Commercial Real Estate Agents – Protect Your Commissions and Fees from Shifty Clients

Whilst I may be biased, I have seen so many commercial real estate clients over the years take the advantage where they can to avoid paying full or any commission to the agent that has served them in a sale or lease transaction.  Some agents and salespeople that should have known better have been impacted by many tens of thousands of dollars after the client has avoided payments.

If the client wants to avoid something they just need to hand their agent’s appointment to their solicitor to look for a loop hole.  Solicitors are good at that!

So what is the message here?  Make sure that your agency appointments are ‘water tight’ and accurate.  If you do not know what that means or looks like, then find someone who understands just what a good listing document looks like and how it is completed.

All too often we see the media knock agents for an array of reasons; rarely  if at all will you see the reverse happen in the media when a client does the wrong thing by an agent when that client seeks ways to avoid paying commissions or fees.

We as agents have to be so focused on our documentation today.  Every appointment to act as agent on behalf of a client should be correctly signed and completed accurately.  If we do not do that we leave the door wide open for the client to avoid commissions and fees.

Here are my rules on that:

  1. Never trust a client no matter how long you have known them
  2. Question a client deeply and comprehensively regards their property and legal title
  3. If you are to introduce a buyer to another agent that has a listing of a property, make sure that they have legally been appointed to act as agent for the client and that your share of the commission is agreed to be paid by that agent at the time of settlement.  Get the conjunction agents written agreement to the process before you introduce your buyer.
  4. Get every appointment to act as an agent correctly signed by the client before you take action with the listing
  5. Get all instructions in writing from the client or in the case of verbal instructions evidence back to them in writing any instructions given
  6. Collect sufficient funds to cover your commission and fees before you settle a deal
  7. If you have a marketing commitment made by the client to vendor funded marketing, then get the money paid and in the bank before you lodge the adverts.
  8. Draw the attention of the client to the fees and commissions involved by getting them to sign the agency appointment and initial the clause relating to payment of costs and commissions

Remember that you are not a charity and that you provide some very special skills for the clients that you act for.  Do not provide those skills unless and until the correct documentation has been legally and accurately signed by the right property owners for the subject land or building.

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By John Highman

John Highman is an International Commercial Real Estate Author, Conference Speaker, and Broadcaster living in Australia, who shares property investment ideas and information to online audiences Worldwide.