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Brad comments today on agent greed.

From time to time, over the years, I have experienced varying forms of agent greed. I have witnessed agents attempting to negotiate their own commission with the opposing side, even when it put their customer’s transaction in jeopardy. I have seen agents trying to pass their own commission expenses along to their unsuspecting clients. I have seen blatant manipulation of other fees and expenses in order to pad their own pockets sat the expense of others. But this past weekend, I witnessed something that I thought worthy of sharing with my readers.

Several weeks ago, one of my associates came to me with a problem. He was working with a client, and had the client under contract to purchase a property. However, even before the home inspection, the associate had to go out of town, allegedly for his other job.

He asked if I could find another associate in the company who would take over the transaction from that point forward in exchange for half the commission. He also mentioned that there was a pretty good degree of certainty that the transaction would never close, because the buyer (an investor) felt that prices were still dropping, and he thought the investor might cancel the transaction completely at some point.

Furthermore, the associate said that he had promised to pick his client up at the airport, and that whoever was taking over would need to do what he had promised.

And one more thing: since this investor client was someone he somehow had known, he also agreed to waive the TRR processing fee of $199. He told me that he was not concerned with money; he just wanted the client to be taken care of.

I set out to find another agent to take this over, which was no easy feat, given the conditions. Normally, when an agent gives up a client, he gets a 25% referral fee, not 50% of the commission. Nonetheless, I found a diligent agent who agreed to substitute and attempt to close the deal, despite knowing that the whole thing could fall apart at any time.

The replacement associate stepped in, contacted the customer immediately, picked him up at the airport, and subsequently attended the inspection. During the inspection, the buyer stated that he would most likely cancel the transaction (as was anticipated), and look for other properties. The agent successfully obtained a Buyer’s Brokerage Agreement from the client, with the understanding that if this deal fell apart, he would move on to become the customer’s new agent, since the first agent was out of town and not coming back any time soon.

The customer also commented during the inspection that he believed the first agent had left the real estate business and Las Vegas completely.

The customer was not that pleased with the results of the inspection, and seriously contemplated canceling. But, the new agent allayed his concerns about the inspection, and also about falling prices, and was able to bring the transaction to a successful close.

At no time did the first agent ever even inquire as to how the transaction was progressing, much less help out.

After the closing, when it came time to submit the closing paperwork necessary for commissions to be released, the new agent did everything, and the first agent did nothing.

TRR charges a $299 commission on each residential closing side. So, this is how we calculated the commission split: we took the total commission collected, and then deducted the $299, so that it would be shared equally between the two agents. Then, the $199 processing fee was deducted from the first agent’s half, because he had personally promised to pay it on behalf of his client.

Our office manager sent an email to both agents, confirming that this was how they wanted it calculated. The second agent responded right away, and agreed to the calculation. The first agent, however, failed to respond for three days. After three days, I emailed him, saying that it was not fair to keep the other agent waiting to be paid, and that if he did not respond by the end of the day, the calculation would stand. I waited more than a day, and still got no response.

So I released the replacement agent’s commission, and waited to hear back from the first agent. Another two days passed, and he finally answered that he was traveling and could not respond (I wonder where he was without email!). And, he objected, stating that he thought it would be fair if the replacement agent also paid half of the processing fee that he personally agreed to waive.

I told him no way! That would not be fair to the other agent, since it was he who personally agreed to pick up this fee. Then, he went on to question my “unfair judgment”, and even called the other agent a “pig”. Can you imagine: one associate calling another a pig over half of a $199 processing fee?

He did not express one scintilla of appreciation for the fact that the other agent brought this deal to a close even after he himself admitted that the likelihood was small. He also did not express any appreciation for the fact that I had chosen the “right” agent: someone who was willing to work under those conditions and who was able to get the deal done.

Keep in mind another factor: that the new agent could have easily talked the customer out of the deal, in order to find him another property. And at that point, the new agent would have been entitled to keep 100% of the commission, since the original agent wouldn’t’t have been involved at all.

Calling this excellent agent a pig is so far out of line, it is absurd to the enth degree. Far from being a pig, he was able to save the deal, and sacrificed the opportunity to do another deal at full commission.

This kind of greed is a career-killer. Whether it derives from financial desperation or some other character flaw, there is no place for this behavior in my operation.

Therefore, this agent will be released from his contract with TRR. Greed as such will not occur on my watch.

Date posted: October 18, 2010