Commission-Less: Earning Broker Fees No Walk in Park, Stroll in Bora Bora
Jotham Sederstrom June 20, 2012, 10 a.m.
If I had a penny for every time a buyer bought a property that I’d mentioned to them, I would not be here today writing this column. Rather, I would be on my own private island in Bora Bora, watching the never-setting sun.
As sales brokers, we like to believe that if we show a buyer a deal, and they buy it, we should be paid a commission. The reality is that simply introducing a potential buyer to a property does not always entitle you to a fee. If you end up in court, a judge will demand to see that you had enough communication and activities that led to the procurement of the transaction. Simply claiming that you sent a potential purchaser property information, mentioned an address, or perhaps even toured and inspected the property with them doesn’t always entitle you to a fee.
In order to actually earn a fee, a broker or agent must not only show or introduce a buyer to a property; you must also present accurate information, get an offer, negotiate the terms of the offer and put the actions into motion, which result in a closing with a ready, willing and able purchaser. It is extremely important to put everything in writing, be it electronically or in hard copy. Save your emails, texts, faxes, call records and all written correspondence. Keep a paper or electronic trail of all communications and responses from every participant.
Some brokers feel entitled to a fee just for making an introduction. Unless someone agrees to pay you, in writing, for this, you may not have a leg to stand on in court. Get everything in writing and define the terms clearly.
I know it sounds hard to believe, but there actually are buyers and sellers out there who do intentionally set out to avoid paying a brokerage fee even after they have engaged a broker’s services. Be diligent in your follow-ups even if negotiations seem to have fallen apart. An ever so subtle change in information can trigger a renewed interest in the deal. Maintain your relationships and keep all parties on your follow-up list. It’s also important that if you have any suspicion about being overlooked as the procuring broker, you make sure everyone is put on notice that you were and still are involved.
There are buyers who will make offers on the same property through more than one broker, hoping to confuse the seller and manipulate the bidding process. The best you can do in this case is make sure you put the offer in writing to the seller listing the names of each buyer, partner, LLC and the names of all companies used. Should one of them consummate the transaction, you will have some chance of collecting a fee. How much of a fee is up to how well you negotiate and show how you added value to the ultimate transaction. You don’t want to end up in court if you don’t have to. So do the best you can at the onset of a problem.
At the end of the day, there will always be buyers and sellers whose intentions are not honorable. It is difficult enough to consummate a deal without the added bonus of having to be hypervigilant and paranoid.
In building your case to collect a fee, you must show that you were more than instrumental in effecting a closing. Being proactive and diligent will help define you as being a great broker. Great brokers get screwed the least.
Adelaide Polsinelli is a veteran real estate professional with more than 25 years of real estate brokerage experience and more than 900 transactions under her belt. She is a senior director at Eastern Consolidated.