There’s always something to howl about

Interview with the Vampire: How Nick learned to knuckle-under . . .

“Hi, Nick. Come on in. Sit down. Sorry to keep you waiting.

“How long have you been here, Nick. Sixteen months! Wow, it seems like just yesterday that I turned my back on you and forgot all about you.

“It seems like you’re doing pretty well for yourself, Nick, two or three houses a month. It looks like you’ve got three houses in escrow right now, plus three listings, is that about right?

“No, Nick, that’s wrong. I’m your designated broker. I have those houses in escrow, and I have those listings. The employment contracts are with me, don’t ever forget that.

“But here’s what I asked you in here to talk about, Nick. I see you’ve got yourself a nice little web site. I like that. It shows that you take initiative.

“But, see, the thing is, Nick, your little web site is robbing traffic from my web site — our web site, the brokerage’s web site. I’m supposed to tell you this is all about legal liability issues, but the truth is, my SEO guy says we can get more traffic on the brokerage web site if we shut all these little agent web sites down.

“There’s more to it that that, though, Nick. I have referral relationships with lenders, title companies, insurance brokerages, home inspectors, exterminators — all kinds of vendors. If my agents are referring business every which way, our preferred vendors don’t get as a big a piece of the pie. I get a little bite out of every one of those pieces of pie. And, as you know, it has always been our policy to brush a few crumbs the agent’s way, so I’m sure you’ll agree that it’s better for everyone if we all speak with one voice.

“Oh, you don’t agree, Nick? Gee, that’s too bad…

“I wonder if you’ve ever made time to read that policies and procedures manual I gave you when you signed on with us. I don’t think anyone ever reads it, at least not until times like this. But the thing is, Nick, you signed an affidavit that said you had read it and agreed to abide by the terms as a condition of hanging your real estate license here.

“I think you’ll agree we have great policies for active agents. Seven hundred bucks a month, you can’t beat that. And the brokerage only takes $200 plus a deductible for errors and omissions insurance for each transaction. And then just that tiny little 5%, not really a split, for administrative expenses. I think we have the best pay plan in town for active agents, Nick.

“I wonder if you ever took a look at our policy for inactive agents. Our liability is higher once an agent is severed, and I have to pick up a lot of the slack, so we take a 50-50 split on transactions involving inactive agents. Of course, I really could take everything. After all, they’re my employment contracts. But that wouldn’t be fair, would it, Nick?

“Now when an agent is severed, the first thing he thinks of is, ‘I should call my clients.’ But that would be a violation of the law and of the NAR Code of Ethics. In the second place, they’re not your clients, they’re my clients. You can’t interfere with my contracts. But in the first place, a severed agent cannot lawfully do anything that requires an active real estate license.

“A severed salesperson can’t work, Nick. Not until he finds another broker to take his license. No cold calls, no warm calls, no door-knocking, no open houses, no handing out business cards at cocktail parties. If you don’t have an active license parked with a brokerage in good standing, you can’t work at all.

“That’s a scary idea, isn’t it, Nick? How many family men do you think could afford to put themselves in that position?

“Oh, do please forgive me, Nick! I get off on these hypotheticals and I just get lost. We were talking about that web site of yours. How soon do you think we can get that shut down…?”

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9 Comments so far

  1. Dave Barnes August 21st, 2006 7:41 pm

    I am confused.
    Why doesn’t every “agent” become a “broker”?

  2. Greg Swann August 21st, 2006 11:27 pm

    Why doesn’t every “agent” become a “broker”?

    The law in Arizona and in most other states is that only a self-employed broker or a designated broker can be a principal in a real estate employment contract. People holding a salesperson’s license (or a broker’s license if they are not the designated broker) can ‘hang’ their licenses with a designated broker and represent him as his sub-agents, but the designated broker is the only actual agent in any contracts signed by that brokerage. The designated broker is the only party who can directly receive compensation for the brokerage’s efforts, and he in turn pays his sub-agents some fraction of the proceeds he receives. If a salesperson is severed from his brokerage, either by quitting or getting fired, he must ‘hang’ his license with another designated broker in order to do anything that requires a real estate license.

    A broker’s license is just more classes and another test. If you do not work as a self-employed broker or a designated broker, you are considered an associate broker, and you have the same status as a salesperson.

    I’m told that in Colorado, all real estate licensees can act as principals in employment contracts. We may see something like this in Arizona, because the designated brokers would love to hang onto the ability to milk the salespeople while escaping the liability of being the fiduciary agent of thousands of people they will never meet.

    Either ways, these laws are stunningly anti-consumer, but they sure are pro-broker. For what it’s worth, I am a designated broker. I don’t do any of these nasty things, but I am empowered by law to do them if I wanted to.

    Incidentally, people at the MLS system and in the state and local associations pay much better attention when I complain than they ever did when I was just an associate broker. I haven’t succeeded in making any big changes as a designated broker, but I’ve played a role in some fairly decent small changes.

  3. Todd Tarson August 22nd, 2006 6:51 am

    Sums it up perfectly, hypothetically. This is the kind of stuff I wish I could share with the new agents at orientation for the Association, but undoubtably some agent would run home to momma broker and momma broker would raise holy hell.

    A newly licensed agent, or heck even an agent with some years experience, needs to interview brokers — like THEY are the boss not the broker — before choosing where to hang his or her license.

    I’m getting —>

  4. Todd Tarson August 22nd, 2006 7:06 am

    That last line should say I’m getting real close to wanting to open my own shop and be somewhat of a maverick broker.

  5. Greg Swann August 22nd, 2006 7:33 am

    > A newly licensed agent, or heck even an agent with some years experience, needs to interview brokers — like THEY are the boss not the broker — before choosing where to hang his or her license.

    This is one of the things I teach: You, the salesperson, are hiring the broker, not the other way around. You will pay him. Find out what he plans to give you for your money, then check with other agents to make sure he follows through. Your first brokerage is the one that will make or break your career. Very few people have the cash to survive a bad first broker.

    > I’m getting real close to wanting to open my own shop and be somewhat of a maverick broker.

    I won’t say yay or nay. It’s not as hard as it looks from the outside, but it’s not a walk in the park. E&O was a bigger deal than the ADRE. We did it because we knew we could not do what we wanted to do under another broker. We spent two years planning for the jump — even though it’s just the two of us. One of the people who was in broker class with me was that kind of serious, and she has over a hundred agents, just like that. Smart, ethical, conscientious — everything the Vampire isn’t. She’s what a real estate broker should be.

  6. […] And speaking of my special thanks (it’s a segue people), I have to also give my thanks to the Tomato (pumpkin?) for picking my entry in its Carnival of Scary Real Estate stories (free T-shirt here I come!). My Favorites (besides my own of course) were from Gena Joeseph Greg and Bill. ? « My first Property management experience   […]

  7. Gena Riede October 31st, 2006 10:42 am

    How very true. I remember the days when I first got started and had NO idea what it was all about. I thought all brokerages were the same and had the same splits. Boy, was I ever in for a shock. But, the good thing was that although the Broker robbed us blind, at the same time he was a fabulous mentor who held us all accountable to attend his real estate classes weekly. I would say that I personally learned most of what I know from this man and appreciate what he taught.

    As soon as I received enough training, of course I flew the coop along with others. By that time we all realized that not all contracts are alike! It is a horror story for a lot of realtors that first get into the business … along with finding all the varied costs for everything!

    Thanks for mentioning my scary story as one of your favorites.

  8. Bonnie Erickson October 31st, 2006 6:50 pm

    THIS horror story takes the cake. How many agents don’t realize the listings are not THEIRS! Oooooh.

  9. rob aubrey October 18th, 2007 4:36 am

    As agents we all know that story, by law it really is the brokers listings and contracts and we are the sub agents of the broker. Sometimes you wish things were a little different, especially in the bigger companies were an economy of scales could exist.

    We all know the companies. Back when the company was going to launch the big web sites and all the agents were excited. After all who could compete with the big web site coming? Then the company launched the site. You got all excited and went online. Found your listing and clicked for more information to find out that the lead was going to some relo type of department. That department was going to sell the lead to an agent for a 30-35% referral. What a nightmare.

    It would be nice if a company really believed the agent was the driving force of revenue. Where the agents had a say in how the office conducted business in the local market place, after all real estate is local in nature. The company would be run by a group of local top producers, they would function like a board of directors and make decisions.

    The owners had an open book policy of all the financials of the company, and the group of top producers had a say in how the money was spent. The broker was an employee and performed their duties for the agents. The owners actually shared some of their profits with those that help build the company.

    What if the agents say paid ten dollars a month for a myriad of technologies, more if the local group of top producers felt it made economic sense for the agents?

    What if everyone had the same exact DEAL with the company, no shoe deals to try and bring over the giant ego of the community?

    What if this company allowed an agent to join and they decided it was not a good match then the company would let the agent take their listings with them.

    I mean a company that was built for agents, by agents and ran by the agents.

    How cool would this company be? A company like this could be the most innovative thing in the industry.

    Thanks Gary Keller you are a Realtor’s Realtor.