How it Feels to Lose a $213,000 Commission
2001 was a year that started out great for me. I was coming off of my best sales year to date, my wife and I were expecting our second baby, and the future was bright. I managed to get my first multi-million dollar ranch deal under contract and I was representing the buyer, who was moving from out of state. This was a $7.1 MILLION dollar contract, so I was clearly excited and working hard to keep everything on track. This was a season in time that I'm sure I will never forget. Since they were paying a full 3% commission to the buyer's agent, our part was going to be $213,000. With this sale, I was poised to be one of the top Austin Texas real estate agents for that year.
The buyer put up $100,000 in earnest money (personal check), which certainly made everything seem much more real somehow. There was also a $5,000 option fee and another $5,000 paid for the inspection and appraisal. The buyer flew back and forth several times to visit the property, and I really enjoyed working with him. He was a widower with a young son, and this was going to be their new start in a new place. The seller was actually running for governor of Texas.
The property was amazing, with 650 acres on Lake Travis, a half mile of Hamilton Creek, and a 10,000 square foot one-story home overlooking the water with two pools. It also had a 2500 square foot GUEST house, and a 16,000 horse barn with offices. WOW!
Things were moving along pretty well, and we managed to get through all of the repair negotiations, along with determining what would stay and what would go with regard to equipment, furniture, etc.
We got close to the closing date, and my baby daughter was born. She was healthy and beautiful (she still is), and then it was back to work on the "big deal". We got past the original closing date and we had to extend things (cue dramatic music) because the funds apparently weren't accesible to the buyer. As time passed in the early summer and I was consumed with this transaction, I lost both of my grandmothers within six weeks of each other.
After months of work, it was becoming more and more obvious that this deal was never going to close. To this day, I don't really know what happened exactly, but I think the buyer probably either: a) didn't receive money that he was expecting, or b) had his accounts frozed for illegal activities (maybe money laundering).
Unfortunately, the buyer was African-American, and he was able to get his entire earnest money amount back by using a not-so-veiled threat to go to the media and claim that the seller "wouldn't sell his ranch to a black man". Terrible as it sounds, it was an effective threat.
In the aftermath (after spending about four months of my life on this), I told my partners that any deal I lost in the future would be easier, because it was unlikely that I would ever lose one that big again. Believe it or not, this has proven to be true. We haven't closed a deal this large yet, but we closed two of the top ten deals in the Austin area last year ($4.1 and 3.4 million). At any rate, even though it didn't work out the way I had hoped, I learned a lot about negotiating and handling difficult personalities and egos, so it was valuable experience.