How it Feels to Lose a $213,000 Commission

By
Real Estate Broker/Owner with Austin Texas Homes, LLC 453249

2001 was a year that started out great for me.  I was coming off of my best sales year to date, my wife and I were expecting our second baby, and the future was bright.  I managed to get my first multi-million dollar ranch deal under contract and I was representing the buyer, who was moving from out of state.  This was a $7.1 MILLION dollar contract, so I was clearly excited and working hard to keep everything on track.  This was a season in time that I'm sure I will never forget.  Since they were paying a full 3% commission to the buyer's agent, our part was going to be $213,000.  With this sale, I was poised to be one of the top Austin Texas real estate agents for that year.

The buyer put up $100,000 in earnest money (personal check), which certainly made everything seem much more real somehow.  There was also a $5,000 option fee and another $5,000 paid for the inspection and appraisal.  The buyer flew back and forth several times to visit the property, and I really enjoyed working with him.  He was a widower with a young son, and this was going to be their new start in a new place.  The seller was actually running for governor of Texas.

The property was amazing, with 650 acres on Lake Travis, a half mile of Hamilton Creek, and a 10,000 square foot one-story home overlooking the water with two pools.  It also had a 2500 square foot GUEST house, and a 16,000 horse barn with offices.  WOW!

Things were moving along pretty well, and we managed to get through all of the repair negotiations, along with determining what would stay and what would go with regard to equipment, furniture, etc.

We got close to the closing date, and my baby daughter was born.  She was healthy and beautiful (she still is), and then it was back to work on the "big deal".  We got past the original closing date and we had to extend things (cue dramatic music) because the funds apparently weren't accesible to the buyer.  As time passed in the early summer and I was consumed with this transaction, I lost both of my grandmothers within six weeks of each other. 

After months of work, it was becoming more and more obvious that this deal was never going to close.  To this day, I don't really know what happened exactly, but I think the buyer probably either: a) didn't receive money that he was expecting, or b) had his accounts frozed for illegal activities (maybe money laundering). 

Unfortunately, the buyer was African-American, and he was able to get his entire earnest money amount back by using a not-so-veiled threat to go to the media and claim that the seller "wouldn't sell his ranch to a black man".  Terrible as it sounds, it was an effective threat. 

In the aftermath (after spending about four months of my life on this), I told my partners that any deal I lost in the future would be easier, because it was unlikely that I would ever lose one that big again.  Believe it or not, this has proven to be true.  We haven't closed a deal this large yet, but we closed two of the top ten deals in the Austin area last year ($4.1 and 3.4 million).  At any rate, even though it didn't work out the way I had hoped, I learned a lot about negotiating and handling difficult personalities and egos, so it was valuable experience. 

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If you're looking for a home in the Austin area, you can also visit my primary website at www.austintexashomes.com.  Thanks!

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Rainer
54,749
Chad Baird
Re/Max Spirit - Dayton, OH
Wow, what a loss!!!  I would be happy just to say I had a chance at making that in a single deal.  Hopefully you did not run out and buy a Ferarri when the deal looked good! 
Aug 08, 2007 04:09 AM #12
Rainmaker
255,115
Dick & Sandy Beals
Wilmington Real Estate 4U Wilmington, NC - Wilmington, NC

I recently had an agent sell a property with a commission to him of $168,000.00. He quit working here, opened up his own real estate company, and is now out of business.  Consider yourself lucky, better educated, yet the deals will come.

Dick Beals

Aug 08, 2007 04:09 AM #13
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Jason Crouch
Austin Texas Homes, LLC - Austin, TX
Broker - Austin Texas Real Estate (512-796-7653)

Dick - No, I didn't buy a Ferrari - I bought TWO Ferraris.

 

Aug 08, 2007 04:15 AM #14
Rainer
52,374
Linda Box Taylor
Castle Connections Realty - Plano, TX
Your Plano, TX Realtor
Oh my gosh.  I would have been heart broken for at least a little while but you are right, it is just money.  But, man it would have been nice!
Aug 08, 2007 05:55 AM #15
Rainmaker
271,466
Kim Daugherty
www.RealFamilyRealEstate.com - McKinney, TX
d + b real estate, McKinney, TX REALTOR Broker/Own
Ouch...OK, I feel better about  not having a $200K transaction go through where I would only be making $3K...I can't imagine how I'd feel about losing nearly a quarter of a million in commissions.
Aug 08, 2007 07:13 AM #16
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Jason Crouch
Austin Texas Homes, LLC - Austin, TX
Broker - Austin Texas Real Estate (512-796-7653)
Kim  - Yeah, it kinda puts things in perspective really quickly. 
Aug 09, 2007 02:06 PM #17
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The Friendly Home Team
Realty Pro Oregon, LLC - Beaverton, OR
Brokers - Oregon / SW Washington Real Estate

I lost a $180,000 dollar one last year when the city decided not to rezone a piece of property, so I know how you feel.

Aug 13, 2007 05:21 PM #18
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Jason Crouch
Austin Texas Homes, LLC - Austin, TX
Broker - Austin Texas Real Estate (512-796-7653)
Todd - It's a pretty bad feeling, huh?  Oh well, life is not all about money.
Aug 13, 2007 05:32 PM #19
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Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life
Wow, tough loss indeed.  I've had a couple of higher end transactions fall to through as well.  Though there are no frills, bells & whistles, or lovely subscribe to my blog buttons:-)....it's easy to tell with this that you are an effective writer Mr. Crouch.
Sep 28, 2007 08:56 AM #20
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Jason Crouch
Austin Texas Homes, LLC - Austin, TX
Broker - Austin Texas Real Estate (512-796-7653)
MR. SARDI - Thanks for your comments on this older post.  I appreciate your compliments!
Sep 28, 2007 09:19 AM #21
Rainmaker
1,228,983
Alan Kirkpatrick
Austin Texas Homes - Round Rock, TX
Alan in Austin

Jason

 It seems the big fish always get away. Sometimes you juet need a smaller lake or a bigger net. Anyway GO COWBOY'S !!!!!!!!!!!!!!!!!!!

Sep 29, 2007 01:20 AM #22
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Jason Crouch
Austin Texas Homes, LLC - Austin, TX
Broker - Austin Texas Real Estate (512-796-7653)
ALAN - You never fail to amuse me.  Thanks for your comment!  And yes, GO COWBOYS indeed!
Sep 29, 2007 01:46 AM #23
Rainmaker
206,139
Chris Tesch
RE/MAX Bryan-College Station - College Station, TX
College Station, Texas Real Estate
Wow, some big numbers on the ones that did go through.  Congratulations! (and condolences)
Oct 20, 2007 12:13 PM #24
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Jason Crouch
Austin Texas Homes, LLC - Austin, TX
Broker - Austin Texas Real Estate (512-796-7653)

CHRIS - Yes, we did manage to land some big fish last year.  I appreciate your congrats and your condolences.  I tried to take this one as a learning experience.  Have a great Sunday!

Oct 20, 2007 06:02 PM #25
Rainer
113,347
Ryan Martin
Windermere Real Estate / Whatcom Inc. - Bellingham, WA
Bellingham Commercial RE Broker

Jason - KC and I "lost" a $72,000 commission last year when the seller got out of contract by a loophole right before closing. Turned out he entered into an operating agreement with another buyer behind our back. Because he didn't "sell" the property no commission was due to us. It hurts after doing all of the work. I feel your pain.

Oct 20, 2007 06:18 PM #26
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Jason Crouch
Austin Texas Homes, LLC - Austin, TX
Broker - Austin Texas Real Estate (512-796-7653)
RYAN - After losing one this large, nothing hurts anymore with regard to lost commissions.  Sorry to hear about your story - that really does hurt.
Oct 20, 2007 06:21 PM #27
Rainer
38,979
Ray Perry
CENTURY 21 The Neil Company Real Estate - Roseburg, OR
Realtor, CRS, GRI, e-PRO

Jason:  It's all relative.  Even the little ones hurt.  I don't like looking at the dollars.  It has a way of getting in the way.  I don't even like going to the bank to deposit the check.  I feel that this business is not really mine anyway.  If He wants it to happen, it will and I will keep doing what I do best, taking care of my clients.

Oct 20, 2007 06:44 PM #28
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Jason Crouch
Austin Texas Homes, LLC - Austin, TX
Broker - Austin Texas Real Estate (512-796-7653)
RAY - I can certainly understand your point.  I agree - this is really not my business in the first place, it is God's.  However, it was painful at the time, especially considering the personal stuff that was going on.  Keep up the good work!
Oct 20, 2007 07:01 PM #29
Rainmaker
299,825
Heather the Realtor Orlando, Lake Mary
LemonTree Realty - Orlando, FL
First Time Home Buyers, Bank Owned Homes
Wow I know how badly that had to hurt and to have tragedy in your life on top of that. That which does not kill us only makes us stronger. Glad to hear that you put this huge negative into a positive which is often times very hard to do. 
Oct 21, 2007 03:29 PM #30
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Jason Crouch
Austin Texas Homes, LLC - Austin, TX
Broker - Austin Texas Real Estate (512-796-7653)
HEATHER - Yes, it was a tough time, but I tried not to let it get me down too much.  Thanks for your comments on this older post of mine.
Oct 21, 2007 03:45 PM #31
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