October 17, 2007
Brokers Speak Out On Co-Exclusives
Well, the co-exclusive issue raised by yours truly must have a hit a chord. More and more brokers – again without being named – are chiming in on the topic. Here's the latest with my comments in parentheses.
"The NY Department of State, which regulates the real estate industry in the state, does not recognize co or tri exclusives as a legal contract. Technically, there is no such thing as a co-exclusive."
(I knew it! That's why I raised the question in the first place.)
"Co-exclusives are a local concoction drummed up by the old boy network in the Hamptons when 'exclusives' instead of the typical 'open listing' started becoming popular with sellers in the '90s. It was a way of giving into the fear of sellers who were afraid that other brokers wouldn't show their house if they gave someone an exclusive (which unfortunately WAS true years ago, although most of those battle-axes have been run out of the business)."
(I knew that, too.)
"If the owner couldn't make a decision, they could just give it to TWO agencies, or three, or even FOUR, yes, we do occasionally see Quad exclusives – quite Monty Python-esq."
(I regret I'm not that familiar with Monty Python but recognized an oxymoron when I tripped over it again and again.)
"The other reason it was formed was to block out other agencies from having the listing. That was before co-broking evolved into what it is today. ALL (99 percent) listings are co-broked today."
(Yeah – now referring to self as Miss Know-It-All – I mentioned that phenomenon in my original column several weeks ago.)
"Lastly, for now, the 80/20 'scheme' was a friendly wager between the two agencies to give a bonus to the house if one of the co-exclusive agencies ended up selling the listing. That practice is on its way out for several reasons. It's unethical, immoral and might be illegal to create a situation where the agent is incentivized to steer the sale to buyer of an in-house agent, because they will make more money if they do, rather than to the buyer whose offer is in the best interest of the seller."
(Wow, that I didn't know. I did ask what benefit clients derived from co-exclusives. There we have a clear downside!)
"The other reason that practice is on the way out is because in the old days, there were many similar sized agencies and no 800 pound gorillas. Today, with the Corcoran's of the world having 500 agents versus 10, 20, 50 or even 100 agents of the other companies, it is unfair to assume that the practice will survive. Consumers are becoming more and more educated, the US DOJ [United States Department of Justice] is on the war path nationally around illegal real estate practices and this type of tomfoolery will end."
(Hmmm, and thank you for the take, unnamed broker! Are we helping the industry, the clients, the customers with raising the question in the first place?)
From Town and Country Real Estate: On October 26 starting at 4 p.m. there will be a reception "unveiling" the works of local artist Terry Elkins, at the Southold office at 57125 Main Road. There will be wine and cheese compliments of Evergreen Mortgage.
Prudential Long Island Real Estate (before adding Douglas Elliman) started this trend at their Bridgehampton office, having shows for local artists. It caught on. Look, anything that brings potential customers or clients to your door is a good idea. I know I hoped to promote my second book this way – you know, thinking I knew the bandleaders – but had no corporate takers. That was a reality check.
East End real estate? A strange business, for sure.
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