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Ignorance + Lack of Management = $300K Mistake

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At one point or another, all of us have thought, “Man! That agent has no clue what they’re doing!” or “I can’t believe that agent did that – that could cost their client or them (insert here)!” Personally, that thought is often followed by, “Where the heck is their managing broker and how have they not caught this and corrected it?”

I do not believe that ignorance is an excuse so I blame the agent. But I equally blame their broker. Their broker is supposed to be overseeing and managing them (hence the name “Managing” Broker).

Are brokers really “managing” their agents?

Some brokers are not – they’re failing to oversee or manage many, if not all of their agents. Heck, some brokers don’t even look at their agent’s paperwork nor the listing in the MLS before or after it’s been submitted. This is sad and inexcusable. It’s also a HUGE liability for the agent, the broker and the livelihood of the entire office – owner, staff, brokers and agents – and all of the clients the office represents.

The $300,000 mistake…

In my local MLS, the Metropolitan Regional Information Systems (MRIS), the policy for broker co-operation and compensation is as follows,

Compensation specified on listings filed in the service (the MRIS) shall appear in one of three forms:

a) by showing a percentage of gross sales price

b) by showing a definite dollar amount

c) commission may be paid on Net Sales price (Sales Price minus seller concessions) or on base price in new construction if specified in the system

Keeping the rules/regulations you just read in mind, let me share with you what I often see written in the “Broker co-op” (aka compensation) field of short-sale listings: “50%”

Now imagine that a property/listing that had “50%” in the “Broker co-op” field sold for $600K (I ran across such a listing several days ago). What impact does having “50%” in the “Broker co-op” field have on the commission?

Think about that for a few seconds…

Tick….tick….tick…

It means that the Listing Broker owes the Selling (Buyer’s) Broker $300,000 in compensation/commission.

The Selling Broker should (and from what I hear, always does) win their case in arbitration – the MRIS rules and regulations are clear, concise and the listing broker (and the agent) signed a legally binding form that says (in more words), “I have read and understand all of the MRIS rules and regulations in their entirety and I agree to follow them as part of being a member of the MRIS”.

Now imagine if a Listing Broker had to pay out $300,000 to a Selling Broker – in this market. If it’s a small or medium sized office, that one huge payout could potentially put the office out of business. Even a large office of 100+ agents would have a tough time swallowing a sudden $300,000 hit like that.

And think about what would happen to everyone that worked in that office if the office closed – their licenses would be sent back to state, they’d have to rush to switch offices (and all the headaches and money that goes along with that) and their clients would technically be without a broker or agent (that’s a whole ‘nother set of troubles in itself).

One “little” mistake and look what can happen.

Agents

Know what you’re doing. Not knowing is not an excuse – learn, learn and learn some more. Don’t just do something because others are doing it – that doesn’t necessarily make it “acceptable practice” or right. And if you haven’t done it or experienced it before, ask your broker. If they “don’t have time”, tell them they’d better make time.

Brokers

You’d better start truly managing, overseeing and leading your agents. This recent market has brought significant changes to the rules of old and a complete new set of rules have been created – you better know them and more importantly, your agents better know them and follow them.

By not managing or overseeing your agents properly, you’re putting yourself, the owner, every agent in your office and every client your office represents at risk. There is no excuse for not managing and overseeing your agents – none whatsoever. It is your job and you get paid to do so. So do your job.

Or…if you really, really like me and want to pay my broker $300K in commission for selling your $600K listing…don’t do your job 🙂

Danilo Bogdanovic is a Real Estate Consultant/REALTOR(R) in Northern Virginia and author/owner of LoudounScene.com and LoudounForeclosures.com. Danilo serves on various committees with the Dulles Area Association of REALTORS(R) and the Virginia Association of REALTORS(R).

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12 Comments

12 Comments

  1. Missy Caulk

    March 16, 2009 at 7:14 am

    We have two lines in our listing contract.

    ______% of commission at_____%.

    I have seen them filled out wrong too. 50% is suppose to go in line one and the amount in the second one.

  2. Kim Hannemann

    March 16, 2009 at 7:50 am

    Danilo – how often do you see the single digit “3?” 3 what? Dollars? Percent? I bet it’s far more often than you see “50%.”

    I agree that the lack of broker oversight is a time bomb. So is the lack of attention that MRIS is paying to this issue.

  3. Rob Aubrey

    March 16, 2009 at 7:57 am

    you could make a full price no contingency offer, just to see the look on thier faces.

  4. Heather Elias

    March 16, 2009 at 7:58 am

    There are sooo many of those incorrect listings that it’s amazing. And in my experience, even larger, recognizable firms have managing brokers that are more concerned with recruiting new bodies for the office than they are managing the activities of the agents they already have…hence the glaring mistakes (like these) that you see in their listings and contracts.

  5. Danilo Bogdanovic

    March 16, 2009 at 8:01 am

    My understanding is that “3” means “3 percent”.

    That’s because, the rules say, “by showing a percentage of gross sales price or by showing a definite dollar amount” – the key word is “definite” – without a “$” in front, it defaults to “percent”. That’s why just putting “50” means “50 percent”.

    (I’m not a lawyer nor work for MRIS-this is what has been told to me by them when I asked for further clarification)

    MRIS is not responsible for the amount of compensation nor should they be. Offering “50%” falls within the MRIS rules and regulations so there’s nothing for the MRIS to say/do. This is an agent/broker issue.

  6. Ken Montville - The MD Suburbs of DC

    March 16, 2009 at 8:26 am

    I’ve also seen “neg” meaning “negotiable” in the co-op line which really means the listing agent/broker doesn’t want to compensate a co-operating agent/broker. I’ve seen “Remarks” about co-op commissions in short sales which, as we know, shouldn’t trump the MRIS rules but often do (thank God for the new Fannie ruling on bank manipulation of short sale commissions)

    If your point is that it’s the Wild West out there and Brokers should work to maintain law and order, it’s a good point.

    If your thinking that some Broker is going to sit still and pay out 50% of any sales price because of an agent error, you’re mistaken. The arbitration costs alone would be worth it to “settle” for something less and, meanwhile, the co-operating agent/broker is put through the ringer as well.

    Still it’s worthwhile to point out.

  7. Rob Aubrey

    March 16, 2009 at 8:30 am

    It’s like raising kids, if there is no consequences for wrong behavior it continues.

  8. Kim Hannemann

    March 16, 2009 at 1:47 pm

    “MRIS is not responsible for the amount of compensation nor should they be. Offering “50%” falls within the MRIS rules and regulations so there’s nothing for the MRIS to say/do. This is an agent/broker issue.”

    MRIS is responsible for a system that allows ANYTHING to be entered in the Compensation field. They have edits built in requiring all sorts of other stuff, but can’t have a better data entry area for compensation? The rules are clear. Even I could write code to handle it.

  9. Danilo Bogdanovic

    March 16, 2009 at 2:24 pm

    I’m not disagreeing with you that the MRIS could make some improvements that would help the cause.

    Until they do (and even when they do), it’s ultimately the broker’s responsibility to manage their agents and check what they’re putting into the system/how much compensation is being offered.

    For a broker to rely on the MRIS (or any MLS) to safeguard them against their agents doing something wrong is foolish, playing with fire and a bit lazy if you ask me.

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Business Marketing

Google Analytics will now filter out bot traffic

(BUSINESS NEWS) Bender won’t be happy that Google Analytics will now automatically remove bot traffic from your results, but it’ll help your business.

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In the competitive, busy world of online content, Google Analytics can help businesses and online publications deliver what their audience and consumers want. Now Google is finally taking the step of filtering out bot traffic in your Google Analytics reporting. This is excellent news!

In the world of websites, online news sites, blogs, and social media, bots are the bane of our existence. In their finest form, they are the electronic equivalent of junk mail. At their worst, they can carry malicious malware and viruses to your site and computer. They can even flood the internet with unfounded rumors that can have an impact on people’s opinions–stirring the political pot or lending misleading numbers to drive unfounded rumors, such as wearing a mask is dangerous. No it’s not! Chalk that nonsense up to bots and crackpots.

For businesses that rely on Google Analytics to determine what content is not only reaching but also resonating with potential customers, filtering out the bot traffic is crucial to determining the best course of action. Bots skew the data and therefore, end up costing businesses money.

Bots set up for malicious purposes crawl the internet looking for certain information or user behaviors. Bad bots can steal copyrighted content and give it to a competitor. Having identical copies on two sites hurts your site and can dink your SEO ranking. However, good bots can seek out duplicate content and other copyright infringements, so the original content creator can report them.

However, it is important for companies and content creators to know if their content is actually reaching real live humans. To this end, Google will start filtering out bot traffic automatically. The Interactive Advertising Bureau (IAB) actually provides an International Spiders and Bots list, through which Google can more easily identify bots. They use the list and their own internal research to seek out bots in action, crawling through the internet and confusing things.

Google says the bot traffic will be automatically filtered out of the Google Analytics results–users don’t have the choice. Some may argue there is a good reason to see all of the data, including bots. Many businesses and online publications, though, will be relieved to have a much clearer vision of what content genuinely appeals to humans, to readers and potential customers. It is a welcomed advancement.

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Business Marketing

Opportunity Zones: A chance to do good

(BUSINESS MARKETING) Opportunity zones offer a chance to breathe new life into economically-distressed communities.

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opportunity zones

Opportunity Zones are a beautiful mechanism for growing communities that are struggling, but some critics have put this process in a negative light. The following is an expert’s perspective on just this topic.

Jim White, PhD is Chairman and CEO of Post Harvest Technologies, Inc. and Growers Ice Company, Inc., Founder and CEO of PHT Opportunity Fund LP, and Founder and President of JL White International, LLC. His new book is a heartfelt rallying cry for investors: Opportunity Investing: How to Revitalize Urban and Rural Communities with Opportunity Funds, launched March 31, 2020.

Dr. White holds a B.S. in civil engineering, an MBA, and a doctorate in psychology and organizational behavior. He acquires struggling businesses to revive and develop them into profitable enterprises using his business turnaround strategy.

In his own words below:

BY JIM WHITE, PHD

Every investment vehicle has a twist some folks don’t like. Real estate, stock options, offshore tax havens, and even charitable gifting can be criticized for certain loopholes.

Likewise, some detractors have pointed to opportunity zones, a newer investment vehicle unveiled in the Tax Cuts and Jobs Act passed by Congress in December 2017. This bold, bipartisan plan allows for private investment capital to be channeled into some of the most distressed communities in the nation, serving the struggling residents and the investors alike.

Personally, I believe it is one of the noblest initiatives to emerge from Washington in years.

I grew up in a sharecropper cabin in what would have been an opportunity zone in Salem, South Carolina. What would an influx of investment dollars have meant to my low-income community? More and better-paying jobs to offset unemployment. People relocating to my town for those jobs, reversing population decline and increasing real estate values. New life breathed into local businesses. The increased tax revenues could have helped improve failing infrastructure. Social challenges, like crime and drug use, could have decreased. Better resources for my family and our neighbors, such as health care and education, would have emerged.

Today, there are nearly 8,800 distressed communities dotting the country that have been identified as Qualified Opportunity Zones (QOZs). These neighborhoods were designated from census tracks, treasury, and state leaders as communities that would benefit from an influx of investment dollars directed through Qualified Opportunity Funds (QOFs) to reinvigorate businesses, rebuild infrastructure and bolster residents.

As our economy continues to falter, more and more businesses file Chapter 11 and unemployment soars under COVID-19, I believe we are heading toward a painful expansion in designated opportunity zones. Even with the latest round of CARES stimulus money many people will have no way to rebound from this crisis.

One of the unexpected consequences of the coronavirus quarantine is that many businesses are discovering that, in reality, they can succeed through working remotely. This success is a double edged sword, meaning that if a business can thrive with employees working offsite then commercial real estate will suffer. And when companies no longer require brick-and-mortar locations, a local domino effect ensues; ancillary businesses, from cafés to gyms to print shops in and around a commercial office environment will subsequently close. The ripples will be felt through many other industries, including construction, transportation, energy, and retail.

Qualified Opportunity Zones and Qualified Opportunity Funds are instruments that can help stop a downward spiral. When a sponsor is able to present a project that meets the objectives of the QOZ initiative, both the QOZ and the investors benefit. That’s a win!

And, it’s not only urban centers that benefit from investment dollars. Forty percent of opportunity zones are rural. Even with often plentiful food, water, energy and other natural resources, deep poverty exists, and too many of America’s 60 million rural residents lack access to education and healthcare. A declining population often goes hand in hand with failing infrastructure as tax money for repairs dwindles. Many households lack broadband, something the vast majority of Americans take for granted.

Despite the challenges, rural residents are often surprisingly resilient and resourceful. According to The Hill (“Rural America has opportunity zones too”), rural residents create self-employment opportunities at a slightly higher rate than the national average. Their challenge is to connect with investors and access funding, more of which is directed to small business investment on the coasts.

In fact, many entrepreneurs and small business owners don’t know about Qualified Opportunity Funds. If a business is located in an opportunity zone it is eligible for direct funding by reaching out to the QOFs with a specific request for funding.

More than any investment plan that’s come before, I believe opportunity zones have the greatest capacity for positive social and economic impact. Spread out over many communities, these investments can help our nation flourish as a whole.

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Business Marketing

Gloves that translate sign language in real time

(BUSINESS MARKETING) A new wearable tech translates American Sign Language into audible English in real time.

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Advancements in technology never cease to amaze. The same is true right this moment as a new technology has been released that helps translate American Sign Language (ASL) signs into spoken English in real time.

This technology comes in the form of a hand glove – similar looking on the front side to what one would wear in the winter, but much more advanced when in view of the palm. The palm side of the glove contains sensors on the wearer to identify each word, phrase, or letter that they form via ASL, and is then translated into audible English via an app that coincides with the glove.

This is all done in real time and allows for instant communication without the need for a human translator. The signals are translated at a rate of one word per second.

The project was developed by scientists at UCLA. “Our hope is that this opens up an easy way for people who use sign language to communicate directly with non-signers without needing someone else to translate for them,” said lead researcher Jun Chen.

The hope is to make communication easier for those who rely on ASL, and to help those unfamiliar with ASL adapt to the signs. It is thought that between 250,000 and 500,000 people in the United States use ASL. As of now, the glove does not translate British Sign Language – the other form a sign language that utilizes English.

According to CNN, the researchers also added adhesive sensors to the faces of people used to test the device — between their eyebrows and on one side of their mouths — to capture facial expressions that are a part of American Sign Language. However, this facet of the technology is not loved by all.

“The tech is redundant because deaf signers already make extensive use of text-to-speech or text translation software on their phones, or simply write with pen and paper, or even gesture clearly,” said Gabrielle Hodge, a deaf post-doctoral researcher from the Deafness Cognition and Language Research Centre (DCAL) at University College London. “There is nothing wrong with these forms of communication.”

What are your thoughts on this advancement? Comment below!

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