I am in serious need of a policy to help friends buy and sell real estate. It seems every time I help a friend something goes wrong and it's my fault or it's expected that I will reduce my commission.
Last week I had dinner with a friend and his wife and we talked real estate. I mentioned a home I sold in their neighborhood and the price and to look for a just sold postcard. Well the next day I get a call and an invitation to come out look at their home. I agree thinking nothing of it. So we are walking through the house and I am pointing out things to work on such as mulch, paint and things to be cleaned etc and all is well. We sit and talk about price and expectations with the current market and still everything is good. My friend is an insurance adjustor and does not make hasty decisions. I can tell they have been thinking about this for sometime. They pick my brain every week but I always dismissed it as casual conversation. They know they will have to offer something to sell their home and fortunately they are smart with money. They put money down, have been in the property for 6 years and updated the home throughout. I am starting to get excited about the possibilities. I start walking through my visual tour process and talk about things to point out including the great schools and community amenities. I told them with some hard work and patience we can make this happen.
The best part is they also want me to help them find a home. So my friend's wife starts talking about her dream home and what she wants. My buddy pulls out a general letter of approval from Bank of America and specifically the contact at Bank of America I prefer. In the back of my head this seems like a concrete deal and then it happens. The twist I thought I would avoid this time.
My friend asked me about selling cost and how much it would cost him. So I pull out my trusty seller's net sheet. I am adding everything up such as deed stamps, closing cost, taxes etc. and then I get to commission. So I put the number down at the percent I charge sellers to sell their home. He replies "well that's what you charge everyone else but not us, right?" There is a moment of awkward silence and I explain that any reductions have to be run through my broker. So I continue with everything but all I can think about is how it is assumed by friends that I will cut them a break. I finish up and leave and really do talk to my broker. He tells me that this is my decision and that he is okay with what every makes me comfortable. I asked what he would do and he told me he has a policy in place for friends and after 20 plus years they know that. He refers them to his agents and explains that with the duties of being a BIC and in charge of the MLS he just does not have the time to needed to properly serve them and sell their home. I have actually been the referred agent and it is great. I love personal referrals from my BIC.
My dilemma is I stand to lose around $12,000-15,000. I do not want to lose his business and the business he could possible refer me. But it burns me up how they assume I will cut them a break. I have never called him and said I would like insurance but I want the "friends" rate. My BIC said I need to type up and outline how to deal with friends including commission etc and give that to them before we meet. That way they know what I charge and will not assume anything.
So basically I am meeting them on Tuesday to sign paperwork but I have not decided on the rate yet. Although I must confess I am leaning towards lowering my rate. I want the business for several reasons. One, the home is in a great neighborhood where I have had success selling homes. Two, the money made from selling their current home and finding their next home is still great. Finally, I would probably cut them a break on commission anyway. It's just how it is assumed that I will do this. I have only helped one other friend sell a home I and I cut him a break because he was so upside down and in real financial trouble. Any feed back advice or "friend policies" are greatly appreciated.
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