Wolf Richter is the CEO of Wolf Street Corp. and the editor-in-chief at Wolf Street, where he muses about economic, business, and financial issues, Wall Street shenanigans, European entanglements, and other things, debacles, and opportunities in the US, Europe, Japan, and occasionally China.
“Dear John, I think you should write about how everyone is a stand-up guy until money’s on the table. Over the past decade, I’ve been screwed by countless so-called stand-up guys. I’m talking about both other brokers and principals. Disappointed Broker.”
Dear Dis, I shared your woe with some of the most reputable brokers I know, asking them whether their experiences were similar, whether screwing with clothes on was rampant these days and what, if anything, they were doing about it.
One veteran replied:
“I use a belt, suspenders, duct tape, Velcro and condom approach with principals I’ve never worked with before. I’ll have the principal sign a commission agreement, listing agreement or include the fee in the purchase contract. My red-alert buzzes when a principal suggests my commission not be included in the contract. My radar is now far more acute with other brokers: I’ve had my offers shopped, had my counterpart fail to disclose I wasn’t getting half of the brokerage fee, had agents sign my CA agreement only to immediately call my client directly to solicit business…As long as fees are being paid, some jackass will rationalize screwing someone over.”
This old friend also reminded me of a call I had received years ago from a young agent one Monday morning in which he crowed about his exhaustion from writing offers all weekend. I asked him how many.
“Oh, about 25,” he said.
“No way. How could you possibly write 25 offers? You and your clients can’t have seen all those properties,” I replied.
“Dude, my clients haven’t even heard of these deals yet, I just put their names in the offer, and if I get a seller to bite, I let the client know we’ve got something going.”
Although I told him that his was probably the most unethical practice I’d ever heard of and that I would never take another call from him (I haven’t), I would wager this particular agent still sees nothing wrong with phishing for deals.
“I only had one instance where a client skipped on a commission covered by a listing agreement. He tried to sell a property before paying my leasing commissions. After finding out, I gave him fair warning (he replied “f-off”) and then filed a lien on his property. Because he needed to remove the lien in order to close, he paid me and then immediately followed up with a voice message calling me every name in the book.
“I was screwed a couple other times when I trusted someone without a listing agreement, investing a lot of front-end work only to have the principal decide to finish the lease or sell the property himself. My thoughts on those were ‘shame on me’ and ‘lessons learned’…There are a few bad actors (and now their sons) whose names consistently come up. The sad thing is that brokers continually try for ‘fresh starts’ with these guys, hoping things will be different this time, or that maybe these guys are just misunderstood. But it always ends the same. Snakes are snakes.”
And so they are. A third wrote:
“Fewer than 10 percent of my developers have attempted to completely jack me, but that increases to about 25 percent when I throw in the guys who try to chisel on my commission.”
And finally from several younger brokers:
“I’ve had a few bad experiences with both principals and other agents that either tried to cut me out of deals or change verbal agreements.
“The bad experiences I’ve had have been with either clients I didn’t know or that had a short-term single transaction outlook. My goal is to put myself in the position of being able to choose my clients.”
“I haven’t seen it get worse or better, it’s stayed constant for me. I’ve closed a lot of deals on a handshake and choose to do business with people that operate the same way. This could change, but I’ve only had positive experiences so far. I can usually tell who will be stand-up and who won’t.”
“I will work on a handshake basis with almost anyone. But if you screw me once, we’re done. As I age, I drop clients that I have to “watch out for”…On the brighter side, I will share that 40-50 percent of my income comes from “handshake” type relationships and guys doing the right thing.”
A theme emerges from these comments: Business is the polar opposite of a high school dance — you can always find someone to screw you. While there are many definitions of success, most are too vague — or too precise (e.g. $200,000 a year) — to be of any use.
Perhaps the best is among the simplest: Success means being able to choose with whom you work. And greater success means choosing wisely. By John E. McNellis, author of Making It in Real Estate: Starting Out as a Developer. The article was first published on The Registry.
The CEO of WeWork is selling that $20 billion valuation to a lot of smart, rich guys. But WeWork’s entities are known as SPE’s (“Screwing Probably Expected”), and landlords will be the first to go down. Read… Does WeWork at All?
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