The One that Got Away - It Could Happen to Anyone

The One that Got Away - It Could Happen to Anyone
If you have been in the business for any length of time, sooner or later you are going to lose a deal, miss out on a listing, or lose your buyer to another agent. Some of these unfortunate experiences seem to be like Murphy’s Law. I have put them all behind me, but you never forget any of these incidents. They have all prepared us for the next time, and given us some valuable lessons along the way. Now, the one that I am going to share today concerns a buyer transaction that got away.

Background:  Let’s go back to 2005 when real estate was doing great just about everywhere in the country. These two buyers were from my sphere of influence and I thought I knew them very well. We meet at my office, and I listen to their needs and wants, and got them to sign off on a Buyer’s Representation Agreement. We got them pre-approved for a loan, and started showing them houses that meet their descriptions. We started looking at foreclosed homes, but I discovered that was a waste of time after working with them for nearly a year. Finally, the decision was reached to build a new home with one of the local New Home Construction builders.

A contract to build a new home was signed and executed. Our anticipated closing was 4 to 5 months since it was being built from a dirt sale. The sales agent informed me that there was even a bonus, and slab pour commission.  Yes, that was the very first time that I had ever received a commission check before we actually closing on the deal. It seemed that many new home construction builders were offering slab pour commissions at that time.

After about three months into the construction of my buyers new home, an incident happened at the new home site that didn’t set well with the husband. He overheard a conversation from some of the subcontractors about things that were being done to his home that were not proper.  Naturally, he got upset about what he heard, but  he didn’t inform me about this incident until after he had done the unexpected.

The Outcome: My client went to visit a different New Home Builder, who had an inventory home available for immediate move-in.  It was one of those deals that he just had to take that weekend, since it would not be available after that weekend at that price with all those incentives. He signed a contract without his wife or his real estate agent being present on a Saturday afternoon. Plus, he failed to mention to the new home sales representative that he had already signed the Buyer’s Representative Agreement with me as his agent.

I get a call from my client late Sunday afternoon informing me of what had happened at the home we already had under contract to be built, and was to close in two more months. He informed me that he was taking his wife out to sign all the documents with this different builder, who had given him such a great deal on an inventory home, and it was better than that other home that those subcontractors were taking shortcuts on. I immediately asked him did he inform that new home sales agent that I was his agent. He simply told me that he forgot to mention it, but I was welcome to come and go with him and his wife when he took her out to sign her part of the new contract. I also informed him that he would be in default on the first contract, and would certainly loose all of his earnest money. He didn’t care about losing any money, and was upset with that builder.

Once we arrived at the new home sales office to visit with the agent, my buyer then introduces me as his agent. I even bought a copy of the Buyer’s Rep agreement. Then, I got hit with the bad news. The agent told me that I was not entitled to any commission since I was not with my client when he first came by that Saturday to sign the contract, and that I was not the procuring cause either. They had a policy that all agents must accompany their clients on that very first visit and register them to get paid a commission as the procuring cause of the contract. That was hard to take and I informed by broker, who went to my support, but that particular home builder would not change their position on their policy about being with the client on that very first visit.

Now, I not only had to give back all the money paid by the first builder for the slab pouring commission, but I was not even getting paid by the second builder on that new contract that  both my buyers signed. It wasn’t so much that I had spent all that time with these buyers, but what hurt was I thought they were my friends from my sphere of influence. It could have been worst since I have heard of other agents being treated that way by their own family members.

What I Learned or What I could have done differently. First, never take your commission early on a slab pour. Wait until the deal is finalized. It’s no fun giving back your commission.  Inform all your buyers that they must tell everyone that they are working with an real estate agent when they sign that Buyer’s Rep Agreement.  It still may not help since some buyers will cut you out of a deal if they think they can get a better deal without you. I stress this point with all my clients during that initial consultation now. It actually saved me on a future deal too.

Another couple back in this same time frame did call me one weekend while they were out looking at new homes, and were hesitate to go inside to visit with a new home builder when they read the notice on the front door. “ If you enter these doors without your agent, your agent will not get paid”. They called me immediately and I spoke with that sales rep over the phone to let him know that these were my clients, and I would come over right now to sign any forms that he required for me to get paid. He was nice enough to tell me that wouldn’t be necessary since he could take all my information over the phone.  At least, some new home sales agents understand that our clients may drop in on them over any weekend without their real estate agents.