Buyer’s Brokerage
July 11, 2008
I quickly discovered that those supposed clients who wouldn’t pay the fee were more than likely going to waste my time. By paying the fee, the buyer was showing me that he trusted me to keep my part of the bargain, and that he was serious.
When asked why I charged a higher commission I explained that I would be working against my self when I negotiated the price down and I wanted to leave room in the negotiations for a reasonable fee for delivering a good deal to the buyer. This was never an issue.
Most of the time, it paid me to go out and prospect neighborhoods to find the house that suited the buyer best, but sometimes I had to resort to selling a listed property. In that instance the seller paid the listing Broker’s fee and my buyer paid mine. Since I wasn’t being employed in any way by the seller and had a fiduciary obligation to the buyer, there was no need to filter my offers through the listing Broker where they could have been watered down.
I must admit that there was a certain degree of envy manifested when at settlement, the listing broker received less than me, but this was quickly defused when they noticed that the seller’s Broker was getting the full sales commission without having to split it with anyone.
Ordinarily, I didn’t try to sell listed properties in order to avoid having the market value “poisoned” by an above market listed price that I would have to negotiate against. I found the houses to show to my buyer simply by knocking on the door of every house that met my buyer’s specifications and offering to buy it.
When I asked them if they would be willing to sell their homes, some skeptical home owners thought this was a ploy to get a listing, but when I made an appointment to show the house within a few days without a listing, this put them at ease. On the other hand, it also presented a problem to me. Suppose my 10% commission on a $300,000 house would have been $30,000. Less $4000 previously paid, this would have left $26,000 owing to me. For some buyers, it was too great a temptation to say they didn’t like the house, then go back to the sellers and buy it directly without paying me my fee.
The home owner had no way of knowing what my arrangement had been, and without any form of listing contract I had to come up with a solution that assured me that the buyer couldn’t buy without me, and at the same time, didn’t create a conflict of interest for me between the buyer and seller as a listing contract would have done. My solution was the single most critical break through in my career.
Find out what this was next time.
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