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Times Are Tough – But That’s No Reason To Be A Thief

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.

UPDATE

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.

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