Why We Use Exclusive Representation in Real Estate

When I first got into Real Estate I was literally walking the streets. At the time, it definitely wasn’t very safe for my young blonde 20 something year old self to be going door to door in high heels down the major roads in Nashville. But I was told it was the only way I would get business, so I did. And honestly, I wasn’t getting anywhere fast. I even started having to base the success of my day on how many cat calls I had received just to keep things light hearted and my morale high. So naturally, one day as I was walking down 8th, I ran into a criminal masquerading as a Seller. One that has forever shaped my opinions of work and worth.

Door to Door Sales in the South

As you can imagine, some days walking the streets were successful, sunny and great. It is the South after all, and this was my choice over 40 hrs a week of office life. But other days were really scary, like when I walked in on two drug addicts shooting up and threatening to kill me. I was working primarily underdeveloped areas, corridors and properties with upside, so NOT the safest areas in town. My shoes and soul would take a beating. Most of the time, the gatekeepers themselves scowled so hard that I would be frozen in my tracks, speechless and wondering why on earth I had decided to “poke the bear” in the first place.

One of the things I always brought with me (other than my conceal carry of course!) was “Estate Expert” a Quarterly Market Report, written by yours truly, with tons of data, development news, and information on real estate deals. I would pass this out to keep owners informed of the Real Estate market without beating them over the head with a cheesy Sales Pitch. It had worked a couple of times and I was gaining readership online at least. An owner on 8th liked it enough that he called me up to schedule a meeting about selling his property.

One of the FREE services we offer is an in depth Broker’s Property Evaluation. We include a thorough examination of your Property, the Pros and Cons of its location, site, size, etc. How Comparable Sales (both SOLD and FOR SALE) stack up, and listing recommendations and analytics. These documents are usually 50+ pages long and take a lot of time to prepare. They cover the gamut of related scenarios concerning the sale or lease of your commercial property. They also include suggested list price ranges, marketing and schedules, and our Exclusive Listing Agreement.

Before I present these documents, I also like to get the 1st hand story from the Seller on why they are considering a sale and how I might realistically meet or exceed their expectations. I then customize my service to their specific needs. Their stories allow me to provide the highest value for the process and property. It also helps me to best negotiate on their behalf and offer solutions that provide a win win.

This Seller’s story was fascinating and turmoiled. He had been trying to sell his business with a business broker but had experienced zero success. He said had a strained relationship with the “Crazy Hat Lady” next door that shared a wall with his property. He also said he wanted to sell his property separately from his business but that every business broker always tried to include the price of it in their evaluations and contracts. He would not sign a contract with them to sell because he thought his company was more valuable than it was and that the Brokers were not above board.

This was the start of my Dummy Award Training, many clear red flags that the owner had unrealistic expectations AND didn’t like signing contracts. He also had no problem bad mouthing others that could benefit him. Not a good sign…. not good at all…..

But I had someone who wanted my expertise! Winning! And I wanted the opportunity to serve and help him sell his property for more than he could with anyone else. I left my Exclusive Listing on the table and got to work with his verbal commitment and a hand shake that he would send me a copy of the fully executed agreement.

A couple of months later, another Broker reached out to me saying he had a Buyer and that my “client” had told him to negotiate the deal directly through me. Success!

We all spent the next 3 long months negotiating the sale in good faith. After 15 LOI and Purchase and Sale Agreement Revisions, we were finally getting somewhere. Until the Seller started getting weird on us…

It’s Okay, As Long As You Admit It – Disclose & Disclaim

In Real Estate, one of the golden rules is to Disclose. People usually don’t have a problem with the knowns, like, “Hey, my property is in the floodplain” but they do have a problem if they find out later in the process that you, their Realtor knew and didn’t tell them. Surprises are usually NOT your friend in Real Estate. Plus most of my business has always been from repeat clients so, of course Disclosure and other Ethical standards are at the foundation of all of my deals.

Throughout any Commercial process it is also my duty to Disclaim to my client where my expertise starts and stops. I am not an Attorney, an Appraiser, a Home Inspector, Engineer, etc. and cannot claim to be. All of our Disclaimer and Disclosure language gets repeated in emails, verbally, and in documents. Each re-stating language like:

“All negotiations with prospective Purchasers/Tenants shall be conducted by BROKER in conjunction with Owner and Owner’s Counsel. Owner and its Counsel will be responsible for determining the legal sufficiency of the purchase, lease and sale agreements and other documents relating to any transaction contemplated by this Agreement.”

For these reasons, I have found great relationships and love recommending Preferred Vendors,  in every transaction. For instance, I always end up recommending real estate attorneys in every deal whom I trust to have my clients’ backs and who can successfully protect their interest while we work through a sale or lease transaction.

But Contracts Are Not Fool Proof

So all of a sudden the Seller wanted to take the contracts to a new attorney. He stopped communicating with me and told me he would send his new attorney’s comments over. In the final hour, we received a Redlined, updated Purchase and Sale Agreement.

Myself and my commission had been written out of the contract!!!

The Seller had decided he didn’t want to pay me and used his new attorney to find a loophole in all of our negotiations pointing back to the fact that he had never signed my Exclusive Listing Agreement. Even though he had agreed in emails, signed LOIs, and verbally confirmed with witnesses to the such, he had never signed my contract. His new attorney would have a lot easier time writing me out and himself in on an hourly basis than I could even comprehend. How could I be so stupid? So naive?

I cried to my husband and colleagues about what had happened. My attorney friends nicely told me how much of an idiot I was over beer. I was beat down. I started thinking of doing my next day of walking the streets and could barely put on my heels. Needless to say, I didn’t get any cat calls that week… or month.

There I was, in the middle of June, broke and “Sweating like a whore in church”.  –#Southernisms

The other Broker was equally as perturbed. We had worked well together, and without me, both of our hard work would be out the window. The new attorney went heavy handed into re-negotiating the Entire deal from scratch. Now that he was on an hourly retainer, there were TONS of contractual items to be re-worked. How convenient. I watched from the sidelines as he ended up costing everyone the sale, and still walked away with his hourly fees, money in hand.

My only solace, they could never make the Sale happen after I was gone.

And as for me, I walked away that day with the Biggest Dummy Award of my life, ironically from the owner of a company called Ovation Awards & Engraving.  That day, I had lost the equivalent of my entire year’s income. I had been praised all the way up to opening that fateful email.  But when the pedal came to the “medal” (<– Haha, see what I did there?) the Seller didn’t have an issue with other business Brokers or contracts. He had an issue with paying people for their services and upholding his word. And unfortunately, in Commercial Real Estate he isn’t the first or the last to hand out a Dummy Award.

Where Is She Now – Exclusive Representation

I picked myself up that year and finished strong in Sales even with the temporary setback. It was a hard turning point in my career. Years later, I often drive down 8th Ave and remember my “Dummy” Award. It’s a constant reminder of the value of Experience and Failure amongst other Awards and Recognitions I have received. And I still have the pleasure of going door to door, even when some of the gatekeepers make me tremble. The Buyer’s agent on the deal that never got paid represents the Seller of an adjacent property on Olympic. I keep an eye out for him on how to make that piece of the puzzle fit with those I serve because I know we can work a deal together, and I love the area.

Relationships still matter in the South. – #SouthernAthenaTips

Of course I’m keen on helping my Affiliate Agents and others not make the same mistake. That is why, at Southern Athena, we require Signed Exclusive Representation Agreements with ALL of our clients. We also now primarily use Tennessee Association of Realtor forms and contracts with state wide standardized attorney approved language that is more bullet proof than past contracts.  We value the importance of our work and the commitments made during a Real Estate transaction. Those Written Agreements are a critical part of making our SALES happen and ensuring we are taking care of each other.

I am thankful for the lessons learned in this experience and the many other hard lessons since. By being quick to see the subtle warning signs of a deal going south, I am better able to help my clients and myself strategize a win and stay out of danger.

Experience as a teacher has also taught me to better see that twitch of dishonesty when big talkers have ill intentions and can’t put pen to paper. Or the signs of a developer who has no loyalty to his team. Having these experiences have in turn given me more opportunity. I get to save myself to better care for the clients I serve, work on projects that have higher rates of success, and work with people that care about others more than lining their pockets.

*Photo Credits! Thank you to Andrew Tanglao and rawpixel for their negotiation styled images.