Brokerage Commissions Must Be Earned... Seems like a simple statement but I find it amazing some people don't get this. It's not about an Open house, a flier or a passing conversation; it's about (a) procuring a meeting of the minds and (b) getting the important essentials into an executed contract.
The paper trail is very important. Some people are pretty casual with their e-mails. You may want to rethink that and do more negotiations in writing. If you do have a phone conversation, re-cap and follow it up with an e-mail. E-mails can help you reconstruct a time-line sequence in the correct chronological order if you habitually use them. They can also refresh your recollection if you forget something that may turn out to be very important later on... As a matter of fact your blog post conversations and posts can also time stamp your business activities. :-)
My gal pals are really gung ho regarding sending me all over cyberspace to understand the intricacies of a commercial transaction. They want me to get out of the books and into the historical life of real estate transactions. From 1986 to 2009, I have a reading list that has been making me go "hmm" since last night. I spent the wee hours this morning with this blurb from Real Estate Weekly, Sept 7, 1994 by Edward L. Schiff.
Do you want to know my favorite points to quote? Check these out:
(1) Helmsley-Spear, Inc. v. Melville Corp. (611 N.Y.S. 2d 240), holds that the mere introduction of a property by a broker to a perspective purchaser does not entitle the broker to a commission. "Despite Melville's refusal to engage the broker's services, Helmsley-Spear claims that in February 1987, one of its brokers made a "cursory showing" of the Dictaphone Building in Westchester to Melville's real estate manager as a possible building to lease. This building was not managed by Helmsley-Spear nor was Helmsley-Spear exclusively engaged to represent the building."
Seems to me the buyer or potential tenant gets to choose who negotiates/writes up their offers and represents their best interests.
(2) Heelan Realty & Development Corp. v. Skyview Meadows Development Corp. -612N. Y. S. 2nd 192 is also a very interesting read regarding "commissions claimed by a broker resulting from a deal which collapsed." Hmm... "It [the court] ruled that no brokerage commission is earned until the buyer and the seller have a meeting of the minds on all substantial issues. Mere agreement as to the price on a proposed sale of real property does not constitute a "meeting of the minds" of the buyer and the seller, absent an agreement as to other terms that are essential and customary to real estate transactions. It is only when the seller wrongfully or arbitrarily prevents the completion of a deal does a broker's commission become due."
Seems to me the binder is only the beginning... We don't stop working until we close escrow. Anything can go wrong at any given moment so if brokers don't cooperate and our clients become entrenched in inflexible ideals, the potential is there for everyone to lose. This deal went south because sets of people (LB, BB, Seller, Purchaser) refused to get a very important letter while demanding the others do it... I am not an attorney so I have no idea why the seller didn't do it and don't know how the buyer could have done it without being the owner of the property. Hmm... I don't know what was technically required but I do know stupidity when I read it.
Non cooperation is the height of stupidity when you are supposed to be dealing in good faith and representing the best interests of both parties involved in a real estate transaction. Do you want to collect days on the market or do you want to close escrow? I am still reading cases from the 1980s and find myself thinking the same crappy attitudes are here in the Rain right now that were evident in the squabbling of old.
Sure you want to keep pissing on another agent about not paying them if they don't attend your Open House? Seems the courts are more interested in the actual work done and the exact factor that proved to be the decisive moment when a buyer and seller has a mutual meeting of the minds.
Our attitudes spill over into the lives of the people who observe us. There is more to negotiating and earning a commission than opening a door and handing a prospect a flier. Your 5 minute conversation may not be the reason they are or are not buying a property. The whole reason is usually the sum of all of the components that factor into their decision making. I routinely have to speak with my buyers, their spouses, their relatives and their friends before some of them will actually say yes. When did your 5 minutes trump my 2 weeks, 2 months, or year?
No practitioner should take any prospect, customer or client for granted. If they decline to choose you and go with someone else you can bet your bottom dollar there is a reason. It doesn't even have to be a good one. People can be irrational and/or generally do what they are comfortable with. It's up to the buyer and/or seller to determine who they want to work with, how and when. It's up to us to service them to the best of our ability when they do select us. A lot of time and conversations passed between the people who eventually litigated their positions.
They each thought they were correct to file their complaints. Things don't always turn out the way we plan...
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