I haven’t had a good rant in a while… and unfortunately, I don’t have enough time to have one right now – so the Reader’s Digest condensed version will have to do.
Most agents who have been in this business a few years or more know when something doesn’t look right. We’ll see something – and although we don’t know the underlying logic… we instinctively know it’s just not right.
This morning, I was perusing some rental properties for a client. As with listings for sale, it’s not uncommon to find some agents who are offering a ridiculously low co-broke. This morning was no different.
This particular agent is offering a 10% co-broke if you show the property. Since many brokerages charge transaction fees – the co-broke on this listing could easily be less than the transaction fee. Kinda gives “co-broke” a whole new meaning.
Now don’t get me wrong – a 10% referral fee for sending the client to a property shown by the listing agent is just fine. But 10% for bringing the tenant and showing the property is a non-starter – I don’t care who’s doing the paperwork.
Just for giggles and grins – I pulled up this agent’s recent history. One sold listing and more than sixty leased listings. Every single one of them offered a measly 10% co-broke… and all but two were leased out by – drum roll please – the listing agent.
[snarky comment] What an unexpected surprise! [/snarky comment]
Of course, both of those co-oped listings rented out for full asking price… while nearly every single one of the double-ended listings involved a rent reduction… sometimes several hundreds of dollars in rent reduction.
Now maybe you think that I’m just whining about some agent who is too greedy to offer a more generous co-broke – that’s fair. Maybe you think that I believe that a co-broke of 25% is more appropriate. I will tend to agree with you on both counts.
But there is an underlying ethical problem here.
When you list a property for lease and offer a ridiculously low co-broke – you are denying your client the best possible chance for achieving a quick lease at the highest possible rent.
And therein lies the rub.
If you are an agent who practices this kind of real estate – you should be ashamed of yourself. This behavior may not be illegal… but like any other kind of criminal, merely changing the law probably wouldn’t deter you from being a dishonest cheat.
If you’re a home owner who has run out of time to sell your home in a declining market, and you’re considering renting your property to stop the red ink from flowing – it’s time to wise up.
Listing your property with an agent to get it rented quickly is a good idea – but if you don’t know your agent well enough, maybe you should remove the incentive for them to be disloyal. Make sure your rental listing agreement includes language that guarantees a reasonable co-op brokerage fee is offered.
Without it, you might get an agent like the one I found this morning who would rather your property sit vacant than lose 15% of one months rent in commssion.
I put a call in to an agent who has a rental listing. Here’s the exact conversation
“Hi this is Zack”
“Hi Zack – Doug Quance with Solid Source Realty here… how are you?”
“I’m doing well, Doug – how are you?”
“I’d be doing better if you told me your rental listing on Bonaventure was available and that you’re offering more than three dollars on the co-op”
“That’s what I’m offering.”
“Are you serious?”
“Yes, I’m serious.”
“You have a nice day.”
Three dollar co-broke on a $2500/mo rental property! My client got a big chuckle out of that.11 comments