M-F Manager Referral: Rose City Commercial Real Estate recently made a referral to a multifamily property manager for an owner with 4 properties totaling over 100 units. The company we chose to recommend was selected because they do a really good job for their owners and having known them for years…we respect them both personally and professionally. The clean way to handle that if the management company successfully takes over is to tell the property owner that a fee was given to the broker making the referral. That’s good, but not best. The squeaky clean way way to handle it is to tell the property owner that if offered, no fee will be accepted. Turning down a potential $5-10,000 referral fee is the right thing to do. That ensures that all vendor
“If it closes and goes well…send us a Starbucks card…or nothing.”
referrals are made with the property owner’s best interest only. A similar situation occurred a while back with a MOB (Medical Office Building) we helped a client buy. The out-of-state buyer had us interview and recommend management companies. When the deal closed we the selected management company offered Rose City Commercial Real Estate a $5,000 referral fee. We directed the manager to reduce our client’s first year bill by the same amount. Squeaky clean.
Lender Referral Fees: A loan broker called us last year to discuss current potential projects Rose City Commercial Real Estate was working on. He explained to us that on one deal there would be at least a $15,000 fee paid to RCCRE if we recommended his lenders. He went on to say that if I wanted more…he could build up to $30,000 into the pricing structure and my client would not be upset, because they wouldn’t know. We told him that if his overall package was better than competitive lenders he would get our recommendation. And in pricing that out…he should not factor in any fees to our company. “If it closes and goes well…send us a Starbucks card…or nothing.”
Parallel Interest Practices: Where the broker and the client have identical interests
Much of Rose City Commercial Real Estate’s business revolves around investments in commercial real estate. A typical investor comes to us with