Whatever Happened to Conjunctions?
Ah yes, the humble conjunction. Most agents in the game for 10 or more years will remember their prevalence in the marketplace. While they’ve never been the most preferred sales option (after all, you lose commission), they’re now almost unheard of. So, what’s happened to them?
Also known as agents in association, a conjunction typically involves one agent who’s the exclusive listing agent and another who finds a willing buyer for the property. The two then split the commission according to a predetermined deal, which could be whatever percentage share they agreed to – usually something in the realm of an 80/20 split is the norm.
REIQ 2020 Residential Sales Agent of the Year Brett Andreassen says the answer is simple: There’s just not much use for conjunctions in the age of technology since it’s easy enough for buyers to find properties on their own. “When I started 15 years ago, conjunctions were pretty common,” explains Andreassen. “Now every buyer gets an alert for new properties from their portal, and so they’re going to come across your property anyway.”
Good agents today have such extensive databases that there’s every possibility the buyer of the agent who’s requesting a conjunction is already in the seller’s list of potentials. “Oftentimes you get an agent – typically a newer one – wanting to conjunct on a property that you’ve just listed, but the buyer’s already in your database,” adds Andreassen. “So, there’s no point giving away 20% of your own fee when that buyer is more likely going to turn up in the first week of your open house anyway.”
Andreassen further highlights that conjunctions may be more common when you’re first starting out in real estate, chiefly because you’re dealing with a lot more buyers than sellers. “You’re trying to build relationships and hopefully snag a sale in conjunction,” he tells. “Then over time as you’re working with more and more sellers, you don’t get too caught up in the conjunction side of things.”
While buyer conjunctions have become largely obsolete by the advent of property portals like realestate.com.au, Andreassen says he still regularly engages in seller conjunctions – otherwise known as referrals. “Another agent might reach out with a client selling a property in Toowong for example. If we agree to take it on, we do it essentially the same as a conjunction where we’re both working for the seller. That’s a lot more common in our profession; there’s usually a 20% referral fee and it works great.”
While technically not a conjunction (as there’s no split in commission), Andreassen says he likes working with buyer’s agents when selling property. “Because the buyer is paying a certain fee for the service of finding a property to purchase, you know they’re approved, the agent has done their due diligence and the buyer is serious,” he says. “We find they’re much higher quality buyers, whereas in conjunctions, the buyer may not be as qualified with an agent simply jumping online to look at properties that may suit, whereas the buyer is just as likely to do the same thing.”
So, the question remains: Are conjunctions null and void in the real estate space? Andreassen says while there’s still room for them, don’t expect them to always work out. “I wouldn’t say it’s a waste of time, but there have been a number of people who’ve asked to do conjunctions with me, only to find their buyer comes through and doesn’t even like the property.”
Note: no matter what kind of agreement is entered into – conjunction, referral, or otherwise – sales agents must ensure it continues to meet its disclosure obligations in accordance with the Property Occupations Act.