Broker referral..........how does this work?

If you hire someone to sell your place, you'll set the commission - 5%, 6%, whatever.

If your selling broker is a member of REBNY (the Real Estate Board of New York), which is our trade association, that commission will be split in half, with half going to the listing agent's firm and half going to the buyer's broker's agent's firm.

What your former broker is trying to do is to set up an agreement with your next broker that they will pay him a percentage of the listing agent's commission, so that he gets paid for whatever he's done in terms of educating you towards the correct sale price, staging the apartment, whatever.

From the point of view of the next broker, they are paying a portion of their commission to have "short-circuited" the hunt for new business.

Most brokers absolutely do this. For example, I might get a client from a California broker who doesn't work here, I'd pay her 20% of my side of the commission for the referral. It's not a "favor" -- it's a business transaction.

If you hire your own broker, but you still want your former agent to get paid, I don't see why you couldn't negotiate with anyone you hire to pay your former agent a referral fee.

The only way it would cost you money is if you were paying a higher commission rate -- say your old broker had offered to sell your apartment at a 5.5% commission, and the next broker wants to charge you 6%.

ali r.
DG Neary Realty

Thank you very much for your clear explanation Ali.........now I know how to proceed..........

In your sentence starting "should I find someone on my own....", are you suggesting you would lie about your friend having provided a referral? I must be misunderstanding your sentence, because that would be cheating/stealing from a broker, obviously.

Karla Harby
Rutenberg Realty NYC
Kharby@crrnyc.com
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Hi kharby2- No, I am saying if I found another broker on my own (not one that is being referred to me from my present broker), I believe it is my choice as to whether or not I want to list my current broker to give him the credit for the referral (even if he didn't provide it). That would be out of me being kind to say "thanks it didn't work out" but I'm still giving you referral credit.

If my current broker provides a referral(s) that I decide to follow up with and use of course I am giving them the credit and potential revenue they would receive from the referral.

Does that clarify your question......?

"I believe it is my choice as to whether or not I want to list my current broker to give him the credit for the referral (even if he didn't provide it). "

Very clear.

Straight shooter that I am, I would never accept a "referral" fee based on false information. Under this scenario, your friend will have to sign a paper that attests to events that never occurred, you know, and you want to thank your friend with someone else's money. You might want to think about this more deeply. Since you have a little riff with this broker friend, perhaps a nice dinner out and a chance to talk about things would be a much better form of thank you.

Karla Harby
Rutenberg NYC
Kharby@crrnyc.com

Hi Kharby2- My broker feels "entitlement" about everything, that is why I WILL NEVER USE A FRIEND AS A BROKER AGAIN IN LIFE, EVER EVER EVER.

He would gladly take a referral fee for a broker he didn't introduce me to, I thought it may be a way to keep the peace. But if that is something that is not legal, or morally incorrect in the real estate world, I want no part of it and I will not make him the offer. Your guidance as a broker is appreciated.

They say good guys may finish last, but at least I can sleep at night!

Tell your idiot friend to man up. As a RE broker, you get paid a big commission for relatively little work when things go right. You know why? Because you don't get paid jack shit when things go wrong. You know what? Things went wrong, like they often do in his business. Tell him to quit his bitching, and then tell him to fuck off: you don't need "friends" like this.

If he's got a problem with it, send him here to talk to me. Whatever you do, don't take a referral from this loser, and don't put him in the middle of another transaction. You'll just be setting that one up with a big baby who will piss on everyone if he doesn't get his way, as he's trying to do here. He's using his personal relationship with you to angle his way towards some of your money that he doesn't deserve.

inonada- You couldn't have said it better. This wasn't a casual acuaintancce of mine but truly a good friend. That is why (call me stupid), I thought he was really looking out in my best interests. I don't want to fight with him anymore, but I do need to tell him I don't want to be in business together any longer and you are right, why should I accept his referrals. There are thosands of brokers out there, I can find another on my own.

Anyway, if you have seen my other recent voluminious postings I am thinking of being FSBO seller of my apartment. The consensus on Sreet Easy was farily positive and they thought I should give it a go. I know more about my home than any of the brokers do, and I have the time to do it.....If I could save about 30G in the process it would be worth it.

You hit the nail on the head when you said brokers get a big comm. for relatively little work when things go right, and don't get paid jack shit when they go wrong.....Truer words were never said. They chose this job, and the ups and downs are part of it.

P.s.- It doesn't help that my broker/friend haz zero listings except for rentals on his website. I am sure that is why all of the pressure is being put on me. If he was so busy with other listings, I don't think it would matter as much to him.

On FSBO vs. broker, I don't have much of an opinion. Just don't let this bad experience overly influence your judgement on the issue.

I've read your posts. It seems you try to be very nice, and you don't want to ever be possibly in the wrong, so you tread very carefully. Good for you, I'm very much the same way. But, I think you are missing one of the key benefits of being overly conscientious. Because you tread so carefully, it is painfully obvious to all when you are right and someone is trying to pull bullshit on you. I suggest you engage in one of the rare pleasures of life that comes with being like this: telling a person to f off guilt-free. You'll sleep like a baby still, maybe more so, because justice was served.

You were a good friend to give your friend a shot with this listing. He obviously had a leg up because of the friendship. Things didn't work out, maybe because of bad luck, maybe because of bad work. A professional or true friend would not keep leeching on the situation so painfully obviously. Time to cut him off. His lack of business is no excuse for him pressuring you. As said in Godfather II, "this is the business we've chosen".

thanks Inonada- Good advice once again. You are correct i tread carefully, want to live a clean life but I am going to write him an email in the next few minutes, since he wants to renew our contract and keep it very simple that states, I just don't want to renew nor think this continued "business" relationship in light of our friendship will serve either of us properly as we both seem to have different agendas....

that simple....you've helped give me the impetus to get that going this morning.

And if he doesn't want to be friends after all of these years, just for losing a listing, how good a friend is this anyway?

I have a whole list of things I could say that he did that was professionally not to my liking (but I will take the high road and leave that out both on this board and to him).

Sorry for the shitty situation. I know you want to keep it simple and not get into it, but be prepared for a follow-up phone call where all that will be dredged up. The broker/friend will not let it go that easily, you'll find yourself having to defend your choice to him, but you just need to be firm. Attempts will be made to guilt you to change your mind, which will include what you will find to be threats to friendship. Friendship may be lost, but in all likelihood all will be fine in several months.

Good luck.

Hi Ionada- Thanks for your support....this wasn't easy. I sent the email.......before I did I read it to my best friend and she covered almost all of the points you posted above....and I'm ready for the fall-out.

But, for some reason, I feel better already having done this and now feel clear to be able to go on to the next step.

Another life lesson learned, but thank you for your words and to many of the posters on street easy that made it very clear to me that I needed to make a break. Had this been any broker, it would have been a no-brainer, but with a long term friend/broker, it's not as easy as that.

So damier what was the outcome of your email? did your friend respond? As a broker I can tell you this is not an easy situation, but anyone who values their friendship will accept your decision no matter what it is. In the past friends have given me their listings, but never did I take it for granted. They do not owe me anything, and you do not owe anything to your friend. While it probably sucks for him, as he is looking at this as money lost, to fault you for taking the listing away would mean that he was taking advantage of the friendship. Asking for a referral makes him look even more desperate. I agree with inonda, in that he should suck it up. I too have lost a friend's listing....I moved on.....and didn't cry about it. Hopefully that was his response.

Thanks UESaptowner for your follow up. He receieved the email and responded 24 hours later with "lets talk this week", which hasn't happened yet. So as they say , the ball is in his court. I am more concerned about this long term friendship then this business deal which is 100% dead in my eyes and can only create more conflict and unhappiness.

Hopefully he will understand but I really prefer to take the high road and not discuss point for point what happened (which I am doubtful he will agree with some of my points anyway), and let's put this behind us and move on.

It's clearly not my fault or responsibility to provide business for him in any way,shape. or form, and the way this was going was turning uglier and uglier.

Time will tell what will happpen both with our friendship and the sale of my apartment, but I flatly refuse to mix the two again. I learned a hard lesson......and I mean this sincerely to all the facebook posters that understood my predicamentk, you were a GREAT help in getting me to act on this right away and realize that mixing frienship and real estate in a transaction can turn rather toxic, whioh it did.

Happy New Year all......I have more to post in the next few days, this business gives one a plethora of items to talk about and discuss and is certainly helpful in educating me.

I said "facebook" poster.....lol......I meant STREET EASY posters!