Since When Is Offering A Cooperating Broker Fee A Selling Point?
The image below is from an email blast sent out by a brokerage firm selling a retail property in Southern California. Really, “Cooperating Broker Fee Offered” is your number #1 selling point? I have cropped out the distinguishing portions of the image to protect the identity of the offending brokerage.
Last time I checked, offering a cooperating broker fee is pretty much industry standard. Basically, it comes down to this: If you have to state “Cooperating Broker Fee Offered” it is because you have a reputation of NOT offering cooperating broker fees and therefore have a reputation of not working with the outside brokerage community. Clearly, this is not in the best interest of your clients. I highly doubt your clients are specifically requesting that you do not share fees with the outside brokerage community because they think your greed will lead to a higher net sales price for their property.
This is why many brokers will not bring their clients to these guys. They want the name, number, address, etc. of your client so they can tell you they already know him and that you are not getting paid if he buys it. Oh really? I guess you didn’t realize that the buyer is allowed to determine who represents him and that your ridiculous confidentiality agreements (whether online or via fax/email) don’t mean a damn thing.
Maybe the next marketing package from these guys will have selling point #2 read “Will not attempt to go directly to your client.” These guys may need to read my Marketing 101 post to get up to spend on some of the latest trends in marketing commercial real estate.
its cbre. cmon. they screwed more people out of fee than i can count. they even screw their sellers for marketing fees on top of commission on off market deals where they refuse to co-op fee. i could tell you a story about that deal, oh boy. anyway, that is exactly what they do and exactly why we use a fictitious buyer when dealing with them and signing their agreements (that would never hold water in court anyway). it is their prerogative to offer a co-op fee, i know a couple people that never offer co-op cause of how their platform is setup. works great in a good market, they have a good value prop on why its beneficial, but in the end, when you need brokers to sell your deal, good luck. anyway, i bet they are offering 1.5% on a 6% fee anyway.
If I were offering a prize, you would be a winner!
I receive the same e-mails. You're absolutely correct, they do have a reputation of not offering a commission to a co-op broker. Many times I have seen these same e-mails tell brokers to get their commission from their client, the buyer. I haven't had the honor of earning one of their commissions, but it seems to me it would be awkward to ask my buyer to pay me…How much do I ask for? Not offering a commission to co-op brokers definitely puts co-op brokers at a disadvantage.
I understand wanting to get both sides of the deal, we can all use double the money. Isn't it every seller's goal to get the highest possible price for their property? What owner will knowingly sacrifice sale price so their broker can make more money? Sure, they have a network of investors that may purchase the property just as quickly as my buyer, but shouldn't marketing efforts include sharing the property with as many people as possible? Only then will you be certain the highest price was achieved at that given time.
not to say that not offering a co-op is the way to go, but the value prop is less exposure (a lot of sellers want the exposure minimized for various reasons) and that if the buyer is working with the listing broker the listing broker has improved control and better probability of closing, and that due diligence wont be spread around willy-nilly. there are more reasons and there is a good value prop for it, its just not the right way to market every property. and cbre is stingy anyway, offering 0.75%-1.5% fees to co-op and then being lazy bums. not every cbre broker is that way, as i am always reminded by them, but theres a handful that really abuse that system (im looking at you, pcgnb).
I've seen a lot of this kind of thing over the last few years as the market heated up. It was exacerbated by easy access to more and more online forums to advertise listing information. Don't get me wrong, using any and all online channels to advertise on behalf of your client is a good thing. What was happening here in Ontario far too often, was that agents were getting permission to advertise unlisted properties and then stating that they would only deal with buyers directly (I can only assume because they weren't able to negotiate a full service commission for their paltry service offerings). "Principals only please" has become the bane of my existence.
I agree with the other posters here too, it tends to be some of the larger firms that abuse this more often.
Who are these guys serving, their clients or themselves?
Although I'm a former CBRE broker from years gone by (they surely taught me some bad habits) you also need to include Marcus & Millichap. I've never seen so many emails from their brokers offering fee's now. The other little trick was to market internally for 30 days to their "preferred" buyers.
The comment about broadcasting non-exclusive listings is spot on too! It's not all the brokers fault though, because at the peak of the market, owners & developers didn't have to offer exclusives because their phones where ringing off the hook. I’ve heard it’s been pretty quite out there the past years…ya, think??
This is exactly right. M&M are far worse offenders than CBRE in my opinion.
M&M has a totally different culture than CBRE. at cbre management is much more organized and things are more regimented. at M&M each manager does business in a different way. on some deals they tell you that you cant co-op. on some they demand you do. most of the sales managers have less than 5 years in the business and are worthless for transaction issues. they simply tell agents to "make more calls" and "find more deals" and "meet with more investors". they suck. and they only hire green agents that they can flog to death telling them to make 500 calls a week. so a lot of the bullshit you see is cause the guys dont know any better, dont have the experience and simply do what they see other people doing. the training is excellent though, and they get people to work their asses off. but the boiler room mentality instead of offering good splits to senior agents to bring their books is plain stupid. anyway, ignorance is no excuse.
i personally think the 30 day internal marketing thing is smart business for a broker. why not take a couple weeks to try and double end it before you go and advertise to every broker? yeah, fiduciary duty, blah, blah, blah… haha.
Quiet? Can you say understatement?
*crickets chirping*
I've never come across an M&M broker that has refused to cooperate with regards to fee, although I have come across dozens of CB brokers who have. To echo what others have said, I find it amazing that there are sellers out there that would agree to listing with a broker who wont share commission…especially in today's market where deals are hard enough to get done as it is