Transaction Reporting and the New Discrepancy Report

I have been working with real estate brokers since 1984.  Prior to that I was one, so I came to the work knowing a little about their  challenges and struggles.    I usually have a pretty good idea how they think and feel and why that is the case.

With franchisors – and I have worked with many – a key issue is transaction reporting.  It is important to the franchisor that closed transactions be reported for obvious reasons:  the franchisor’s revenue stream is tied to closed transactions.  That’s why franchise agreements generally include strong language about reporting transactions (usually within 24 hours of closing) and the consequences of not doing so.

But franchisees are first and foremost, real estate brokers;  and brokers, especially in difficult economic times, can come to that point at the end of the month where they have $4,000 in bills to pay and $3,500 in the checking account.  We’ve all been there, even the biggest stars among us!   ‘ . . . Maybe I can hold off the electric bill for a couple of weeks until that two-story closes . . . ‘ the broker thinks.

Looking back over the previous weeks it occurs to the broker that, had he not reported his transactions to the franchisor and paid his Royalties as things closed, he might have made it to even at the end of the month.  This will ruminate for a period of time and sometimes . . . becomes reality.  ‘I know I’m supposed to report and pay,’ the broker thinks,’ but I just can’t spare the cash right now and besides, we’re family, they’ll understand and I’ll make it up when things improve.  It’s not like I’m not going report and pay my Royalties!’

Franchisors go through all kinds of machinations to get franchisees to report and pay.  In the old days (the ’90s), franchisors really had no idea what an office closed unless it was reported.  Reporting was essentially an honor system.  That’s why most Franchises employed staff auditors who went to each office on a regular basis to verify the books.  As a Century 21 franchisee, I was audited like clockwork every two years.  In that world, the big carrot that was used – rather effectively – to get people to report, was Awards.  The franchisor would recognize offices and agents based on gross closed income and on closed sides that had been reported.  Un-reported or un-paid transactions obviously didn’t count.  At Century 21 and all of the other franchises, the end of December and most of January was about squaring up the totals.  Offices would receive the franchisor’s count and Awards totals and then had an opportunity to get unreported transactions in before it was too late.  I can’t tell you how often, in that agent oriented world, brokers who sandbagged a few transactions would become desperate to get them in when doing so would make a difference in their top agent’s Award status!

It’s a little different today.  Information about transactions is readily available from a wide variety of sources.  A franchisor can simply monitor activity and compare it with what’s reported to know who’s reporting and who’s not.  Audits, while still necessary, don’t usually have to take place at the franchisee’s office and can often be handled at a distance, with on-site audits reserved for those suspected of serious breeches.

All of this history brings us to something new at Help-U-Sell, the Discrepancy Report.  We’ve created a set of three reminders for our members that they have unreported transactions.  They go out once a month with a request to take care of the discrepancy as soon as possible.  Consequences get serious after the third notice:  possible Notice of Default and Termination and/or on-site audit.  But  the Discrepancy Report program is a genuinely humane process that acknowledges that these things happen and provides ample time to set things right.

Help-U-Sell Royalties remain the lowest of any national brand.  We lowered them from the 7.5% we used to charge – which was in line and in some cases, below what others charged – to a flat 6% and then temporarily reduced them to 5% to help our members make it through the last few difficult years.  The 5% program is set to expire at the end of December and as yet I do not know if it will be extended into 2012.  At the same time we’ve created a top notch technology platform for our members that remains un-matched in features and effectiveness in the industry, provided uninterrupted training and networking opportunities every week,  and solid leadership in a wide variety of areas including electronic marketing, staffing and growth.  Plus (and this is big) the Help-U-Sell Brand actually means something to the American public:  savings.  Even people who have never seen a Help-U-Sell advertisement know, just from the name, that we are different and that difference often leads to a request for more information.  Add it all up and  Help-U-Sell is a bargain, not just for the consumer, but for the real estate broker who wants to grow his/her business, provide excellent service, and make a comfortable profit.

 

 

 

 

 

 

 

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