Co-Broke or Referral – who does the work? Another agent has a listing you think your customer may be interested in. Will the listing agent co-broke or want you to turn the customer over to him/her and receive a referral fee? Several things help decide this. What is your experience level; full time, part-time commercial agent or primarily a residential agent? Are you prepared to “run” the customer, show them this and other properties? What is your relationship with the customer, established or new? When I co-broke with another agent I expect them to do half the work, if not lets set up a referral fee.
All fees are negotiable when co-broking it’s usually a 50-50 split of the commission, but I do remember (I have been in the business over 35 years) when commissions were split 60-40. Market conditions had many listings but few customers, so having a buyer or tenant was worth more (like conditions today?) and the buying side got 60% of the commission. It is important, whatever is decided, that the commission fee and split be disclosed, and agreed upon in writing, by the agents.
Referral fees also are based on what you can do to help the deal, were you just introduced to the customer yourself or do you have an “influencing” relationship with them? Once again whatever is decided needs to be agreed upon in writing.
Another relationship with agents may result as a desire for a newer commercial agent to find a Mentor, or Partner or to just request an experienced agent to “assist me”. What is fair compensation in these cases? This may get complicated as during transactions the clients may seek additional properties or several customers immerge that both agents feel are their own.
When an experienced agent mentors someone they usually receive a percentage of all the new agent’s commissions for a specific period of time. Out of design they are privy to all the information about the transactions.
Partnerships are more permanent, require a very specific agreement as to who does what and who gets paid what, but they also need to address possible termination. What happens to deals and customer’s then?
Asking another more experienced agent to “assist you” with a specific deal needs to establish boundaries as to working with this client or customer again. The danger is the client may choose to work only with the more experienced agent in the future.
The key to these relationships is fairness, complemented by an agreement in writing covering all contingencies.
Ed Smith serves as Eastern Regional Director of Coldwell Banker Commercial NRT, is a Real Estate Broker, Commercial Continuing Education Instructor, Corporate Trainer, Speaker and Textbook Author; he may be contacted at Edward.firstname.lastname@example.org.CommercialEd.com.