, he said.
Jack Drapacz left his job as a hedge-fund vice president and is now with Douglas Elliman, a luxury brokerage in New York. Among his listings is an apartment on Manhattan's Fifth Avenue with a view of the Empire State Building. Keith Bedford for The Wall Street Journal
In addition to helping score the deal, the project put Mr. Srivatsaa on the phone with the family's various certified public accountants, and tax and trust attorneys. "Those are huge sources of referrals. They are a gold mine," Mr. Srivatsaa said.
In the short term, his income is about on par with his average Wall Street income, which swung up and down with the markets. Long term, however, could yield a big upside, said Mr. Srivatsaa. "The overall growth of my ownership equity in the firm is what excites me," he said.
The process of becoming a real estate agent varies by state, but typically involves taking courses and a licensing exam, said Jeanne Jackson-Heim, president of the Association of Real Estate License Law Officials. Many states require salespeople to work under a broker, which usually involves paying the brokerage "startup fees" for training, errors-and-omissions insurance, and business cards, among other items. Broker licenses have separate coursework and exams, and often require professional experience.
Chris Liem said his confidence in investment banking tanked after his employer, investment bank Lehman Brothers, collapsed in 2008 and he went to work for Nomura Holdings, 8604.TO +0.88% which bought Lehman's Asian assets. Based in Hong Kong, Mr. Liem, 37 years old, repositioned himself "for some bigger trends," and in 2010 became a franchisee, which requires fees and training, for Engel & Völkers.
Though he speaks neither Mandarin nor Cantonese, Mr. Liem, originally from Australia, said his fluency in finance gives him an advantage with Chinese property buyers attempting to navigate the complexities of foreign ownership. He is talking to clients in China and Hong Kong about pooling investments to develop apartment buildings in Portugal, which can then be sold to Chinese buyers looking to establish residency in Europe.
With family offices, which are private companies that manage family fortunes, "I can talk about funds, development, debt deals. It's a value-added play," Mr. Liem said.
The Wall Street to Elm Street transitions are increasing. Today, 19% of all Realtors come from a management, business or financial-services background, making it the most common previous career, up from 13% in 2003, according to a survey by the National Association of Realtors. The increasing professionalism of new agents underscores a sea change in the industry, said Eric Sussman, senior lecturer at the Ziman Center for Real Estate at the University of California, Los Angeles.
"Historically, many of them have been women returning to the workforce after taking time off. That speaks to the idea that you don't have to have training in technical disciplines to be a real estate agent," Mr. Sussman said.
Daniela Sassoun, an associate broker at Corcoran, said she "cried for a week" in 2003 when her then-husband talked her into leaving her travel-heavy job as a relationship manager at a Swiss bank, which she declined to name.
"I thought, 'Are you kidding? I don't want to be a real-estate broker,' " Ms. Sassoun recalled.
Today, she says her banking background has given her an edge: Former private-banking colleagues refer four or five clients a year to her, and she has her own network of high-net-worth individuals from her banking days.
"I had a situation when a Brazilian client had an investment locked up," and didn't have access to cash. "He needed to close on a property in 45 days," said Ms. Sassoun, who is 42 years old and says she speaks four languages, including Portuguese. She instructed the client to call his bank and ask for a bridge loan, a type of short-term financing, so he could compete with the all-cash offers that were common in the Manhattan market in 2012.
"I know what a bank is willing to do to make a client with $15 million happy," said Ms. Sassoun.
By the Tracy Tidwell Team at ERA Henley Real Estate in Conway, AR
http://www.tracytidwell.com
Tracy: 501-472-4709 ERA: 501-327-6731
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