Sharing – It’s An Agent Thing

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As children, we are all taught to share – because it’s the right thing do. As we grow up, sometimes we forget.

In the real estate profession in Port Elizabeth, Nelson Mandela Bay – we tend to share a lot.

What “sharing” am I talking about here?

“Sharing” is where one agent (the listing agent) and has the seller and the property does a deal with a buyer (represented by a buyer’s agent). In such a case the agents share the commission in a prearranged manner, the ratio may vary but the result is what’s really important.

As professionals, we recognize that we represent our client’s interests.

It goes without saying that the client wants the property sold at the best price possible and in the shortest possible time. In a buyer’s market, a willing and able buyer has a lot of buying power. It is also so that a good buyer’s agent has spent time getting their client pre-approved (should they need bond finance) and they know exactly what their client wants (or should at any rate), they know the area, have done tons of research, and leverage these to the buyer’s advantage.

I know that there are buyers who may have come across the “hit and runner” they only stop long enough to hear how many beds you are looking for and then dash off making appointments at every property they can, suitable or not.

But let’s assume the buyer’s agent is diligent and is thorough.

I list a property and its well priced and the marketing is awesome, with high-intensity exposure campaigns et cetera. The fact is there remains a chance that a buyer has not seen the property but the buyer’s agent has identified it as a match to their client’s needs.

The buyer’s agent then makes contact and the terms of engagement are agreed along with a Q & A to confirm its suitability for their client. This process works best where there is a sole and exclusive mandate as it prevents the dreaded “multiple commission claim”.

The buyer’s agent and the buyer then view the property with the listing agent and if the client loves the home, they negotiate a deal.

But what if your agent does not share. I hardly believe that a seller would knowingly hire an estate agent who states at the outset that should a buyers agent contact them that they will not share and the likely consequences. That would be madness, especially in a high sharing environment, like Port Elizabeth.

No, I think they might be economical with that declaration. Instead, let’s assume they pass quickly by and in some cases say they have shared in the past. The mandate is signed and the client out of earshot – our non-sharing agent gets a number of calls from buyer agents with pre-approved clients. The response to these agents may be an interesting option between: “I just listed it”, “I have an offer” (but it’s not accepted), and then you get the cantankerous ones that will just say I don’t share and get your client to see me directly. At this point remember that a buyer’s agent could have walked a long road with the buyer, only to find the perfect home and receive nothing for it.

The response to these agents may be an interesting option between: “I just listed it”, “I have an offer” (but it’s not accepted), and then you get the cantankerous ones that will just say I don’t share and get your client to see me directly. At this point remember that a buyer’s agent could have walked a long road with the buyer, only to find the perfect home and receive nothing for it.

Now the buyer’s agent may have found a number of options (especially in a buyer’s market) and this statement could mean that the buyer will not get to see this home alternatively a buyer’s agent may state the listing agent’s position and the buyer opts to not view without their agent.

Net result – the seller loses.

The refusal to share, as seen above is clearly not shared with the seller nor are its likely consequences, so it’s clearly actions/omissions by an agent which is contrary to that agent’s principal’s (legal terms) instructions.

The other point is that the agent is not acting in the client’s best interests, which is a clear violation of the Code of Conduct, which determines what conduct is considered unethical.

In my practice, I share from the moment I list a property. This weekend I had two brand new highly saleable listings and I shared on both of these deals and as a result: a sale within 2 days, on the one property and on the other one, it was hardly a day.

But what if a listing agent refuses, this is a tricky position. One option that I have heard used is to draft a short and sweet letter to the owner in which the agent advises that they have a willing and able buyer, who is pre-approved and their agent refuses to consider a transaction because of the refusal to share commission. I have also heard of very loyal buyers who have submitted offers which are subject to the buyer’s agent being remunerated for services rendered to them, very often over some time.  Then again, I have heard more than one of buyer’s agents who have been advised by the buyer’s agent that the listing agent will not share commission, to proceed without them being paid anything, and it is not uncommon for the buyer to rather give up that home, rather than accept those terms.

Either way, before hiring an estate agent, make sure they confirm that they share and that they commit to it because if they don’t the ultimate person being prejudiced will be you.

Clinton Begley (PPRE MPRE CEA B.PROC (NMMU)) is the co-founder, Principal/Director at BOLD REALTY, in Port Elizabeth, South Africa. In addition, to his passion for people and real estate, he is also an experienced trainer, coach, and mentor. He holds a B.Proc degree through the Nelson Mandela Metropolitan University and is a non-practising Attorney, Notary, and Conveyancer (with over a decade of experience). His legal and real estate experience is augmented by studies towards an MBA degree through the Nelson Mandela Metropolitan University Business School, which he is scheduled to complete soon. This article reflects the personal opinion of the author only, it is NOT intended as legal advice nor may any reliance be placed upon it. The article is purely for information purposes and you are advised to consult an expert before making any decision.

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