In a widely covered story last week, a judge ruled that Jerry Seinfeld had to pay a commission for a property he purchased, trying to bypass the broker that had originally showed the property on more than one occasion to his wife.
- Seinfeld Tries To Stiff Real Estate Agent (Not that there is anything wrong with that [Realty Times]
- Seinfeld loses real estate dispute [CNN]
- Comedian Seinfeld Ordered to Pay Real Estate Broker Fee [Law.com]
- Seinfeld’s Broker Fee Stiffing Won’t Stand [Gothamist]
- Seinfeld: Master of a More Expensive Domain [Yahoo TV]
The story is pretty straight forward. The commission was earned but Seinfeld thought the fact that the broker was not available at the exact moment he wished to view the property, the $100,000+ commission wasn’t earned.
It brings to mind a few thoughts:
- Did Seinfeld think someone would walk away from a 6-digit commission?
- Could he be that insulated from reality by his advisors?
- Could there have been some bad blood between the broker and his wife after the initial visits that would motivate this illogical behavior?
- Was the amount of money to be saved worth the bad public relations?
I wonder if he learned anything to avoid make the same mistake in future deals, and I would bet brokers dealing with him in the future will make sure their legal t’s are crossed and i’s are dotted.
When I was a real estate agent in Chicago in a prior life (early 1980’s), some of the worst individuals trying to re-negotiate the commission were the real estate attorneys at the closing table, trying to “earn” their fee. Snide remarks were common, along the lines of “thats a big commission for two 30 minute showings of a property, I wish I could bill that hourly rate.” (This was a market with an average sales price of about $90,000.) There was no appreciation for the 60 other showings made without a commission before this sale, advertising and marketing costs, travel costs, and other expenses. My mentor in the realty office back then, and still a good friend, would basically assume a “take no prisoners” position. When a discount was proposed, he would tersely suggest the lawyer take the same dollar discount (which was preposterous because the dollars the lawyer was being paid was less than the discount proposed) and he would not be afraid to stand fast and kill the deal altogether if the commission was to be re-negotiated – our firm was big on that and it usually worked, even though the market was very weak at the time. Hopefully things are generally better at the closing table in Chicago these days.
The generally weak public relations efforts of NAR has resulted in an unfair stereotype of the typical broker as not earning their commission. Of course there are some agents that deserve this criticsm like in any other profession, but not everyone does. Its sounds like Jerry was under the same impression as the stereotype. Given the generally low pay of the average real estate agent [Slate], despite all the media stories about high powered agents, makes this criticism pretty simplistic (not that there’s anything wrong with that).
Tags: Realtor.com, NAR, National Association of Realtors
That is pretty funny stuff… NOT
“… and he would not be afraid to stand fast and kill the deal altogether”
In my experience this attitude reflects the policy of the vast majority of brokers in the tri-state area, and should serve as a warning to anyone naive enough to believe the brokers put a client’s interest ahead of their own.
Well, thats pretty cynical thinking without a foundation. I think there has to be some reality to be applied here. If someone has a contract to provide a service (the broker), and a party tries to undermine the contract because they have a change of heart and get greedy, they place the transaction at risk. If I assume you have a job and one day your boss comes in and says that he/she changed their mind and will pay you half of what was agreed when you were hired, then shouldn’t you have a right to challenge your pay cut?
The cynicism is provided by your former broker-employer, who was “willing to kill a deal” rather than take part in a negotiation, which brokers expect everyone else but themselves to do to make a deal happen.
Why are concessions sought at closing? Typically, the seller has removed some fixture or item that the buyer thought was included in the sale, or the movers damaged something on the way out, or there is a dispute over a delay penalty, and so on on ad nauseum. These are genuine disputes that adults should try to resolve in good faith. In 30 years of doing everything with RE other than sell or appraise it, I have never seen any party try to create a dispute at closing in order to reduce a broker’s fee. Due to the amount of liens that have to be paid at closing, or a pending simultanous purchase/sell, or even a pending foreclosure, it may be necessary to negotiate fees and commissions.
BTW, I work with brokers all the time and consider several to be close friends. Real professionals look at the facts and circumstances of each transaction rather than adopting a blanket attitude of arrogance as demonstrated by your former employer.
Envious – perhaps thats something unique to Chicagoland because it was something that was common place where I worked and it was pretty upsetting. I think you are over analyzing or not seeing the actual point that was made (but you make some great points) – these are situations where it was common place, where the attorney brought up the suggestion simply because the commission was something that was seen as fair game – it had nothing to do with concessions or was even something initiated by the parties. I agree – if there are terms or conditions that are not fair or agreed on, then of course, there should be a negotiation and thats what professionals should do. Thats why agents in that market got so upset about it at tried to stop it.
My fee is not negotiable at the closing table, it’s that simple.
My fee is written into the Purchase and Sale Contract, which I believe is a legal document.
Any attorney who suggests otherwise, in order to “get the deal done” is lucky to get away with a polite no from me.
I’m just as likely to pop him one. Or, her.
threatening to kill a deal rather than negotiate a commission sounds an awful lot like violating your fiduciary duty to your client.
“If someone has a contract to provide a service (the broker), and a party tries to undermine the contract because they have a change of heart and get greedy, they place the transaction at risk.”
Your contract does not entitle you to sabotage a deal. You can refuse to modify your fee and if the principal indicates that he will not pay you as agreed, you can refuse further representation.
But in no case does such a request entitle you to pretend to continue functioning as a fiduciary while undermining the principal’s purpose.
The real story here that Jerry Seinfeld has such high regard for greed and pettiness that he would try and cheat a person working for him out of their rightful compensation.
How did it evolve into broker bashing?
Skep-tic – how does refusing to re-negotiate a previously agreed on contractual agreement at the closing table constitute sabotaging a deal? You seem to be saying that a broker in a sale has no rights whatsoever at closing? If that were true, all transactions would be negotiated. And what does this have to do with acting as a fiduciary at the closing table?
DP (Toni) – Bingo!
“You seem to be saying that a broker in a sale has no rights whatsoever at closing?”
like I said, you can refuse to re-negotiate your fee.
Perhaps I misunderstood your meaning, but “killing the deal” sounds like something beyond refusing to negotiate.
Skep-tic – I see your point, sorry I wasn’t more clear.