Agreements in Advance

I was working on another deal a while back and it was for a residential mortgage, not something I normally work with. I brought the deal to Bill, an acquaintance through the local Chamber of Commerce. I trusted what I knew of Bill and I had always liked what appeared to be his approach to doing business.

This deal was for a large property and I knew it was not going to be a simple process. Now, Bill works for someone else and he does not have approval to make deals with me directly. From the beginning I wanted to have a deal in writing simply stating that we would share all fees. If the deal did not go through, I would be owed nothing, but it was my client and I was not going to just hand him off.

Bill kept telling me that his boss would not sign any form of agreement with me until they knew if they could fund it. This was completely backwards to me. They wanted me to release all of the information I had, but would not give me any form of guarantee, nor would they discuss what sort of fee sharing split they had in mind. This is a classic example of putting the cart in front of the horse. I should have walked away at that point, but I was trusting of Bill and wanted to see this deal go through.

It looked like the deal was going to go though and Bill spoke with his boss and came back to me with his idea of fee splitting. We were not on the same page. I had lost my bargaining power however, since they now had all of my client’s contact information. It turned out they couldn’t do the deal, so I moved onto another connection of mine who was willing to sign a confidentiality agreement and fee splitting agreement before I would even release any information to him. That is how it should always be done from the beginning.

We all learn from our mistakes, but hopefully you can learn from some of mine and save yourself some time!