Do you work for free?
If you were to ask me that I would instinctively say no, I don't. Kathy is expensive and I have toys to pay for - not to mention two mortgages, car payments, insurance, retirement funding, etc, etc.
However, the truth of the matter is that sometimes I do work for free. That is to say that I'm not always compensated at the close of escrow.
I read a post tonight by Jeremy Blanton in which he talks about releasing a buyer client from a buyer brokerage agreement because they couldn't afford a house without seller concessions, and the seller couldn't pay the concessions and his representation fee.
In assessing his choices of how best to deal with the situation he decided to cut the buyers loose and let them purchase the home on their own. This is not a post designed to criticize Jeremy's decision by any means but to perhaps offer an alternate view to those agents facing similar situations.
I'm generally of the opinion that buyers (and sellers) who sign a contract with us need to honor the terms of that contract. My fees are well disclosed and everyone is on the same page as to how we will be compensated at the close of escrow long before we embark on our real estate journey.
When we accept a new client we do so with the understanding that we are their real estate advocate. We are the wall between them and a possible disastrous transaction. We're always well compensated for our expertise, but there are times it's in the form of referrals rather than a check at closing... and I'm ok with that.
We have worked with more than a few couples that, after scouring the real estate market, Kathy or I found the perfect house for them. The catch? It's a FSBO or builder that won't pay the buyers representation fee. In most cases the buyer ponies up the fee and we proceed toward closing. (90% of our buyers pay a portion if not all of our representation fee.)
What happens in the rare instance where the buyers don't have the funds available to cover the fee? (A situation I'm aware of since we discuss this prior to signing the BBA). If the house is perfect for them I tell them that my sincere goal is to find the home that's perfect for their family. If I were to cut them loose what would that accomplish? In my opinion, it would make me appear to be interested solely in being compensated and it would make me look like a hypocrite for espousing all that drivel about protecting and promoting their best interests.
"Yea, Bob. I'm here to make sure you don't get taken for a ride. What's that? Oh, you can't afford to pay my fee? Well, the heck with that., I'm going to the track. You're on your own kid."
While I'm always happy to see checks come in from the title company, We don't base our income on any one single transaction. We make the bulk of our income through referrals from previous clients. I have often said I would forfeit every individual commission check for the referral business that client will generate. By my calculations each satisfied client in our roster is worth approximately $300,000 in referral income.
When the clients are happily nestled in their new home they will remember who helped put them there, mainly because I will remind them. :) They will tell their family, friends and colleagues who made it possible. Given the choice between earning a single commission and fostering a relationship which will pay a $300,000 dividend it's an easy decision for us to write off the occasional commission.
That's my .02 worth... What say you?