Cancellation Fees

By
Real Estate Agent with Marc It Sold!
Did you know that on this date in history...

Chop Suey was invented in 1896.

First Scout Camp Opened in 1934.

The Goodyear Tire Company was founded in 1898.

The Beatles performed their last public concert at Candlestick Park in San Francisco, 1966.

Ingrid Bergman was born on this date in 1915 & died on this day in 1982 from breast cancer.


Cancellation Fees

Now to cancellation fees. I have never charged a client a cancellation fee, nor have I ever entered it on a listing agreement. I've always felt that if the client and myself are not a good fit, than I am not going to hold them and their property hostage, nor will I be held at that same time if that may be the case.

Yes, I know the arguments that a realtor should be compensated for their work and costs. I can agree with this partially, but have to disagree on the whole. This is a part of the business. This is a part of being an independent contractor and salesperson. If you have a problem with this, than you might wish to reevaluate your decision to be a realtor. I know that a lot of people will totally disagree with me and feel that I am too harsh. But, I really feel that this is the reality of the business.

I could even possibly deal with a cancellation fee if was at least reasonable. But the new manager of the office in which I work and some higher management personnel are obviously on another planet. We are told to institute a $1500 cancellation fee. Let's be realistic, who the heck is going to sign a listing agreement with that policy? I'll tell you right now, that I surely wouldn't. This is whacked! I'll get back to my new manager shortly. Oh, by the way, did I mention the fact that when I spoke with my regional manager about this, because I did not think that this was the company's philosophy, I was informed that they never checked with the competition to see what they were doing and how much they were charging. I was totally blown away by this response. This is just a basic business principle - know who & what your competition is and what they are doing. Duh!!

One of my main reasons for never even thinking of instituting a cancellation policy, is that I feel that there has to be a matter of trust between my seller & myself. This is what I build. We have a relationship. To me being a realtor is basically that of building trust between my clients & myself. I am there to educate and lead them through the process to make sure that they make the right decisions for themselves. Aren't I supposed to be the professional?

Many of my sellers have become friends. In fact recently, I had a home that was just not selling and we took this home off of the market. These people have become such very dear friends. I care for them so very much as I know that they do for me.

So my new manager comes into the office. She is a very effervescent person. I do believe that she has a lot to offer. It appears that she does not have a lot of management experience, but sometimes that is a plus. Well, unfortunately, she also has two bad habits. Let me preface this by stating that she seems to be genuinely interested in helping. But, then again, her salary is surely corelated to the business that the office produces.

When she told us about the cancellation policy, it was just that. Not that it was talked about and this is the decision that her bosses came up with and that we will have to implement this. No, we were TOLD! Great management style - think we might just need a little bit of work here. Her other habit, which I understand drove her boss crazy during the interview process, is it is always 'I, I, I, or me, me, me.' Can you imagine how infuriating it is to hear this consistently.

Granted, I can only come the conclusion that she is probably egotistical to some degree and most likely also very insecure. Unfortunately, at present, I am dealing with a brother in the trauma center due to a motorcycle accident and twice in conversations with her, I came away with the feeling that she had to 'one-up' me with tales of woe that she has encountered.

Even through most of this and the fibs that we've encountered I have tried to just let it rest and go on, but this cancellation policy is so totally against my grain. I can't do this to people. I really do believe in the common good of all people. Yes, we know that there are others out there. But, let me ask you, why should the general good out there pay for that? I can't go through life looking for the evil in others and watching my back & being wary. I will give almost anyone a chance - a chance until they prove me wrong, then they won't get another chance.

I am not saying this is right or wrong, for it isn't. It is just the way that I tend to live my life. I would love to right more at this time, but am running late for I have to catch a plane.

See you here tomorrow again, when we'll do a little more on this date in history.

Til then - Marc It Sold!
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Rainer
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Lisa Spalding
Casa Latino Four Corners, REALTOR, CDPE - Longwood, FL
REALTOR, CDPE

Marc--  Hang in there.  Our office didn't have a listing cancellation fee, either, when I started there.  When our office instituted the new listing cancellation policy fee of $500 last year, our  Broker brought it up during one of our office meetings, stated the higher-ups had been haggling back and forth for awhile and told us we had to start charging the fee.  What he said next  was great b/c it was something like "They told us what they think we should charge but I'm asking you (everyone at the meetin) what would be a fair number you'd be comfortable with charging?"  We eventually agreed on $500 and our fee has been that way for the past year. 

So, I think that is an excessive cancellation fee but there are certainly many companies that charge more.  Are you more concerned with the fee or the management style of the new Broker? 

Aug 29, 2007 01:59 PM #1
Rainer
209,246
Marc Grossman
Marc It Sold! - Longwood, FL
GRI, Greater Orlando Real Estate Broker

Lisa,  Thanks for the comment.  It all started with the cancellation fee, because I could have dealt with the manager.  I look at it this way, I do my work and really have no need to get involved with the office, the politics of such and the gossip.  But, yes, I do have an issue with the management style.  I've talked with other managers in our company and do not plan on doing anything until this situation is resolved, because they have issues with this new policy.  There is another office within the company of which the broker is more than happy to have me move to that office.  So, that is definitely an option if it need to come to that.  Additionally, I can check out the myriad of companies in the area, as you well know.  Also, I guess that this is the impetus for me to finally get my brokers license.  I've kept from doing such because I never really planned on opening my own agency.  I never really wanted the liability.  But it is something that I will have to think hard and long about.

Again, thank you very much for your comments and input. 

Marc

Aug 29, 2007 03:34 PM #2
Rainer
209,246
Marc Grossman
Marc It Sold! - Longwood, FL
GRI, Greater Orlando Real Estate Broker

Lisa,  One question, are you telling me that your office only has a $500 cancellation fee, because their was an email circulated to all of the managers that the cancellation fee is to be a minimum of $1500 and I just think that is excessive.  Regards, Marc

Aug 29, 2007 03:37 PM #3
Rainer
64,016
Jasen Edwards
Creator, Good Selling Formula™ - Austin, TX

Hi Marc

Tripped upon your blog this evening.  I've seen several agents in Austin use a cancellation fee with great success back in the day when I was selling homes (before I was a speaker/trainer).  Dollar amounts aside, I can see why a company would want to implement one.  A bunch of listing that don't sell do nothing but drain company and agent reserves and in a market like you all have, that's a legitimate concern.   I'm curious...if a seller cancels and pays the fee, who gets it?  Broker/agent or split somehow?

The ultimate answer is for the agent to learn how to take listings at the right price so this is not a big worry for anyone.  SIGH!  Looks like I have tons more work to do (thank God)!

;)     

Nov 03, 2007 02:53 PM #4
Rainer
209,246
Marc Grossman
Marc It Sold! - Longwood, FL
GRI, Greater Orlando Real Estate Broker

Jason - Firstly, I understand the company's perspective & that there are costs involved.  In my particular instance, the broker & agent divide the cancellation fee depending on your split with the company.  I still feel very strongly about the seller/agent relationship and that it is built on a matter of trust. 

Secondly, I totally agree with you that listings need to be priced correctly for the market and that the realtor as well as the seller have to be adaptable to market changes.

Thanks for your comment.

Nov 04, 2007 03:50 AM #5
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Marc Grossman

GRI, Greater Orlando Real Estate Broker
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