Death of a Salesman

Disclaimer: This information is intended to be of a general nature. Please do not rely on any of the content as being a professional tax or legal opinion and seek your own independent advice.

Apologies to playwright Arthur Miller, but the title of his well known work relates nicely to this week’s comments.

One of a real estate salesperson’s most important functions is to appropriately match buyers with properties. Listing and then promoting property for sale and encouraging the buyers to come to you is only part of this process. Whilst almost always working for the seller, agents will often assist buyers by providing general market and specific property information and will sometime introduce buyers to other agents’ listed property.

Referred to as a “conjunctional”, the introducing agent seeks permission from the listing agent to first introduce the buyer and if amenable to the request will offer a portion of their selling fee to the introducing agent should the buyer purchase the property. Technically then, the introducing agent, given they are paid with part of the listing agent’s commission are working for the seller even though they have probably never met.

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Conjunctional arrangements between agents are common but are rapidly fading from real estate practice. Certainly in “sellers markets” where supply is tight, conjunctionals all but disappear as buyers benefit from dealing direct with the listing agent, but in less buoyant markets (like the one  we have now) listing agents are more inclined to welcome a conjunctional. Despite being a privilege and not a right, a decade ago conjunctional requests between local, albeit competing, agencies were almost always granted and the standard rate of 40% of the selling fee given to the introducing agent. Nowadays, conjunctional fees offer less incentive and can be as low as 0.25% of the selling price, or the listing agent will simply refuse or agree to the conjunctional after a certain marketing period.

In a way, this is a shame. The principle of assisting buyers, providing information and encouraging them to buy a suitable property is eroded when the stock to choose from is limited. It is also questionable that should an agent refuse a conjunctional are they really acting in the best interests of their seller? As buyers are often loyal to their introducing agent, a refused request to a conjunctional may mean a missed opportunity for the seller.

Of course, sometimes a conjunctional arrangement is not appropriate. An agent introducing her brother to a property as the potential buyer can hardly be expected to be acting in the best interests of the seller.

This aside, less conjuncting means less hands-on selling for agents and more listing, marketing and matching of buyers to the limited properties listing by that one agency. It is perhaps not the death of the salesman but is certainly a limiting of his/her craft.

by Hayden Groves
REIWA President
REIA Deputy President

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