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Crediting Commission to Buyers to Compensate for Other's Mistakes

By
Real Estate Agent with Elizabeth Anne Weintraub, Broker DRE #00697006

commission credits to buyersIt would be hunky dorey if people would live up to their word, wouldn't it? And if they find themselves unable to honor those commitments, it would be even nicer if they would own up to making mistakes and apologize. But then I would be living at Disneyland or on a deserted island with my husband and cats -- and I'm not certain I can vouch for my cats' character -- instead of in the real world.

The fact is many people seem to have misplaced their moral fiber or traded integrity in favor of face-saving measures. When confronted, they become defensive. Being accountable for your actions shouldn't be a struggle in the real world, but the truth is some can't handle it.

Case in point, about 10 days ago, a buyer switched her loan to her credit union. The credit union wanted the buyer to pay for a new appraisal. Since we already had an appraisal from a reputable and well known appraiser in Sacramento, the credit union decided to accept an assignment and enlisted my help to get that assignment. I pointed out to the credit union that the appraiser would charge an assignment fee. The buyer did not want to pay an assignment fee.

The credit union said, "Don't worry, we'll pick up that fee." The buyer then called the credit union to verify that it would indeed absorb the cost of the assignment fee, and the credit union loan officer affirmed that it would pick up the fee.

You know where this is going, right? We get to closing and the assignment fee is on the closing statement. I called the credit union, and the loan officer gave me some song and dance about it. I suggested to the buyer that she call the credit union for an explanation.

When the buyer spoke to the credit union loan officer, he denied making that commitment. Understandably, the buyer was disappointed. When she asked for an explanation, the credit union loan officer berated her, raised his voice and verbally beat up the buyer over the phone. She was in tears when she called me.

The right thing to do was for the credit union loan officer to be accountable for his mistake. If he had taken responsibility for the error, all would have been right with the world for this buyer. He could have said, "I had no authority to tell you we would absorb the assignment fee; I apologize." But he chose the pompous, self-righteous route as his defense, thereby alienating and losing the respect of every person associated with this transaction.

Lots of agents never give commission credits to buyers. It's against their policy. But for me, making my clients happpy is the most important aspect of a transaction.

I immediately called escrow and authorized from my commission a $100 credit to the buyer for the assignment fee.

That buyer is now likely to tell everybody she knows about her unhappy experience with that credit union. For $100? It doesn't make sense to me that the loan officer short-sited himself, and by extension his company, over such an insignificant sum. Yet, we see this behavior every day. It's regrettable, isn't it?

elizabeth weintraub sacramento real estate agent

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Elizabeth Weintraub is co-partner of Weintraub & Wallace Team of Top Producing Realtors, an author, home buying expert at The Balance, a Land Park resident, and a veteran real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown, Carmichael and East Sacramento, as well as tract homes in Elk Grove, Natomas, Roseville and Lincoln. Call Elizabeth Weintraub at 916.233.6759. Put our combined 80 years of real estate experience to work for you. Broker-Associate at RE/MAX Gold. DRE License # 00697006.

Photo: Unless otherwise noted in this blog, the photo is copyrighted by Big Stock Photo and used with permission.The views expressed herein are Weintraub's personal views and do not reflect the views of RE/MAX Gold. Disclaimer: If this post contains a listing, information is deemed reliable as of the date it was written. After that date, the listing may be sold, listed by another brokerage, canceled, pending or taken temporarily off the market, and the price could change without notice; it could blow up, explode or vanish. To find out the present status of any listing, please go to elizabethweintraub.com.

Comments (21)

Robert Rauf
CMG Home Loans - Toms River, NJ

Shame on the unprofessional LO... Manage expectations and clients will be happy.

Also, the buyer switched... she should expect to have some costs in the switch.  She was lucky that the credit union would accept the appraisal at all.  In todays world the Real Estate "f word" is Fraud, and every lender is very cautious of appraisals and have been VERRRRRY strict on who can do the appraisal. 

Moving forward, prepare your clients to expect to pay for an additional appraisal if they switch lenders mid stream, it is more likely to be the norm.

May 30, 2008 04:27 AM
Carey Pott
January Financial - Foothill Ranch, CA

The great thing is, she'll also probably tell other people about the $100 credit you gave her. The hard thing in situations like that is to keep your own integrity by not bad-talking the loan officer to the buyer. I think you did the right thing by showing her that more than you earning a commission, you're concerned with her having a comfortable transaction. Well done!

May 30, 2008 04:31 AM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

Hi Michael: It seems to be the norm, though, that we pay for other's mistakes.

Hi Robert: Oh, believe me, the buyers were aware of the possible fees for changing lenders. They made an upfront agreement with the credit union that it would not charge for the appraisal nor for the assignment fee, and I verified it.

Hi Carey: Well, I wish she were as happy with the lender. At least it wasn't a lender i recommended nor will recommend.

elizabeth weintraub sacramento real estate agent

May 30, 2008 04:38 AM
Debi Ernst
St. Charles County, Missouri - Prudential Alliance Realtors - O'Fallon, MO
GRI, e-PRO, Broker/Sales Associate

I think you did the right thing.  Not everybody would've done that.  I'm sure you will have a loyal client for life...!  :)

May 30, 2008 06:22 AM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

Hi Debi: I didn't want to see the buyer in any more pain. She was so frustrated and upset after her conversation with the credit union. I couldn't make the loan officer stand up and be accountable, but it was within my power to ease her suffering, so that's why I did it.

elizabeth weintraub sacramento real estate agent

May 30, 2008 06:48 AM
Jesse Clifton
Jesse Clifton & Associates - Fairbanks, AK

Seriously... over $100?  For the love of Pete.  That's nuts given that he's probably making money on the front and back end.  Integrity...some folks just don't have any!        

May 30, 2008 07:44 AM
Kevin O'Shea
Coldwell Banker - White Plains, NY
White Plains, NY Real Estate

You are a deal maker that Cred Un. officer is a deal breaker. 

Your buyer is happy, the deal closed, good for you!

All the best!

May 30, 2008 08:07 AM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

Yup, Jesse. A hundred bucks. You know, people often say that when you claim it's the principle and not the money, it's the money. But in this case, it's really the principle. I sent the name of the credit union's president / ceo and address to the buyers.

This loan officer endeared himself to everybody when he said the real estate agents were making all the money and implied that the buyer should try squeezing the agents . . . instead of the individual who didn't have the guts to own up to the fact he made a mistake. And then compounded the deception by lying about it.

elizabeth weintraub sacramento real estate agent

May 30, 2008 08:09 AM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

Well, Kevin, I don't know if I'd say the loan officer is a deal breaker. He did fund the loan today and the transaction closed. But I do question his character and commitment to customer service.

elizabeth weintraub sacramento real estate agent

May 30, 2008 10:04 AM
Robert Machado
HomePointe Property Management, CRMC - Sacramento, CA
CPM MPM - Property Manager and Property Management

Agents kicking in money on deals is a fact of life.  In the right world the buyer would have picked this up, it was her credit union.  When buying a property another $100 here and there should be expected.  What is that buyer going to do when the heat goes out and it costs $500.00 to fix?  I just don't get the logic.

May 30, 2008 03:37 PM
Thesa Chambers
West + Main - Bend, OR
Principal Broker - Licensed in Oregon

I bet most of the frustration was that the loan officer was not truthful - if the buyer had been told upfront this would be the case my guess is it would mot be an issue - I would have done the same thing - buyers and sellers get tired of being nickled and dimed along the way - good for you for making this right

May 30, 2008 05:28 PM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

Hi Robert: In my experience, dealing with renters and working with home buyers represents two different worlds of people. Many home buyers become extremely emotional during the home buying process. Some do not understand the complexity. The frustration was caused, as Thesa so aptly put it, because the loan officer -- in an attempt to sway the buyer to reject her current loan and borrow money from his source -- clearly promised to pay for the appraisal assignment fee.

On top of which, when confronted, the loan officer became defensive and verbally abusive to the buyer. That behavior was unprofessional, rude and uncalled for.

The question is did the loan officer lie when he promised to pick up the appraisal assignment fee or did he lie when he claimed he never made that promise?

Buyers deal with enough stress when home buying.

P.S. I rarely kick in money, so that's not a fact of life in my business.

elizabeth weintraub sacramento real estate agent

May 31, 2008 04:23 AM
Robert Machado
HomePointe Property Management, CRMC - Sacramento, CA
CPM MPM - Property Manager and Property Management

Elizabeth,  I don't list or sell, so I never kick anything in, but I hear about it all the time so that agents keep the deal.  Renters are just as emotional and have less money to work with so they can be quite emotional.

The truth is that consumers do not accept the facts and want others to pay.  In your case sounds like the lender was untruthful and the lender should be called on that one.  Hopefully a supervisor there will step up.  But, a $100 problem is not a real problem when buying a house in my view.

May 31, 2008 08:33 AM
Sylvie Conde
Sutton Group-Associates Realty Inc., Brokerage - Toronto, ON
Broker, Toronto Real Estate

Elizabeth, just yesterday I wrote out a cheque in the amount of $1,400, to make it up to a buyer, for something very similar.  The bank made a mistake, and ended up not coming through, even though the client had not listened to me initially, and decided to take their chances with their bank. Anyway, to make a long story short, there was a shortgage of funds on closing, and no one had the cash and the bank would not advance a further amount.  The buyer was stressed and in tears, and there was nothing anyone could do... so everyone said.  So I wrote out the cheque out of my pocket, to ensure the deal closed, and to ensure the buyer would not be sued, as the sellers could care less whose mistake it was.  It upsets me that the professionals we deal with on a daily basis do not take responsibility for their mistakes or their actions, and always find a way to blame someone else.

May 31, 2008 10:06 AM
Jesse Clifton
Jesse Clifton & Associates - Fairbanks, AK

Excellent.... let the Pres. sort it out.  No doubt he or she would not like such poor representation from a L/O. 

May 31, 2008 03:02 PM
Scott Cowan
RE/MAX Professionals - Olympia, WA

Elizabeth- That is terrible that someone would make a statement to cover a cost and then at the closing change things around. That is awful! I would of done the same thing as you did.

Best,

Scott

Jun 01, 2008 02:38 PM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

You're right, Robert, $100 is not a big deal unless you believe that the principle is more important than the money.

Hi Sylvie: That's terrible. If it was me, I'd probably have asked everybody at the table to kick in a prorata share than paying that huge chunk of change myself. But that was good of you to do so.

Hi Jesse: They do intend to follow up with the CEO.

Hi Scott: Well, you'd be amazed at how screwed up things can get if you're not using your preferred team during escrow. When you refer the same lenders over and over, they tend to own up to their mistakes and fix them because they have a vested interest in doing so -- it's called repeat business. :)

elizabeth weintraub real estate agent Sacramento

Jun 02, 2008 02:56 AM
Sharon Harris
Keller Williams Keystone Realty - Hanover, PA
Realtor

yes we as Realtors do end up making payments of all kinds just to make the deal fly. What is a $100.00 ? If it makes everyone happy.

Jun 02, 2008 03:24 AM
Erin Newington
5305573559 - Grass Valley, CA
Sierra Foothills Realtor

You are exactly right!  Where are people moral compasses these days!  I just closed a loan last month where the lender mislead me on their guidelines. Instead of passing that mistake to the borrower I ate the fees so I did not make a commission at all.  I will be darned to go back on my word at the last minute even if it was not my fault.  It amazes me that some folks are so transactional.  My borrower totally appreciated our efforts and our integrity and within a day I had a new referral on my desk!   Your $100 will prove to be a great investment! Erin

Jun 04, 2008 12:58 PM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

You get it, Erin. It's the point.

elizabeth weintraub real estate agent Sacramento

Jun 04, 2008 03:53 PM