Latest / Dishin' Dirt with Gary Pickren / Your Fiduciary Duty Does NOT Mean You Work for Free

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Your Fiduciary Duty Does NOT Mean You Work for Free · Dishin' Dirt with Gary Pickren

0:02
SPEAKER_01: Over the years, I've done about 300 episodes of Dish and Dirt.
0:05
SPEAKER_01: And I have probably spent more time in those 300 episodes talking about your fiduciary to your client than almost any other subject.
0:13
SPEAKER_01: I've told you that when you represent your client, that your client's interests have to come before your own.
0:19
SPEAKER_01: I've told you that you can't steer a buyer toward one house or another because it pays you more commission.
0:25
SPEAKER_01: I've told you that you can't withhold information from your client because if you disclose that information, it might kill the deal.
0:31
SPEAKER_01: And I've told you that you can't recommend something based on the fact that it might be best for your commission instead of what is best for your client.
0:39
SPEAKER_01: And I stand by every bit of that.
0:41
SPEAKER_01: But today I want to talk about the other side of your fiduciary duty because I think some real estate agents, and really in particular, some clients, have taken this concept way too far.
0:52
SPEAKER_01: Some agents and their clients are starting to believe that because they owe a fiduary duty to their client, that somehow the real estate agent surrenders all of their rights.
1:01
SPEAKER_01: Their rights to their commission or to all of their commission.
1:05
SPEAKER_01: The client wants you to cut your commission.
1:07
SPEAKER_01: Well, I have a fiduciary duty.
1:08
SPEAKER_01: The buyers and sellers are three, four, five thousand dollars apart.
1:11
SPEAKER_01: Well, maybe you just have to kick in to make the deal work.
1:14
SPEAKER_01: Your buyer sign an agreement agreeing to pay you a certain commission, but the seller side won't agree to pay all of it.
1:20
SPEAKER_01: Well, I guess you just have to eat the difference.
1:21
SPEAKER_01: Or the seller's changed his mind.
1:23
SPEAKER_01: You spend all this time marketing the property, you've done everything that the agreement requires of you.
1:27
SPEAKER_01: That's just part of the business, right?
1:29
SPEAKER_01: No, that is not what fiduary duty means.
1:32
SPEAKER_01: Not at all.
1:33
SPEAKER_01: And that's what we're going to be talking about here today.
1:35
SPEAKER_01: Your fiduciary duty does not mean that you have to work for free or that you have to cut your commission every time your client asks.
1:42
SPEAKER_01: It does not mean that your commission becomes the emergency fund for the transaction.
1:47
SPEAKER_01: And it doesn't mean that every contractual right that you've negotiated simply disappears the moment that exercising that right becomes inconvenient for your client.
1:57
SPEAKER_01: There's a line here.
1:58
SPEAKER_01: And understanding where that line is may be more important today than it ever has been.
2:01
SPEAKER_01: And I'm going to discuss this and a whole lot more on this week's episode of Dish and Dirt.
2:07
SPEAKER_00: This is Dish and Dirt with Gary Pickering, South Carolina's only podcast dedicated to the real estate agent craft.
2:14
SPEAKER_00: And now the host of Dish and Dirt, Gary Pickering.
2:18
SPEAKER_01: And greetings and welcome back, everybody, to another episode of Dish and Dirt.
2:21
SPEAKER_01: I'm your often opinionated, but rarely wrong host, Gary Pickering, coming to you from the beautiful downtown Columbia, South Carolina offices of Player Kato Pickering Castellan this, the third week of September, 2026.
2:31
SPEAKER_01: Now I hope you've had an opportunity to see our brand new series for your clients.
2:34
SPEAKER_01: It's called Before You Sign.
2:36
SPEAKER_01: It's basically an overview of all of the documents that a real estate agent might present to a buyer or a seller.
2:41
SPEAKER_01: And we started our overview with the buyer representation agreement.
2:45
SPEAKER_01: After that video, I followed it up with two short form videos.
2:48
SPEAKER_01: The first one was called Three Provisions in the Buyer Agency Agreement that Nobody Talks About.
2:53
SPEAKER_01: And the second one was Can You Fire Your Buyer's Agent.
2:56
SPEAKER_01: This week I'm going to try two new ones.
2:58
SPEAKER_01: One will be called Who Really Pays Your Buyer's Agent?
3:01
SPEAKER_01: And the other one will be the realtor lawsuit changed how buyer agents get paid.
3:05
SPEAKER_01: Here's what every buyer needs to know.
3:07
SPEAKER_01: After I finish that, I'm going to go over to the listing agreement and do a full-length video on that.
3:12
SPEAKER_01: And then I'll circle back and probably do another 10 to 12 short form videos of the buyer's agency agreement and then 10 to 15 short form videos of the listing agreement.
3:21
SPEAKER_01: One of my agent friends, Sandy, told me that she's already shared these videos with three of her clients and had nothing but positive feedback.
3:28
SPEAKER_01: So here's what I recommend you do.
3:29
SPEAKER_01: First, you need to watch the videos, make sure you fully understand all the legal aspects of the documents and how to explain them.
3:35
SPEAKER_01: And then, secondly, go ahead and share the videos with your client before you even meet with your client so that they can watch them and get all the legal aspects of the documents out of the way so that you can spend more time with your client explaining how you're going to help navigate them through the home buying or home selling process.
3:51
SPEAKER_01: The videos can all be found on Blair Cato's YouTube page, and I'm going to put a link to that page down below in the show notes.
3:58
SPEAKER_01: All right, so let's go ahead and start with South Carolina law today.
4:01
SPEAKER_01: South Carolina Code Section 4057-350 says that a brokerage firm providing services to a client through an agency agreement is bound by the duties including obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care.
4:15
SPEAKER_01: Those are the old car duties that you learn about in real estate school.
4:19
SPEAKER_01: And those are significant obligations.
4:22
SPEAKER_01: If I'm your buyer agent and I know something material that you need to know, I can't hide it because I'm afraid that you're going to terminate your deal.
4:30
SPEAKER_01: If I'm your listing agent and I receive an offer, I can't decide not to present that offer to you because I don't like the buyer's agent or I don't like the offer.
4:37
SPEAKER_01: If two houses satisfy my buyer's needs and house A financially benefits me more than house B, I can't try to manipulate my client toward a particular house because I can make more money.
4:49
SPEAKER_01: That's loyalty.
4:50
SPEAKER_01: That's fiduciary duty.
4:52
SPEAKER_01: But listen carefully to what fiduciary duty doesn't say.
4:55
SPEAKER_01: It doesn't say the brokerage cannot charge for its services.
4:58
SPEAKER_01: It doesn't say the brokerage has to renegotiate its compensation every time the client asks.
5:04
SPEAKER_01: It doesn't say the agent has to contribute part of its commission to save a transaction.
5:08
SPEAKER_01: And it doesn't say the client's financial obligation to the brokerage disappears because the brokerage owes fiduciary duties to the client.
5:16
SPEAKER_01: In fact, South Carolina law expressly recognizes the compensation agreement.
5:21
SPEAKER_01: Our law requires a listing agreement or buyer representation agreement to state the amount of the compensation or the method for calculating it.
5:29
SPEAKER_01: And it must explain how and when the compensation is earned.
5:33
SPEAKER_01: It must also specify any exceptions or any variations in the commission and the circumstances in which those variations apply.
5:41
SPEAKER_01: So think about that for a minute.
5:42
SPEAKER_01: The same statute that imposes duties on real estate professionals such as fiduciary duty also expressly contemplates that the brokerage is entering into a contract under which it gets paid.
5:56
SPEAKER_01: Those concepts coexist.
5:58
SPEAKER_01: You can owe somebody a fiduciary duty and still have contractual rights against that person.
6:04
SPEAKER_01: And that distinction is incredibly important and something we're going to talk about here today.
6:08
SPEAKER_01: Now, I recently read an article that was written by real estate coach Daryl Davis.
6:13
SPEAKER_01: It was called When the Seller Stalls, here's how to protect your commission.
6:17
SPEAKER_01: The name Daryl Davis might be familiar to a lot of you.
6:20
SPEAKER_01: He's been on dish and dirt several times, and he's actually spoken at our real estate success summit several years ago.
6:25
SPEAKER_01: Here's a funny story.
6:27
SPEAKER_01: We like to give all of our guests, speakers, some type of a present for coming and speaking.
6:32
SPEAKER_01: And we like to have it South Carolina related.
6:35
SPEAKER_01: Well, there is a hot sauce in South Carolina that has been created by several service members, and it comes in a glass hang grenade.
6:43
SPEAKER_01: And so we gave this to Daryl, and I think it was Daryl, might have been Jeff, but we gave it to Daryl, and Daryl was very excited about it.
6:49
SPEAKER_01: And he took it home with him, and he went to the Columbia Airport and forgot it was in his bag.
6:55
SPEAKER_01: And TSA saw the hang grenade, and they thought he had a real hang grenade.
7:00
SPEAKER_01: So our friend Daryl was put up against the wall while they searched his bag and realized that it wasn't a hang grenade, it was simply a glass bottle in the shape of a hang grenade full of hot sauce.
7:10
SPEAKER_01: So interesting story about Daryl.
7:13
SPEAKER_01: I'm not sure Darrell will come back to South Carolina after that story, but hopefully he will.
7:17
SPEAKER_01: But the premise of Darrell's article caught my attention because it addresses something that I think agents do struggle with.
7:23
SPEAKER_01: The basic situation involved a listing agent who had a seller represented through a power of attorney.
7:29
SPEAKER_01: The buyer signed the contract, but the seller's side had not signed.
7:33
SPEAKER_01: According to the article, the seller's representative appeared to have second thoughts.
7:37
SPEAKER_01: The agent's instinct was basically, I'm the seller's fiduciary.
7:40
SPEAKER_01: What am I supposed to do now?
7:42
SPEAKER_01: And Davis makes an important point.
7:44
SPEAKER_01: Serving your seller and protecting your compensation are not necessarily inconsistent.
7:50
SPEAKER_01: Now, there are portion of the articles that I would not automatically apply in South Carolina.
7:54
SPEAKER_01: For example, whether compensation has actually been earned depends on the applicable agreement and law.
7:59
SPEAKER_01: South Carolina specifically requires an agency agreement to explain how and when compensation is earned.
8:06
SPEAKER_01: And the article also discusses possible lien rights.
8:09
SPEAKER_01: Do not read an article discussing another jurisdiction and assume that remedy also applies in South Carolina residential transactions because in South Carolina, we do not have lien rights in South Carolina as a real estate agent.
8:20
SPEAKER_01: But the broader principle is what's worth discussing here.
8:24
SPEAKER_01: Being somebody's fiduciary doesn't require you to become their financial martyr.
8:29
SPEAKER_01: Let me give you another profession.
8:31
SPEAKER_01: Suppose you hire a lawyer.
8:34
SPEAKER_01: The lawyer owes significant professional and fiduciary duties.
8:38
SPEAKER_01: The lawyer has a duty to protect your confidential information.
8:41
SPEAKER_01: The lawyer has to avoid conflicts of interest.
8:43
SPEAKER_01: The lawyer has to exercise professional judgment on your behalf.
8:47
SPEAKER_01: But does that mean the lawyer can't send you a bill?
8:50
SPEAKER_01: Of course not.
8:51
SPEAKER_01: How about your accountant?
8:52
SPEAKER_01: How about your financial advisor?
8:53
SPEAKER_01: Other professionals can simultaneously owe professional duties, including fiducies, and have the contractual right to be compensated for their work.
9:01
SPEAKER_01: Real estate is no different.
9:03
SPEAKER_01: And yet real estate agents have somehow been conditioned to believe that their commission is different from everybody else's compensation.
9:10
SPEAKER_01: If something goes wrong with a transaction, somebody inevitably says, Well, can the agents just take a little bit less?
9:17
SPEAKER_01: And my question to you today is why?
9:19
SPEAKER_01: Why should you take less?
9:20
SPEAKER_01: Let's play out a scenario that happens almost every day.
9:23
SPEAKER_01: We get toward closing, an inspection issue pops up, seller says, I'm not giving another$5,000, buyer says, Well, I'm not paying another$5,000.
9:31
SPEAKER_01: So now we're$5,000 apart.
9:33
SPEAKER_01: Then someone says those magic words.
9:35
SPEAKER_01: Maybe the agents can help.
9:36
SPEAKER_01: Why are we starting there?
9:38
SPEAKER_01: Nobody calls the home inspector and says, Would you mind refunding half the inspection fee?
9:43
SPEAKER_01: Nobody calls the appraiser and says we're$5,000 apart.
9:46
SPEAKER_01: Can you kick in some money?
9:47
SPEAKER_01: Nobody calls a termite company.
9:48
SPEAKER_01: Nobody calls a surveyor.
9:50
SPEAKER_01: Sometimes they call the lender or the attorney.
9:53
SPEAKER_01: Don't do that.
9:54
SPEAKER_01: But agents, apparently your commission is sitting there like an ATM.
9:57
SPEAKER_01: And here's what I want you agents to understand.
10:01
SPEAKER_01: You may absolutely decide that contributing part of your compensation makes good business sense.
10:05
SPEAKER_01: That's your decision.
10:07
SPEAKER_01: Maybe you've got a$2 million transaction and everybody's$1,000 apart.
10:11
SPEAKER_01: Maybe you decide, you know what?
10:12
SPEAKER_01: I've looked at the economics of this.
10:14
SPEAKER_01: I want this to close.
10:14
SPEAKER_01: I'll contribute$500 or$1,000.
10:16
SPEAKER_01: Fine.
10:17
SPEAKER_01: That's a business decision.
10:18
SPEAKER_01: But that's completely different from saying my fiduci obligation requires me to do it because it doesn't.
10:24
SPEAKER_01: Those are entirely two different things.
10:26
SPEAKER_01: Your client can have a financial problem without the financial problem automatically becoming your financial problem.
10:33
SPEAKER_01: And I think agents need to get comfortable saying that politely, professionally, but firmly.
10:38
SPEAKER_01: I'm happy to continue working to find a solution, but reducing my compensation is not part of the solution I'm proposing.
10:45
SPEAKER_01: That's simple.
10:46
SPEAKER_01: That's not abandoning your client.
10:48
SPEAKER_01: That's maintaining a boundary.
10:50
SPEAKER_01: Your job is to advocate, your job is to negotiate, your job is to advise, your job is not necessarily to personally fund the solution.
10:58
SPEAKER_01: Your commission is your commission for your professional services.
11:02
SPEAKER_01: It is not the transaction's contingency fund.
11:06
SPEAKER_01: And if you think about it, if my agent can't even defend his compensation, how can I expect my agent to defend and negotiate for me in the transaction?
11:16
SPEAKER_01: Now let's move to the buyer side because this is where the issue has become much more important.
11:20
SPEAKER_01: South Carolina Realtors recently changed the residential forms again in March of 2026.
11:25
SPEAKER_01: Among those changes was broker-to-broker cooperative compensation was removed from the forms.
11:31
SPEAKER_01: South Carolina Realtors Association explained that compensation is now essentially self-contained within the agency relationship.
11:38
SPEAKER_01: The seller compensates the listing broker and the buyer compensates the buyer broker as a separate mechanism such as the Form 120 for seller-to-buyer compensation.
11:47
SPEAKER_01: On a side note, if you're still doing broker-to-broker compensation now at the end of 2026, I think you're an idiot.
11:54
SPEAKER_01: And yes, I'm speaking to you, Hilton Head.
11:56
SPEAKER_01: Yes, I know that's down there, you're still doing it.
11:58
SPEAKER_01: I know that at least one top agent in the business is still telling his sellers that you have to pay me X so that I can give half of my X to a buyer's side or no one's going to show your house.
12:08
SPEAKER_01: You are simply begging to be sued.
12:10
SPEAKER_01: It also is amazing to me how the rest of the state of South Carolina can still sell houses without doing broker-to-broker compensation, but somehow in Hilton Head, you don't think you can.
12:18
SPEAKER_01: So either you're incompetent, lazy, or you're lying to your client.
12:21
SPEAKER_01: Either way, it's not a good look for you.
12:23
SPEAKER_01: And like I said, you're likely to get sued.
12:25
SPEAKER_01: Because, hey, you know, the world's changed since Sitzer Burnett.
12:27
SPEAKER_01: Maybe you've heard of that lawsuit.
12:29
SPEAKER_01: Nevertheless, back to the story.
12:31
SPEAKER_01: So let's imagine this scenario.
12:33
SPEAKER_01: You have a buyer consultation, you've explained your services, you've explained compensation, buyer signed a buyer agency agreement, your compensation agreement calls for X percent.
12:43
SPEAKER_01: Now you find the buyer's dream home, buyer loves it, but the compensation available from the other source only covers half of X.
12:50
SPEAKER_01: So there's a percentage gap.
12:52
SPEAKER_01: Here's where fiduary duty matters.
12:54
SPEAKER_01: You cannot hide the house.
12:56
SPEAKER_01: You cannot say, oh, that's not really a good neighborhood, or now suddenly you don't think the kitchen is quite right for the client.
13:02
SPEAKER_01: You can't discourage your buyer from purchasing that house simply because another property produces a better chance for you to get full compensation.
13:08
SPEAKER_01: That's where your fiduary duty or your obligations do kick in.
13:12
SPEAKER_01: Your advice about the property must be based upon the buyer's interest, not your paycheck.
13:18
SPEAKER_01: But here's a second half of the conversation.
13:21
SPEAKER_01: Does that automatically mean you have to waive the remaining percentage that your buyer contractually agreed to pay you?
13:29
SPEAKER_01: Those are different questions.
13:30
SPEAKER_01: And I think agents sometimes combine them.
13:33
SPEAKER_01: Question one is, do I have to properly represent my client concerning this property, even though the compensation situation isn't ideal for me?
13:41
SPEAKER_01: And the answer is yes, your duties don't disappear.
13:43
SPEAKER_01: But question two is, does that necessarily mean I must waive compensation that my client agreed to pay me under our contract?
13:51
SPEAKER_01: And the answer is no.
13:52
SPEAKER_01: You look at the agreement.
13:54
SPEAKER_01: That's why compensation has to be discussed before you're standing in somebody's kitchen after the buyer's fallen in love with the house.
14:02
SPEAKER_01: This conversation should happen during the buyer consultation.
14:05
SPEAKER_01: Here's what our brokerage charges.
14:07
SPEAKER_01: Here's how compensation works, and here's how we may seek seller paid amounts where appropriate.
14:13
SPEAKER_01: And here's what happens if those amounts don't fully satisfy your contractual obligations to my brokerage.
14:19
SPEAKER_01: That is transparency, and transparency on the front end prevents resentment on the back end.
14:25
SPEAKER_01: I want agents to think differently about the agency agreement.
14:28
SPEAKER_01: Sometimes I think agents look at the agency agreement as a document containing 10 pages of things the agent promises to do.
14:35
SPEAKER_01: And that's only half of the contract.
14:37
SPEAKER_01: A contract creates rights and obligations between both the parties.
14:41
SPEAKER_01: South Carolina requires these agreements to contain material terms of the agency relationship, including the services that the agent will perform, the compensation, how and when the compensation is earned, the duration of the relationship, and other important terms.
14:55
SPEAKER_01: In other words, your agency agreement isn't a one-way promise.
15:00
SPEAKER_01: And here's a phrase I want you to remember: Fiduciary duty is not a contractual eraser.
15:07
SPEAKER_01: It doesn't erase the contract every time enforcing the contract becomes inconvenient to the client.
15:12
SPEAKER_01: Now that doesn't mean every compensation dispute is automatically won by the brokerage.
15:17
SPEAKER_01: Far from it.
15:18
SPEAKER_01: What does the agreement say?
15:20
SPEAKER_01: Did the brokerage perform?
15:22
SPEAKER_01: Was compensation actually earned under the language of the agreement?
15:25
SPEAKER_01: Was there a modification?
15:27
SPEAKER_01: Was there a termination?
15:28
SPEAKER_01: Did the brokerage comply with its own obligations?
15:30
SPEAKER_01: Those questions matter.
15:31
SPEAKER_01: And the South Carolina Real Estate Commission itself makes an important distinction here.
15:36
SPEAKER_01: The commission regulates license law violation, but its FAQ states that it does not intercede in civil contractual matters or arbitrate disputes.
15:46
SPEAKER_01: And that's a very important distinction.
15:48
SPEAKER_01: A fiduciary duty issue can be a licensing issue.
15:51
SPEAKER_01: A compensation dispute can be a contractual issue, and sometimes the two overlap, but they aren't automatically the same thing.
15:59
SPEAKER_01: Now I spent half this episode telling you to protect your compensation.
16:03
SPEAKER_01: So let me make sure that nobody takes this episode and runs completely off the other side of the road with it.
16:08
SPEAKER_01: There's absolutely a line.
16:11
SPEAKER_01: And you cannot protect your compensation by breaching your duties to the client.
16:16
SPEAKER_01: So let me give you some examples.
16:18
SPEAKER_01: Your buyer has agreed to compensate your brokerage.
16:21
SPEAKER_01: You discover a property that perfectly matches the buyer's criteria, but you don't like the compensation situation.
16:27
SPEAKER_01: So you simply don't tell the buyer about the property.
16:30
SPEAKER_01: That's a problem.
16:30
SPEAKER_01: Your financial interest has now affected the service you provided your client.
16:35
SPEAKER_01: Or house A is better for your buyer.
16:38
SPEAKER_01: House B is better for you financially.
16:40
SPEAKER_01: You subtly push your buyer toward house B.
16:44
SPEAKER_01: That's a problem.
16:45
SPEAKER_01: Your compensation has influenced your advice.
16:48
SPEAKER_01: Or maybe this one: the inspection comes back with serious problems.
16:52
SPEAKER_01: You know that if the buyer terminates, you don't get paid.
16:55
SPEAKER_01: So you minimize the issue.
16:56
SPEAKER_01: Oh, that's nothing.
16:57
SPEAKER_01: Every house has that.
16:58
SPEAKER_01: I wouldn't worry about that.
16:59
SPEAKER_01: Be very careful, because your desire to get paid compensation now cannot compromise the advice you owe your client.
17:08
SPEAKER_01: Or maybe the client has a contractual right to terminate, but based on the circumstances, termination may actually be in the client's best interest, but you desperately need this commission.
17:18
SPEAKER_01: So your advice becomes you really need to close.
17:20
SPEAKER_01: Again, that's a problem.
17:22
SPEAKER_01: The correct principle is this: you can protect your compensation.
17:26
SPEAKER_01: You cannot protect your compensation by sacrificing your client's interest.
17:30
SPEAKER_01: Those are not the same thing.
17:32
SPEAKER_01: And sometimes fulfilling your fiduciary duty means giving advice that you know may cost you your commission.
17:37
SPEAKER_01: That's part of the profession.
17:39
SPEAKER_01: If walking away is legitimately the best option for your client, your job is to explain that option honestly.
17:47
SPEAKER_01: But losing compensation because your fiduary obligation requires you to give honest advice is very different from voluntarily waiving compensation that you contractually earned.
17:57
SPEAKER_01: Don't confuse those two situations.
17:59
SPEAKER_01: So let's go back now to the situation that prompted the Mint article.
18:03
SPEAKER_01: You've taken the listing, you spent money marketing it, you held open houses, you've taken calls, you've negotiated, you've done everything you're supposed to do.
18:10
SPEAKER_01: Then you produce the result contemplated by your agreement.
18:14
SPEAKER_01: And suddenly the seller says, Ah, I don't think I want to sell anymore.
18:17
SPEAKER_01: So what happens to your commission?
18:19
SPEAKER_01: Here's the South Carolina answer I want you to remember.
18:22
SPEAKER_01: Read your agreement.
18:24
SPEAKER_01: That's simple.
18:25
SPEAKER_01: Read your agreement.
18:26
SPEAKER_01: Don't assume, don't threaten, don't immediately tell the seller you owe me a commission.
18:30
SPEAKER_01: Don't automatically conclude that, well, I guess I'm out of luck.
18:34
SPEAKER_01: Look at your agreement.
18:35
SPEAKER_01: South Carolina law specifically requires a listing agreement to explain how and when compensation is earned.
18:41
SPEAKER_01: The language matters there.
18:42
SPEAKER_01: The facts matter.
18:43
SPEAKER_01: And if there's a legitimate dispute, get your broker in charge involved and where appropriate, obtain legal advice.
18:50
SPEAKER_01: The eminent article recommends that agents document what is happening and communicate clearly with the seller.
18:56
SPEAKER_01: And that part I strongly agree with.
18:58
SPEAKER_01: If the seller is considering a decision that may create a contractual obligation, explain the situation.
19:04
SPEAKER_01: Put important advice in writing.
19:06
SPEAKER_01: Don't threaten the client.
19:08
SPEAKER_01: Don't make emotional statements.
19:10
SPEAKER_01: Don't say, after everything I've done for you, you owe me every penny.
19:13
SPEAKER_01: That's not professional.
19:15
SPEAKER_01: Instead, what you say is before you make this decision, I want to make sure that you understand the potential consequences under our listing agreement.
19:22
SPEAKER_01: I'm going to involve my broker in charge so we can explain those provisions and recommend that you obtain legal advice when it's necessary.
19:28
SPEAKER_01: It's a very different conversation.
19:30
SPEAKER_01: It's professional, it's factual, it's documented.
19:33
SPEAKER_01: You can protect yourself without becoming adversarial with your client.
19:36
SPEAKER_01: And here's another scenario.
19:39
SPEAKER_01: You list a house, everything's going well, you get an offer, seller likes the offer, and then the seller says, if you'll reduce your commission by$3,000, I'll take it.
19:47
SPEAKER_01: Now what?
19:48
SPEAKER_01: First, remember the compensation is negotiable.
19:51
SPEAKER_01: The South Carolina Real Estate Commission brokerage disclosure form expressly says the commissions are fully negotiable and aren't set by law.
19:57
SPEAKER_01: That's part of the Sitzaburnette settlement.
20:00
SPEAKER_01: But negotiable doesn't mean the client dictates the answer.
20:04
SPEAKER_01: It means the parties can negotiate.
20:07
SPEAKER_01: You negotiated your compensation at the beginning of the relationship.
20:11
SPEAKER_01: The client can ask you to change it.
20:13
SPEAKER_01: You can say yes, you can say no.
20:16
SPEAKER_01: You can propose something different.
20:18
SPEAKER_01: And saying no to a request to reduce your compensation does not standing alone mean you breached your fiduciary duty.
20:24
SPEAKER_01: You still have to properly advise a seller about the offer, and you still have to explain the benefits and the risk, and you still have to follow lawful instructions.
20:33
SPEAKER_01: You still owe loyalty, but you don't have to respond because I owe you loyalty, here's$3,000 out of my paycheck.
20:40
SPEAKER_01: Think about how strange that would sound in almost any other profession.
20:44
SPEAKER_01: There's another side of this conversation that agents may not want to hear.
20:47
SPEAKER_01: If you're going to defend your compensation, you better be able to explain your value.
20:52
SPEAKER_01: You can't say, my fee is my fee, and then provide mediocre service.
20:57
SPEAKER_01: Professional compensation should come with professional performance.
21:01
SPEAKER_01: Know the contract, know the market, be able to communicate, return phone calls, present offers properly, document your file, understand agency, understand compensation, advise your client, do the work that you promised to do.
21:15
SPEAKER_01: Because the strongest argument for protecting your compensation is I did exactly what I agreed to do.
21:21
SPEAKER_01: And this is one of the reasons I think agents need to stop being embarrassed about discussing compensation.
21:26
SPEAKER_01: A consumer asks, why should I pay you this?
21:29
SPEAKER_01: That's a legitimate question.
21:30
SPEAKER_01: It really is.
21:31
SPEAKER_01: But you should be able to answer it.
21:32
SPEAKER_01: Here's what I do, here are the services you're buying, here's the expertise I provide, here's what I'm responsible for, here's what I'm not responsible for, here's what our agreement says, and here's what it's going to cost.
21:43
SPEAKER_01: That's how professionals talk about fee.
21:46
SPEAKER_01: Not apologetically, not defensively, but transparently.
21:50
SPEAKER_01: So let's finish with five rules.
21:52
SPEAKER_01: Rule number one negotiate compensation before the problem exists.
21:56
SPEAKER_01: The worst time to explain compensation is after the client.
22:00
SPEAKER_01: Has found the house or after the seller's received the offer.
22:03
SPEAKER_01: Have the conversations at the beginning about what happens with compensation if the seller side refuses to pay the entire amount.
22:09
SPEAKER_01: Are they going to be obligated to pay you the difference?
22:12
SPEAKER_01: If they are, let them know that up front.
22:15
SPEAKER_01: Rule number two, know exactly when compensation is earned.
22:19
SPEAKER_01: Don't rely on something another agent told you 15 years ago.
22:22
SPEAKER_01: Don't rely on something you read in an article about New York.
22:25
SPEAKER_01: Read your actual agreement.
22:27
SPEAKER_01: South Carolina law requires that agreement to address how and when compensation is earned.
22:33
SPEAKER_01: Number three, never let your compensation distort your advice.
22:38
SPEAKER_01: This is the bright line.
22:40
SPEAKER_01: You can enforce your rights.
22:42
SPEAKER_01: You cannot manipulate your client's decision to protect your paycheck.
22:46
SPEAKER_01: Number four, don't automatically reach for your wallet to save the deal.
22:51
SPEAKER_01: You can contribute commission if you want.
22:53
SPEAKER_01: Sometimes it makes tremendous business sense.
22:55
SPEAKER_01: Don't want to lose$30,000 commission over a$200 repair.
22:59
SPEAKER_01: I get that.
23:01
SPEAKER_01: But make it a conscious business decision.
23:04
SPEAKER_01: Don't do it because somebody's convinced you your fiduciary duty means you're obligated to subsidize their transaction.
23:10
SPEAKER_01: You are not the ATM machine and quit using your commission as one.
23:14
SPEAKER_01: Number five, document compensation issues.
23:18
SPEAKER_01: If the situation starts getting complicated, involve your broker in charge.
23:22
SPEAKER_01: Put important communications in writing so everybody understands it.
23:26
SPEAKER_01: And if you're facing a genuine contractual dispute over an earned commission, get legal advice rather than improvising remedies you saw somebody recommend online.
23:36
SPEAKER_01: I want to leave you with this.
23:38
SPEAKER_01: Real estate agents have spent the last several years hearing a lot about compensation.
23:42
SPEAKER_01: Commission lawsuits, buyer agreements, seller paid compensation, concessions, cooperative compensation, new forms, new rules, all of it.
23:50
SPEAKER_01: And somewhere in all of that discussion, I think some agents have become almost embarrassed to say, I expect to be paid for my work.
23:57
SPEAKER_01: You shouldn't be.
23:58
SPEAKER_01: I'm not embarrassed to ask to get paid for my work.
24:01
SPEAKER_01: You shouldn't be embarrassed to get paid for yours.
24:03
SPEAKER_01: Your fiduciary obligation is real.
24:05
SPEAKER_01: This is not to understate that at all.
24:08
SPEAKER_01: Take your fiduci duty very seriously.
24:10
SPEAKER_01: That is why it is the number one topic I have talked about over 300 episodes of Dish and Dirt.
24:15
SPEAKER_01: Your client's interest cannot become secondary because you want to get paid.
24:19
SPEAKER_01: You won't commission.
24:20
SPEAKER_01: You cannot steer, you cannot conceal, you cannot manipulate, you cannot give bad advice because good advice might cost you money.
24:28
SPEAKER_01: Sometimes being a great fiduci means recommending something that results in you earning absolutely nothing.
24:33
SPEAKER_01: That's just part of the profession.
24:35
SPEAKER_01: If you don't like it, don't be a real estate agent.
24:37
SPEAKER_01: But here's the other side.
24:39
SPEAKER_01: Your client doesn't get to use those words fiduciary duty as an eraser for your contract.
24:45
SPEAKER_01: You do not automatically have to reduce your fee because the transaction got difficult.
24:50
SPEAKER_01: You do not have to automatically contribute money because the parties can't reach an agreement.
24:55
SPEAKER_01: You don't automatically surrender compensation you've earned simply because asking to be paid creates an uncomfortable conversation.
25:03
SPEAKER_01: You can advocate for your client and protect your contractual rights.
25:07
SPEAKER_01: That's not exclusive.
25:08
SPEAKER_01: You can put your client's interest first and still expect the client to honor the agreement they made with your brokerage when they signed the agreement.
25:16
SPEAKER_01: You can be a fiduciary and you can run a business.
25:20
SPEAKER_01: Those things are not inconsistent at all.
25:22
SPEAKER_01: So remember these two sentences.
25:24
SPEAKER_01: Your compensation can never come before your fiduciary duty.
25:29
SPEAKER_01: But your fiduci duty does not mean you have to work for free.
25:33
SPEAKER_01: There's a difference.
25:34
SPEAKER_01: Know it, explain it, put it in writing, and protect your client while also protecting yourself.
25:40
SPEAKER_01: All right, that's all the time we have for our show today.
25:42
SPEAKER_01: I hope everybody enjoyed another episode of Addition Dirt.
25:45
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25:48
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25:51
SPEAKER_01: Hope y'all enjoy y'all's weekend, and we'll see you again next week for another episode of Addition Dirt.
25:56
SPEAKER_01: Y'all take care.