Lunch at The Four Seasons with: David Michonski
Published by The New York Sun on 2006-01-18
David Michonski of Massachusetts wanted to blaze a trail in national politics. Instead, he wound as a self-styled revolutionary in Manhattan's real-estate industry.
"I created a revolution to Manhattan by bringing in a national real-estate brand," said the CEO of Coldwell Banker Hunt Kennedy yesterday. "I changed the rules of the game here - I brought national rules to Manhattan, a national code of ethics. And I brought a multiple listing service."
The story of how that service - known as an MLS in real-estate jargon - came to life at www.MLSmanhattan.com, offers an insight into the closely-knit, often secretive industry's history and practices. It also illustrates how an out-of-towner with a driving ambition can indeed take on the traditional big players of the Manhattan residential real-estate market, the world's biggest with a sales volume of $9.4 billion in 2005.
Of those revenues, Mr. Michonki's company accounted for $1 billion.
"Colbert Coldwell and Benjamin Banker would have approved of the manner in which we established their consumer-driven values of transparency and accessibility," Mr. Michonski said.
His reference was to the founders of Coldwell Banker, both of whom were real-estate speculators in the late 19th and early 20th century in San Francisco. Coldwell and Banker consolidated local listings, and founded the concept of the 6% commission. In doing so they also founded the modern real-estate brokerage system.
Their company will mark its centenary in a few days.
Mr. Michonski will also mark his own special anniversary - a decade plus one with Coldwell Banker.
"I set up shop in 1995," he said. "I'd been with the company in Greenwich, Conn., and one of my superiors called me in, gave me a corporate American Express card, and said, 'Go to Manhattan!'"
There might be a hint of hyperbole in the telling of that tale, but Mr. Michonski found that Manhattan's real-estate industry was not especially welcoming. Virtually all business was handled by large local firms or boutique firms, but not national companies. Boutique firms are normally defined as having 5 employees or less. (There are some 150 boutique real-estate firms in Manhattan.)
Mr. Michonski also found that each company zealously guarded its listing. There was no authoritative residential multiple listing service that encompassed all of Manhattan.
"When I suggested that a national firm might do very well in Manhattan real estate, the response was that it would be a McDonaldization of real-estate," Mr. Michonski said. "My own feeling was that Manhattan consumers deserved a choice of being serviced by boutique local firms or a national firm such as Coldwell Banker - and that they would respond positively to the latter."
His brand succeeded from the get-go. At the end of 1996 - his first year in Manhattan - sales were $41 million. At the end of 1997, the figure had risen to $190 million - a gain of 440%. This year, Mr. Michonski expects his revenues to exceed last year's $1 billion.
"Manhattan consumers should have as many choices for brokers as possible who give them maximum exposure for their properties, both nationally and internationally," he said. "At the moment, the bulk of business is done by only 20 firms - that's 20 firms out of 200 operating in Manhattan." (Coldwell Banker ranks number 5 in the top 10 real-estate firms.)
The MLS that Mr. Michonski helped create under the rubric of the new Manhattan Association of Realtors, encourages such choices and exposure of listings, he said.
"Many people think there is no comprehensive MLS just because not every real-estate brokerage is a member," Mr. Michonski said. "The history of MLS's is that everyone is never a member until the MLS reaches about 35% market share - and then people feel that weight of lost business and join en mass. And the largest firms are always the last. That is the way it has always been, and our MLS is shaping up the same."
His MLS is building a statistical data base about the Manhattan market. Mr. Michonski said it the first to span more than 40 offices in some 30 firms, and is thus "creating transparency in this market."
"Members of the MLS subscribe to a strict code of conduct regarding how to treat listings and give them proper exposure - and they guarantee to co-broker every listing in Manhattan," Mr. Michonski said.
There are about 6,000 residential listings in Manhattan currently. According to Jonathan Miller, co-founder and president of Miller Samuel - the largest Manhattan appraisal firm that keeps these figures -7,780 units were sold in Manhattan last year at an average price of $1.2 million. Excluding rentals, those sales amounted to $9.4 billion.
Nationally, the residential sales volume in 2005 was $1.4 trillion, at an average sales price of $200,000. More than 7.2 million residential units were sold in America last year.
"A Manhattan MLS offers consumers national and international exposure - and the certainty of getting that exposure," Mr. Michonski said. "National firms such as Coldwell Banker tend to be consumer driven, not broker driven."
He doesn't shrink from being critical of his brethren in the real-estate community.
"More than 70% of e-mails and phone calls from consumers don't get answered by real-estate brokers," Mr. Michonski said. "What kind of service is that? I advocate a new paradigm - 'You must be responsive to every consumer.'"
Responding to consumer calls is more than a matter of manners. Mr. Michonski said his research showed that 75% of the time consumers buy real-estate through the broker who calls them first.
"So being responsive is a matter of good business," he said.
His company has created software dubbed "Lead Router" which, Mr. Michonski said, picks up phone numbers from e-mails and dials the first available broker.
"How's that for technology?" he said.
That sort of braggadocio is typical of Mr. Michonski, but it's conveyed with good cheer. Growing up in western Massachusetts, he was always a leader at school, and nearly always class president. He wanted to run for national office, and, indeed, became campaign manager of a gubernatorial candidate while still at Colgate University.
Mr. Michonski then went on to pursue a doctorate in the political philosophy through a joint program between Boston College and Harvard University.
He entered real-estate at the suggestion of his wife, Linda Davison, and mother-in-law Barbara McBride.
"They rescued me from bartending jobs I held while pursuing my Ph.D.," Mr. Michonski said.
Does he regret not entering electoral politics?
"A politician is an agent for change - or should be, anyway," Mr. Michonski said. "I've been agent for change in the most important real-estate market in America."
Senior Writer and Global-Affairs Columnist