It's the moment that real estate agents dread. You've been showing properties to your client, you've found one that you think will work for your them, and then completely unexpectedly you hear them say: "I have a friend who has a real estate license and I want him to cooperate and receive some of your commission."
And just when you thought you were getting closer to earning some good money with the client, you've now got a brand new situation on your hands you have to deal with.
This is where both new agents and mediocre agents often just roll over and cave-in to the client, offering a portion of their commission to the client's friend who has the license. But seasoned professionals on the other hand definitely know this is no time to stand for this kind of treatment from anyone.
This problem oftentimes stems from the inaccurate assumption by many people, that possessing a valid real estate license is the most important component for getting paid commissions. But while it's necessary to have a real estate license to legally receive commissions, having the license itself is really meaningless unless one does the work to create the opportunities to get paid the commissions.
With this in mind I'm completely appalled at the number of people I hear of who complete all the work and pass the exam necessary to get their real estate licenses, and then never do much of anything else to find and close transactions.
Continuing along this line of thought, during the Spring of 2005 I was reading an article in the Los Angeles Times discussing this subject, and the President of one of the realty boards in the L.A. area was quoted as saying that "approximately 75 percent of our members close between zero and one transaction every year."
Now this was in the first half of 2005, in a market that was completely on fire in Southern California! I'm just dumbfounded to hear these statistics quoted during the absolute best of times. And these weren't just licensed real estate agents, these were agents who took the additional step of actually joining a realty board! Which means they were most likely affiliated with a real estate office, and had their license registered under the Broker's License in that office.
I wonder what the statistics would be then for all real estate licensees, including those who never even affiliated their license with a real estate brokerage office?
It just shows you how difficult it is for most people to consider the possibility of ever prospecting and facing rejection, even if it offers great success as long as you're willing to do it. But then of course the general public keeps telling us that we don't really do much to earn our commissions as real estate agents, and that we're extremely overpaid.
I'd like to hear the opinion of these exact same people once again after prospecting just one week on their own in real estate for about 10-12 hours.
With this in mind, when a client tells you they have a friend who they'd like to have cooperate in your real estate commission, they don't understand the nature of our business. The toughest part of our business is finding the right property where the two parties involved can agree upon closing a transaction.
Yes, there are other difficulties that must be overcome along the way all the way through the closing, but nothing that you'd want to start sacrificing your commission to anyone over. Especially when you know the other person has no experience in the business, they'll most likely do nothing at all in the transaction, or even worse they'll make your life more difficult because of their incompetence.
So you have a situation with your client where their friend has a license, most likely an agent's license, and most likely one not affiliated with any Broker's License right now. (And it probably never was affiliated with a Broker's License at any time since they've had it, either.)
So in effect, you're probably dealing with a licensed agent who has no legal right to receive a commission in the state you work in, because their license isn't registered under anyone's Broker's License right now.
What you really must do is zero in on the situation and perform what's called a "reframe," something that politicians often become brilliant at doing. And in this situation what you'll be doing is actually changing the way your client feels about what they're asking you to do.
Here's a phrase you may want to utilize in creating this reframe:
"John, as you and I both know, it's the locating of the ideal property for you that determines whether or not I'll earn and get paid a commission here. The rest is all follow-up, and I'd never hire somebody after the fact, give them a piece of my commission, and have them do the follow-up for me. That's not real estate brokerage, that's charity."
"If you feel sorry for your friend because he has a real estate license and he's never had a successful real estate career, I understand. But because bringing him into this situation now would be an act of charity, you're going to need to pay him out of your pocket, not mine."
What this will ideally do is get your client to recognize he's asking you for an unreasonable favor for his friend, and at a huge expense to you. And he'll also recognize that if he's not willing to pay the friend out of his own pocket, he shouldn't be asking you to do it either. Quite frankly this person is his friend, not your friend.
This firm, business-like stand will often be all you'll need to have your client get rid of the notion of having his friend cooperate in the commission with you.
