B6 Y THE NEW YORK TIMES BUSINESSSATURDAY, OCTOBER 10, 2020
Personal Finance
Scott Anderson was living in Brooklyn
with his wife and two children when the
coronavirus hit, closing all of the city’s
schools and sending his children into
the netherworld of online education.
The family moved to its weekend
house in Dutchess County, N.Y. The
children, one a freshman and the other
a sophomore at an independent school
in Brooklyn where they had been since
prekindergarten, were unhappy with
their online classes. Their parents were
paying an annual tuition of more than
$50,000 for each.
“This is the time for them to strike
out and explore things,” Mr. Anderson
said. “Their school was completely
unprepared for this style of teaching
and for engaging a class.”
As the summer wore on, the Ander-
sons decided to enroll their children in
a boarding school, the Frederick Gunn
School in Washington, Conn., 45 min-
utes from their weekend house.
In making a change they had never
contemplated before the pandemic,
they joined a surge of affluent parents
who have upended their plans in order
to get their children into independent
schools holding in-person classes for
the fall. It didn’t come cheap — the
Frederick Gunn School costs $66,523
for boarding students — but in-person
learning was not going to be possible at
many public schools and even at well-
regarded day schools in big cities hit
hard in the pandemic.
“Applications are up, and enrollment
is up,” said Carole J. Everett, executive
director of the New Jersey Association
of Independent Schools. “This is largely
due to people fleeing the city and public
school parents disappointed that their
schools haven’t opened in person. It
really picked up over the summer and
has continued into the fall.”
The National Association of Inde-
pendent Schools said in August that 58
percent of its schools had reported an
increase in interest from the previous
summer.
That uptick has helped the private
day and boarding schools shore up
their balance sheets, especially when
some of their most lucrative students —
full-pay international students, many
from Asia, who are charged as much as
$75,000 a year — didn’t return this year.
“We have families who were six
months ago enrolled in day schools,
primarily in New York, and boarding
school wasn’t on their radar,” said Peter
Becker, head of the Frederick Gunn
School.
The surge in summer and fall appli-
cations for schools offering in-person
education has been as uneven geo-
graphically and economically as the
coronavirus itself.
In the Northeast, it’s boom time.
Schools in New England reported the
largest enrollment increase in the na-
tion — up 36 percent from last year as
schools opened in September, according
to the National Association of Inde-
pendent Schools. But the New York
metropolitan area reported a 56 percent
drop in private school enrollment.
Sacred Heart, in Greenwich, Conn.,
just 35 miles from New York City, ac-
cepted 22 students after the normal
admissions cycle closed and would
have accepted more if certain grades
were not full, said Meg Frazier, the
head of school. She said interest was
driven by city families but also nearby
families whose children were strug-
gling with online public education.
At Doane Academy, a day school for
kindergarten through 12th grade in
Burlington, N.J., 20 new students are
entering, which is substantial given
that the school now has just 253 stu-
dents, said George Sanderson, head of
school.
The Southeast is a different story.
Many schools in Florida had accept-
ance deadlines before stay-at-home
orders began in mid-March, largely
filling their classrooms before the pan-
demic worsened. But other schools in
the region struggled to hold on to stu-
dents, with 59 percent reporting lower
enrollment this year.
Jay Lasley, director of admissions at
Berkeley Prep in Tampa, Fla., said he
had fielded a surge in calls from par-
ents in Chicago and New York who
wanted to move. He was able to accom-
modate a few families with students
who were not in grades like fifth and
ninth, when children typically shift to a
new school and apply early, but not asmany older children.
The interest remains, Mr. Lasley
said. Applications in the first month of
the 2020-21 school year are outpacing
what they normally are for an entire
admissions season.
In California, most public schools
remain remote or a combination of
in-person and distance learning, and so
are most private schools. Some 80
percent of them with middle and upperschools are not teaching fully or at all in
person, said Deborah Dowling, execu-
tive director of the California Associa-
tion of Independent Schools.
Some boarding schools in the state,
though, have managed to keep the
virus at bay, and they have siphoned
students from day and public schools.
The Army and Navy Academy, a mili-
tary boarding school for boys in Carls-
bad, Calif., reopened with strict rules
around staying on campus throughout
the semester.
Michelle and Michael Foster enrolled
their son this fall at the Army and Navy
Academy after seeing him struggle andbecome distracted in the online learn-
ing at his private day school in Los
Angeles.
“We’d looked at boarding school a
couple of years ago, but that was
prepandemic,” Ms. Foster said. “This is
his junior year, and we wanted to give
him the best education he could get.”
But even some private schools in Los
Angeles that are online until the county
tells them otherwise have attracted
new parents. George and Heather Ellis,
who have three sons and live in the
Sherman Oaks section, said they had
watched their oldest boy, then in first
grade, completely lose interest with
remote learning in public school. They,
like many others, rushed to apply to an
independent school.
They were put on the waiting listed
at the Buckley School and began the
school year at their public school. They
said their two older sons, now in second
grade and kindergarten, had little to do
during the day as a single teacher
struggled to manage a class on Zoom.
When the Ellises were offered a place
for their two sons at the Buckley
School, they accepted at once. “Covid
definitely propelled us to make the
change,” Mr. Ellis said. “I don’t want to
devalue what a hard job it is for one
teacher to manage 26 kids online. At
Buckley, it’s not just homeroom teach-
ers. It’s specials teachers. It’s P.E. It’s a
full day, from 8:30 to 3 p.m. every day.”
Still, these parents are paying tens of
thousands of dollars for private Zoom
school, and not everyone is happy with
that arrangement. In New York, par-ents at one of the city’s most elite pri-
vate schools, the Dalton School, which
remains remote even when competitors
have in-person learning, have begun to
complain.
Its reputation for excellent teaching
and college placement keeps parents
from leaving, said Emily Glickman,
president of Abacus Guide Educational
Consulting, which works with families
to get their children into private schools
in New York. Schools with less competi-
tive reputations have struggled more.
“It’s interesting because parents are
all looking left and right to see what
their friends’ kids are doing,” Ms. Glick-
man said. “No one is sure what is bet-
ter.”
Still, after hearing friends speak
highly of their children’s private school,
some parents are rolling the dice and
paying for private school even knowing
that the schools may have to go virtual
at some point. They said the financial
sacrifice was worth it, given the alter-
native of their children staring at a
screen and attending school intermit-
tently now and having little work to do
if the public schools go virtual in the
winter.
Jennifer and Spiros Liras, who live in
Brookline, Mass., and work in Boston,
moved their family to their weekend
home in Stonington, Conn, so their
14-year-old twins could enroll at the
Williams School, a day school in New
London, Conn.
“We were nervous in July when we
hadn’t heard about the school’s plans
for mitigating risks,” Ms. Liras said.
“They’re very dated schools that are
very crowded.”
Their children are thriving with
in-person learning, but she said she
worried about what would happen
when she and her husband could no
longer work remotely and needed to
return to their offices.
Kim Leipham Freedman, head of
New Garden Friends School in Greens-
boro, N.C., an area rich with colleges
and universities, said she had several
families who went through the admis-
sions process over the summer but had
to pull out at the end when they decided
they couldn’t afford the tuition, which is
$22,000 a year for the upper grades and
$17,000 for the lower grades. She said
the school could have added more
families if price weren’t an object.
“Many of them think they’re going to
get a ton of financial aid,” Ms. Freed-
man said. “We do what we can, but we
lost many families at the end.”
One thing many independent schools
are doing is giving financial aid to exist-
ing students whose families have been
affected by the pandemic. New families
are generally out of luck: Most financial
aid budgets are spent every year by
summer.
If independent schools are a barome-
ter, the pandemic is continuing to affect
families’ education plans. Many private
schools, like Berkeley Prep in Tampa,
are reporting application requests for
next year that are many times higher
than in a normal year.In-Person Learning at a Steep Price
Parents dissatisfied with their children’s online classes seek private schools whose doors are open.
Wealth Matters
By PAUL SULLIVAN
The Frederick Gunn School in Washington, Conn., which costs $66,523 for boarding students, has had a surge in interest in the pandemic.JEENAH MOON FOR THE NEW YORK TIMES‘Parents are all looking
left and right to see
what their friends’ kids
are doing.’
Emily Glickman, president of Abacus Guide
Educational Consulting.Consumer advocates have long criti-
cized traditional real estate commis-
sions as confusing and too high. Now
those commissions are coming under
increasing legal pressure.
A federal judge in Illinois ruled last
week that a potential class-action law-
suit against the National Association of
Realtors and four major brokerage
companies could proceed.
The lawsuit, filed last year in Federal
District Court in Chicago on behalf of
several home sellers, alleges that the
way brokerages charge commissions
and run property databases called
“multiple listing services” is anticom-
petitive and artificially inflates commis-
sion rates paid to real estate brokers.
(A similar lawsuit filed in Missouri is
also pending, after a federal judge
declined last year to dismiss it.)
Mantill Williams, a spokesman for
the Realtors association, which repre-
sents more than 1.3 million real estate
professionals, said in an email that the
trade group was “disappointed” in the
ruling but was confident that it would
prevail in the suit. As the case moves
forward, he said, “we intend to demon-
strate how the M.L.S. system creates
competitive, efficient markets that
benefit home buyers and sellers as well
as small-business brokerages.”
Home buyers in many parts of the
country are facing a strong sellers’
market. A lack of houses for sale is
pushing up prices, impeding first-time
and lower-income buyers even as mort-
gage rates remain low.
In an order denying requests by the
Realtors association and the broker-
ages to dismiss the suit, Judge Andrea
R. Wood said the plaintiffs would have
paid “substantially lower” commissions
if not for the rules established by the
Realtors association and followed by
the brokerages.
The suit takes aim at the way brokers
who represent home buyers are paid.
Typically, people seeking to sell their
home agree to pay a listing agent a
commission — usually 5 to 6 percent of
the sale price — to place it on a listing
service maintained by local Realtor
groups and to market the home. The
seller agrees that the listing agent will
offer to split the commission — say, a
2.5 percent share — with the agent
representing the buyer. (Agents may
share part of their commissions with
their brokerages.)
Home buyers pay nothing directly to
their own agent and may believe they
are paying no commission because,
according to the lawsuit, the Realtors
association allows buyers’ agents to
tell clients that their services are free.
“In a competitive market,” the suit
says, “the seller would pay nothing to
the buyer broker, who would be paid
instead by the buyer, and the commis-
sion paid by the seller would be set at alevel to compensate the seller broker
only.”
In effect, the suit argues, the home
seller is paying an inflated commission
that is covering the buyer’s share as
well. By that analysis, a seller paying a
5 percent commission on the sale of a
$500,000 home is overpaying by about
$12,500.
Consumer advocates and some
analysts say the practice pushes up
home prices because the commission
for the buyer’s agent ends up being
added to the asking price of the home
so the seller can get a particular net
price.
“The money comes out of some-
where,” said Mark S. Nadel, a lawyer
who has published research on broker
practices.
In a report last year, the ConsumerFederation of America found that few
people understood the commissions
they paid when buying or selling a
home, partly because most agents don’t
make it easy for consumers to learn
about them.
Also, the complaint says, buyers’
agents can see, through the listing
service, the commission split offered for
each home — but home buyers general-
ly cannot. Buyers’ agents, then, may
tend to “steer” clients to homes paying
higher commissions.
Mr. Williams, the Realtors association
spokesman, maintained that the broker
commission structure “ensures greater
access for first-time, low-income and
many other home buyers who other-
wise couldn’t afford a home purchase.”
That echoes an argument made by
agents: that if buyers had to pay bro-
kers directly, many would find it diffi-
cult to afford a home. Many buyers
already struggle to save enough to
cover a down payment and to secure a
mortgage.Others, however, dismiss that con-
cern. Stephen Brobeck, a senior fellow
at the consumer federation, said buyers
wouldn’t have to come up with the cash
upfront. Rather, they could finance the
commission through their mortgage
just as they finance other closing costs.
And paying their agent directly would
allow them the opportunity, perhaps, to
negotiate a lower commission.
The plaintiffs, who are seeking class-
action status for the suit, are asking for
damages and a halt to the practice of
having sellers’ agents pay commissions
to buyers’ agents.
The brokerages named in the suit are
Realogy, the parent of Century 21, Cold-
well Banker and others; HomeServices
of America, a Berkshire Hathaway
affiliate; Re/Max; and Keller Williams.
HomeServices and Keller Williams
declined to comment. Re/Max said it
would “continue to vigorously defend”
itself against a “baseless” suit. Realogy
said in a statement that the case was
“without merit.”A Challenge to Real Estate Commissions
In a lawsuit, home sellers say that the current system is confusing and anticompetitive and that they overpaid.
Your Money Adviser
By ANN CARRNS Can I negotiate the commission I pay a
real estate agent?
The National Association of Realtors
says commissions are negotiable. But in
practice, that may be difficult. The Con-
sumer Federation of America found that
only about a quarter of agents inter-
viewed said that they would consider
adjusting their commission.
Stephen Brobeck, a senior fellow at
the federation, suggested that home
buyers interview several agents and ask
about commission splits. Some agents
may be agreeable to different ap-
proaches, like being paid by the hour.
Sellers do have other options. They
can try to sell their home themselves,
but it can be difficult to market a prop-
erty without the help of an agent to list
the home on multiple listing services.
Or they can work with some online
brokerages that offer lower commis-
sions. Redfin, for example, charges a 1.5percent listing fee to sellers, and lowers
the fee to 1 percent if the seller also buys
a home on Redfin within a year.. ................................................................................
What are commission rebates?
Some brokers may offer commission
“rebates” or refunds to home buyers. If,
for example, a buyer’s agent received a
typical 2.5 percent commission, the
agent may return part of that amount —
say 1 percent of the sale price — to the
buyer. Such rebates can save home
buyers thousands of dollars, according
to the Justice Department.
But at least 10 states ban such re-
bates.
. ................................................................................
What are current home mortgage rates?
Mortgage rates remain historically low.
The average rate for a 30-year, fixed-
rate mortgage was 2.87 percent for the
week that ended Thursday, according to
Freddie Mac’s weekly survey.
Q. and A. About Real Estate CommissionsTILL LAUER