When Brokers Battle for Buyers, Expect Slime
So you lost the exclusive to a competitor. You know you have the right buyer for the property. So you call the competing broker, congratulate her and ask if you can collaborate. In no uncertain terms you’re told:
No, we aren’t co-broking, unless of course your buyer is willing to pay you, and you’re willing to register that buyer; or Yes, please have your buyer fill out our confidentiality agreement; or Maybe, after we have blasted the market with the deal so no buyer is missed and anyone you bring was already contacted by us.
You decide to present your buyer with the listing. Once you establish that she hasn’t seen it yet, you get her to agree to pay you a fee. You present the co-broker the offer. You know your buyer is overpaying for the property because they have a 1031, own next door or simply just fell in love with the deal.
Your call to the co-broker goes unanswered. Finally, you connect and submit the offer. To your surprise, the co-broker asks for proof of funds, a detailed list of what your buyer owns and a résumé. You hastily ask your buyer to put all of this together. Your report proves without a doubt that your buyer is beyond qualified. You present it to the co-broker. A week later, you are surprised to hear the co-broker say that they have an accepted deal on the table from a more qualified buyer.
Your buyer is disappointed, not only to lose the deal, but also wondering to whom and where her financials were broadcast. Eventually, the transfer hits and low and behold, the buyer who closed the deal paid a much lower price with terms that were not as good as yours. To add insult to injury, the broker has been contacting your buyer directly without your knowledge.
What happened? Well, in “broker talk” you were slimed. This is a classic case of the listing broker looking after their own financial interest rather than that of the seller. You never had a chance of making the deal and your offer wasn’t presented in the most positive light, or even presented at all.
What do you do? Not much at this point other than to know what you are dealing with when working with this broker so you can avoid it in the future.
How do you prevent this from happening again? Choose your co-brokers carefully. While this happens even in the large firms, try to deal with brokers you know and trust. Also, it is important that you request a counter or response from the seller to any offer you present. Additionally, ask that the president or broker of the firm, not just a manager, sign off that they have received your offer and will handle your buyer’s information with confidentiality. Also, try to get them to sign a statement saying they will not contact your buyer for a period of time, unless they include you in the fee.
As hard as most of this can seem, at the end of the day you have the responsibility to protect your buyer’s interest. Any reputable broker will agree to these requests and most likely will prove to be someone you can have a good working relationship with in the future.
The most difficult lesson to learn is that not every broker is looking out for you, your buyer—or their seller.
Adelaide Polsinelli is a veteran real estate professional with more than 25 years of real estate brokerage experience. She is senior director at Eastern Consolidated, an investment sales firm in New York.