2012 May 20th

Can You Do That in Hoboken Real Estate?

I had a curious request from a friend and colleague the other day. He used to be with us at Century 21 but now works at a very small agency here in Hoboken. He had been working with some buyers and they were very interested in seeing some properties over the weekend but he is going on vacation. After trying to get someone from his own agency to cover for him without success, he asked us if we could possibly do it. He offered to repay the favor going forward.

Normally, properties are listed on the MLS by a seller’s agent and any other agent who brings a buyer splits the commission with the seller’s agent. Sometimes the seller’s agent sells it him or herself and keeps the whole commission. Normally an agent shows properties to buyers and, if the buyer makes a purchase, the agent gets half the total commission.

Occasionally, we agents do what is called a referral. That means I have a buyer who, for example, has given up on Hoboken and wants to look in the ‘burbs’ where I don’t work. I recommend the best agent in Montclair and refer my buyer to that agent in exchange for typically 25% of that agent’s commission. That is my referral fee. Or an agent from NYC may send me a buyer and I pay the Manhattan agent 25% of my commission for the referral.

What my friend was asking me to do was basically the same thing. He would refer his buyer to us for a limited time. For the week while he was on vacation, we would show his buyer some properties and we could have agreed that if they purchased one of the home we showed the buyer, we would earn the commission and my friend would be compensated whatever amount of referral fee we had agreed upon.

Yet in Hoboken real estate circles this is unheard of. No one does it, to my knowledge. I suppose part of the reason is the fear that the buyer will want to keep working with me, for example, and not go back to the referring agent. People are often resistent to change. I think this is one of those situations where no one has done this so it’s assumed it can’t be done. It’s just another referral. It would make life easier. There’s no real reason I know of why it couldn’t or shouldn’t be done. I’d be curious to know what you all think.

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  1. JC

    No one does what exactly? Grant referral fee’s? In your case I think a favor is a favor….if they decide to buy a propety you show them then YOU deserve a bonus but the real selling agent (the one on vacation) will be doing work ensuring a close. That agent could have been working with buyer for 2 years and just so happens the buyer saw the property they decide to buy on your watch. You deserve something but dont think you should get commission and vacation agent gets the 25%

  2. Lori

    No one in Hoboken asks an agent from another agency in Hoboken to cover for them in exchange for compensation of any sort. There are no “favors” in our business. Who does the work to close is decided between the agents – typically once a referral is made, the agent who worked with the buyer continues to close and gets the bulk of the commission. Maybe Agent A worked for 2 years and never really understood what the buyer wanted or just doesn’t know the inventory. That is common, believe me. Whoever actually makes the sale typically (Agent B) would get the bulk of the commission.

  3. JC

    sounds like a really gray area….wouldnt want to be on any side of that.

  4. Mo

    I think what agent A was asking for is that if their client wants to see a place in their absence, if you could show it to them. If they have worked with this client for 2 years, im sure another week wont hurt. The agent just wants to make sure if they want to see a unit immediately that you can do them a favor and take their client on that showing. This would not have anything with agent B being a better agent or knowing what agent A’s client needs are. I really dont think agent A is asking you to take time out for one week and show them a ton of places. They just want you to show them any unit they find on their own. And if this is the case which i think it is, agent B should not be compensated as this is a favor.

  5. Lori

    Geez – when you work on commission there are no favors!!! This is a situation with 2 agents from 2 different companies. How do you propose brokerage B be compensated by brokerage A?

    I don’t know what you mean by “another week won’t hurt”.

    Showing a buyer the right place has everything to do with being a good agent, knowing what the buyer’s needs are and knowing how to match those needs with available properties.

    Buyers are not “clients” because there is no agency relationship.

    For Agent B to take time and show properties to Agent A’s customers means time Agent B does not have available for his or her own customers! There is an opportunity cost here.

    I’m amazed at how poorly the public understands how our industry work. Our own faults, no doubt. Gives me lots of topics to write about going forward.

  6. JC

    I simply thought agent A asked you to show their client a few SPECIFIC properties. The compensation for your time would be contingent upon your relationship. A drink, dinner, or 25% of commission up to you two.

    I didnt think agent A was aksing for you to pick the buyers brain, simply turn key and let them in.

  7. Lori

    What Agent A asked me doesn’t matter because I’m headed for the airport and wouldn’t be able to help him no matter. But I find it interesting, in general. Yes, the compensation has to be decided between agents and agencies. Don’t forget, the brokerage gets its cut, too and the broker has to sign off on any deal.

    When I do my job as an agent, I never simply “turn the key”. That’s what incompetent agents do. Not me. My value-added is in my 35+ years of looking at, evaluating, comparing and actually buying and selling properties both for my own account and others. Any buyer who works with me, benefits from information that has significant value. Given that it is probably the biggest asset purchase of the buyer’s life, I would think most buyers want that. Otherwise, we could do e-trade for condos and the buyer could just click and buy. Trust me, that’s not how it works in the real world.

  8. MattRio

    I had a feeling your original post would be a lead in to promote your services and you did not disappoint. We get it, you’re an agent…

    Who cares about how you get compensated in this instance besides you? Simply discuss the finances with the other agent prior to helping out. If you can’t agree on the finances, politely decline and move on…

  9. Lori

    MattRio – and you clearly haven’t been reading this blog for very long or very often. I have received tons of positive feedback from my readers who appreciate that I do NOT spend much time at all talking about my services but rather provide useful information about the market and the industry. They seem to appreciate that. I’ sorry if you see it otherwise. I think most buyers and sellers ought to care about how we are compensated because they are the ones paying our compensation. Inter-agent relationships absolutely affect both buyers and sellers relationships. Something else many buyers and sellers do care about and of which they ought to be informed.

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