2.
Is This What We Truly Want Our Business
to Be Like? There
are reports I'm hearing from different
agents around the country that are very
disturbing to me. It used to be that
listing agents and procuring agents
always divided the commission from a
transaction in a manner that was fair
and equitable to both sides. But this
just doesn't seem to be happening
anymore...
In
some sections of the country now listing
agents sometimes offer procuring agents
only a very small portion of the total
commission being paid by the owner on a transaction.
In addition to this these agents are
doing this without telling the owner
about it until the buyer is located and
it's time to sign the documents to sell
the property. And I'm sitting here
right now thinking about how I'd feel as
an owner of a property if I knew that my
listing agent was doing this, knowing
full well how this would impact the
marketing of my property and the
ultimate price that I might receive for it.
While
in theory agents are not supposed to
allow differing commission rates on
properties to affect how aggressively
they present these properties to their
buyers, when you're looking at a
procuring commission rate of 3% vs. 1%
on two potential properties, one
property just might be, shall we say,
presented with more enthusiasm than the
other one at times. It's one thing when
as a co-op agent you know that the
listing agent is sharing equally with
you in the reduced commission. It's
quite another when you feel that the
listing agent is squeezing you and
keeping the lion's share of the
commission, when they were the agent who
accepted the lower commission rate from
the owners in the first place.
To
illustrate what some agents are up
against out there in this arena right
now, here's a real-life story that one
veteran agent recently experienced:
Dennis, a coaching
client of mine, had a tough week about a
month ago when he lost out on an
$18,000,000.00 transaction that he
really thought was looking good. At that
time I told him that the most important
thing he could do was master his state
of mind, let go of the transaction he
had just lost, and move forward in a
total state of expecting that he was
about to locate an even greater
opportunity for himself and his client.
Well,
in the next week, Dennis located a
$20,000,000.00 investment that was
perfect for his client. But what he then
heard the listing agent say to him
completely let the air out of his sails:
"Dennis,
the total commission that the owner is
willing to pay on this transaction is
only 3 1/2%. Therefore, we're only
willing to pay you a 0.5% commission as
the procuring agent."
Needless
to say, Dennis was stunned. But this is
far from being the first time that I've
heard about this kind of behavior from
some of the listing agents in
our industry.
While
I can understand a slightly larger
commission being paid to the listing
agent at times to cover marketing
expenses, offering only a small,
miniscule amount of commission like this
to the procuring agent is ridiculous.
And what really concerns me here are the
listing agents who accept a lower
commission rate from some owners to get
them to sign the listing, but they never
tell the owners about their plan to then
only offer the procuring agents a very
small portion of the commission. The
owner then only finds out about this
when it's time to sign the documents for
the sale. And at that point, the owners
are so happy to be selling the property
that they really don't care how the
agents are dividing the commission.
If
what we stand for as agents in our
industry is serving our clients' best
interests, then this kind of behavior by
listing agents has no place in our
industry whatsoever. It's the locating
of the buyer that gives the owner of the
property the best price they can
possibly obtain for their property.
Therefore, doing anything that could
possibly impede the
presentation of one's listings to
potential buyers is outright wrong and
harmful to one's owners as far as I'm
concerned.
If
you truly care about taking care of your
owners please do not practice this kind
of behavior as an agent. If you're going
to offer a substantially lower than
normal commission to procuring agents on
one of your listings, please at least
notify your owners of this before they
sign the listing with you. In addition
to this, if you feel that offering the
lower commission to procuring agents will have any impact
whatsoever on generating showings,
offers, and the highest price imaginable
for the owners' property, let the owners
know
about this in advance also.
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