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A Lesson Learned in my Real Estate Career

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

 

I am thankful to have been in this business for over a decade, and I still truly enjoy what I do for a living.  Although I don't really consider myself a graduate of the School of Hard Knocks, many of the lessons that I have come away with during my career have been difficult to swallow.  Thankfully, I try to take these tough times and use them going forward, both in my own transactions and as I train other agents who work with me.

I have come to realize that any client who asks for part of my commission in the beginning of the process is bound to cause problems later.  In fact, I have rarely seen a client ask for money who hasn't been among the more difficult people to work with. 

This is a good barometer for me - maybe it will work for you, too.  Here is but one example:

Once, about six years ago, I had a couple who spent a good deal of time looking at homes with me.  The husband once called me during a very rare excursion of mine to the golf course, and wanted me to meet  him to write up a contract with a builder.  Since I was honestly getting a bit tired of working with them, I met him as soon as I was finished, and we spent the evening getting the details worked out.  About three days later, he decided to cancel the contract, and the builder gave him back his deposit.

We continued to look at various builders and their spec homes, and they soon found another to-be-built home in Round Rock that looked to be perfect.  My business partner had to meet them since I was working on this deal at the time.  He called me as I was headed home, "Jason, you probably want to come over here.  They are asking for some of the commission."  WHAT?  I showed up and the client was sitting in the back bedroom of the model home.  He said, "I want to know what you have done to earn your commission."  The first thing out of my mouth was, "You must be joking." 

Since I don't want to lump this particular buyer in with a particular group, I won't tell you where he was from, but  suffice it to say that he was from another country.  Perhaps he was taught that this was a good negotiating tactic (since this was actually what he told me later), but all that he succeeded in doing was ticking me off.  I explained to him that I was already giving part of the commission to his company to help with his closing costs (this was part of a relocation account, and we had to pay 30% to the relo company).  Thankfully, the builder was offering a bonus of 1% in this case, so I let him have that in order to get the deal done.  The sales rep explained that he would need a $500 non-refundable deposit, and we were good to go.

Well....I got a call about a week later from the salesperson, who explained that my buyer wanted to cancel (again) and he asked me if I wanted him to fight and try to get their money back.  I told him that I honestly thought that everything was very clear when they signed, and that I would certainly understand if they lost the $500, which they did.

Shortly after that, the buyers decided to dramatically drop their price range, from around $250k to about $130k.  I told them that I would not be willing to give them any commission breaks once they walked away from the other deal, since that was a special situation. 

They eventually found a home and they closed, but not without a ridiculous amount of tooth pulling.  I won't bore you with more details, but this is one example of a client who wanted something for nothing and I should have run the other way. 

 I have given discounts to friends, past clients, and even to buyers who are obtaining several properties at once.  The difference is who is offering this money.  If it is being requested of me, I find that things will be rocky and difficult.  This is like a canary in a coalmine now.  If a client starts out by asking if I will discount my commission, I will likely not work with them, as I have been burned repeatedly.  I hope this helps someone else reading this post to put things in perspective.

Thanks for reading!

 

Posted by

 

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

Kelly Sibilsky
Licensed Through Referral Connection, LTD. - Lake Zurich, IL
I've never had this happen to me, so I can only imagine how you felt when you got the "what have you done to earn your commission" question. Pretty much, when a client shows his or her true colors, we should pay attention! It's usually not going to get any better!
Dec 07, 2007 06:16 AM
Renée Donohue~Home Photography
Savvy Home Pix - Allegan, MI
Western Michigan Real Estate Photographer

Two major listing commission objections, usually hand in hand:  commission discounting and price.  I tell them zero times whatever number discounted, 4, 7, 20 is still zero.

My deep thought for the day :) 

 

Dec 07, 2007 06:20 AM
Tricia Jumonville
Bradfield Properties - Georgetown, TX
Texas REALTOR , Agent With Horse Sense
Funny how that works, isn't it, Jason?  I'm developing my own "canary in the coal mine" intuition for probably "problem" clients.  This is one of them.  
Dec 07, 2007 06:48 AM
South Austin Real Estate Blog
Sky Realty South Austin - Austin, TX
I admire your tenacity of continuing to work with these buyers.  I am not sure I would have, and I think the perfect reply to someone asking for a share of my commission (paycheck) is to ask them how much of their paycheck do I get?   :))  but I have shared with my buyers bonuses that are offered to an agent. Have a great weekend!
Dec 07, 2007 07:38 AM
Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth
Jason, at some point in working with the folks I think it was time to terminate the relationship. They did not respect the value you brought to the table. You valiantly hung in there though.
Dec 07, 2007 09:08 AM
Katerina Gasset
The Gasset Group & Get It Done For Me Virtual Services - Provo, UT
Amplify Your Real Estate & Life Dreams!

Jason- Oh, this post should be featured! We mostly work with sellers so we have not experienced this from a buyer. When I do show to a buyer, I tell him that my fee is X percent and if I show any homes that are not X percent to me, that they will need to pay the difference. They have agreed and there have been times where this came into play and the buyer did pay the difference.  I always let buyers know right upfront all that is involved. If they are not getting it, I do not work with them, I refer them to other agents. 

We had a seller try to do that to us once when he was accepting an offer. He was a cabinet maker. I told him,

OK  I just hired you to custom design and install cabinets in my kitchen and we agreed on a price. Then after you put them in, I will tell you, Oh, BTW, I am not going to pay you what we agreed. I want to take $5000 off of what I owe you because, well, just because. 

Well, he got it, and did not try that tactic again with us. Katerina 

Dec 07, 2007 03:30 PM
Jason Crouch
Austin Texas Homes, LLC - Austin, TX
Broker - Austin Texas Real Estate (512-796-7653)

KELLY - That is a great way to put it.  Seeing their true colors makes me sometimes discontinue my work with them. 

RENEE - Well done. I have used this approach myself.  Thanks for your comments!

TRICIA - It is interesting to see how this almost inevitably plays out badly every time.  Thanks for your comments - glad to hear that you are developing your own internal barometer for this kind of thing.

GAIL - I think the key really is whether it is offered freely or requested.  I have no issue offering it sometimes, but having someone ask immediately makes me think less of them.  This just comes from my previous experiences.

GARY - One of the reasons that I stuck it out was to protect my relationship with the relocation company, but I have had other clients that were more difficult and we closed them, too.  Thanks for your nice comments.

KATERINA - I had a similar conversation with a physician once.  It shut him up very quickly.  Thanks for your vote of confidence.  I was a little surprised at how little attention this particular post garnered.

Dec 07, 2007 05:25 PM
Bill Roberts
Brooks and Dunphy Real Estate - Oceanside, CA
"Baby Boomer" Retirement Planner

Jason, As you know I prefer your real estate related posts, but it is obvious that your other readers don't. There must be a lesson in there somewhere.

I too won't work with somebody that doesn't respect me. If they ask for some of my commission they obviously don't respect me and they are just "using" me. Shame on them and shame on me if I gave into these users.

Bill Roberts

Dec 09, 2007 05:43 AM
Elaine Hanson
Coldwell Banker Realty - Malibu | Topanga - Malibu, CA
REALTOR - Topanga, CA Real Estate Agent

Warning bells -- I'm learning to listen to what they are trying to tell me.  I had a client really just disgust me by continually asking for "a break".  It really took them down in my eyes.

I like all your posts.  I'm sorry I missed this one -- I'm crazy with the holidays!

Dec 09, 2007 06:14 AM
Paul Slaybaugh
Homesmart - Scottsdale, AZ
Scottsdale, AZ Real Estate
I have nothing clever to say here, Jason.  I simply won't empty my pockets to the guy who demands it.  You can't work in this field without undergoing a commisionectomy at some point, but it is my decision if and when that happens.  I am not adverse to pitching in to help a good client or good person, but I will never give a break to the guy who demands it.  In fact, I usually don't want that guy's business even at my full rate.  This is someone who does not see his agent as adding any value, and he will keep coming back to well.  I try to reserve my time for those who appreciate and respect my services. 
Dec 09, 2007 08:37 AM
Jason Crouch
Austin Texas Homes, LLC - Austin, TX
Broker - Austin Texas Real Estate (512-796-7653)

BILL - You make a great point here.  "Shame on me" is a part of the equation.  Giving in to their demands only fuels the fire and makes them ask for even more later.  Thanks for your comments - I hope you have a great week!

ELAINE - I have another post which I may write about a doctor who wanted a commission break.  I looked at him differently after that.  Thanks for your compliment.  Don't worry about catching every one of my posts. I know that things are hectic, and I do write quite a bit.  However, you are among my favorite commenters!

PAUL - I like "commissionectomy" - good one.  Your comments are spot-on with this topic.  I fully agree with you. 

Dec 10, 2007 02:17 AM
Ricki Eichler McCallum
CastNet Realty - Corpus Christi, TX
Broker,GRI,ABR, e-Pro, TAHS
Jason, I've had my share of these kind.  I can do without them.  They take up more time and often times do not even buy.  I think we all get a few of these buyers from time to time.
Dec 10, 2007 12:12 PM
Melina Tomson
Tomson Burnham, llc Licensed in the State of Oregon - Salem, OR
Principal Broker/Owner, M.S.

In Oregon rebating is not allowed currently, so we haven't had these conversations with our buyers.  I have no doubt that will change at some point with the DOJ on the case, so it's good to see how others have handled these issues.

I like the commissionectomy verbiage. 

Dec 10, 2007 12:20 PM
"JT" Prevatte
Former Agent - Fayetteville, NC
I had a client like this...I fired him...best thing I ever did...I felt he was putting me into to many liability type situations
Dec 10, 2007 01:53 PM
Jason Crouch
Austin Texas Homes, LLC - Austin, TX
Broker - Austin Texas Real Estate (512-796-7653)

RICKI - I couldn't agree more.  Thanks for your comments!

MELINA -That is interesting to hear.  Thanks for stopping by - I also liked "commissionectomy".

JEFFERY - Sometimes, firing a client is the only prudent move.  Thanks for your comments!

Dec 11, 2007 04:46 AM
Karl Burger
ERA Beach Ball Realty - Pensacola, FL
Pensacola Real Estate News
Great advice. Agents often forget this advice when they are desperate for a check, as so many are these days, and in the end it bites them in the butt. I think when you realize you are dealing with these types of clients, your time is better spent prospecting for quality clients and letting these folks go to a more desperate agent.
Dec 19, 2007 03:13 AM