Good brokers provide a vital service that can be well worth the fees charged. Markets are always shifting, and a well-informed agent has the most updated knowledge on what’s going on right now. Though a commission structure does often lead brokers to be very determined to see deals done, that’s their job. Brokers bring buyers and sellers together in complex marketplaces. Without knowledgeable intermediaries pushing, it’s hard for transactions to progress at prices that make sense for all parties. And skipping a sales broker can easily mean leaving money on the table.
It’s Worth the Cost
Take real estate for example. It should tell you something when even savvy investors use brokers to market their properties and secure mortgages. And when they don’t, it can easily bite them, too. In one major deal I observed, buyers who convinced the owners to sell “off market” were able to immediately flip their newly purchased property for a 10% profit. (Because of leverage this brought an immediate 50% gain!) The original sellers lost out, and they vowed to never sell again without an expert middleman. Trying to save the broker’s commission while risking a sale at 10% below market value or paying more mortgage interest for five to 30 years is bad business!
Choose Your Broker Carefully!
Perhaps technological innovation will one day flatten the commissions of complex markets like insurance, real estate, mortgages, and used cars. But until then, a good broker is providing a vital service, one usually well worth paying for.
The stress here, however, is on good. Using an agent who isn’t well trained and knowledgeable is a waste of money. And some agents do indeed put their desires for fat commissions above the needs of their customers. The numbers involved may be huge, and since commission payments are all or nothing, it’s very difficult not to be affected when a closing is in the balance. But ethical and smart players are focused on the big picture. It’s only by serving their customers faithfully that they build up a healthy reputation and succeed over the long term. It pays to ask around about a salesperson’s reputation before signing a brokerage contract. There are wonderful professionals in each field, and with research, it is possible to find an informed and ethical agent.
A Nudge or Helpful Facilitator?
Although sometimes it can be overdone, a bit of pushing can be helpful, even welcome. Some people are too busy to focus even on important things, while others can’t make up their minds about anything. For someone who struggles to decide what to make for supper or which necktie to buy, imagine how hard it is to finalize a complex transaction involving many thousands or even millions of dollars! Every insurance agent can tell you about people who never got around to signing their life insurance applications and passed away leaving families unprotected. And many procrastinators waiting for the housing market to go just a bit higher or lower end up being priced out of the market instead. Sometimes clients are just too fearful to finalize an obviously good decision, and a broker’s nudge is often appreciated.
The Flip Side
Also, mentshlichkeit is a two-way street, and every broker deals with people who treats him unfairly. This misbehavior includes taking an agent’s time when there’s no serious interest, kvetching about fees even after a job well done, or worst, maneuvering to cheat them out of a commission. In the end, there are all types in every group. Be sure to find a reputable broker, and make sure to be a good client, as well.
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