Remember you are the gatekeeper to your client.

FACTS:

Agent ("A") had a long standing relationship with out of state principal ("P") that was constantly looking for the perfect San Diego vacation home. A never asked P to execute a representation agreement depite the dedication of multiple days of effort to find a property for P.   After years, and multiple visits to San Diego, P finally fell in love with home in costal San Diego County for a purchase price in excess of $1M.

The property was listed by Flipper ("F") who exercised control over the listing broker, but F was not broker of record because F had hired a "straw man" broker to operate the brokerage that F owned. F was renowned for aggressive negotiations, and drove an exceptionally hard bargain.

After exchanging multiple offers and counter offers. During the process of exchanging documents, A provided the contact information for P to the broker that was "representing" F.

Unbenownst to A, F contacted P and indciated that F would only sell the property to P if P would terminate A as his agent, and contract directly with F (excluding F's "straw man" broker) for the property at a slightly reduced price. This was P would get a discount, and F could obtain a greater net sales price.  As instructed, P allowed the pending counter-offer to expire, and then without A's knowledge signed an agreement with F to purchase the very same property.  F and P closed escrow on the property a few weeks later.

Approximately six months after the sale had closed, a guilt ridden P called A and confessed to A that he had purchased the property without her despite A's years of effort to find P the "perfect" house.

HOW COULD THIS BE AVOIDED IN THE FUTURE:

Getting A the commission that was owed required binding arbitration and thousands of dollars in attorney's fees. I believe others could avoid similar disputes by applying the following practical lessons to their daily practice:

(1) When representing buyer(s), especially buyers that like to use your gas and time to look at properties for days on end, always get an exclusive representation agreement confirming your right to a commission for your efforts. While A had the good fortune to have submitted an offer with A's name on it before P decided to defect in this scenario, P could have just as easily decided to go it alone before any offer was made.

(2) When representing buyers or sellers, avoid provding the other side with means to contact your client directly, unless absolutely necessary. This means no "cc'ing" emails, providing direct telephone numbers, or direct contact addresses. While the NAR code of ethics prohibits working around the other broker/agent, not all brokers and agents follow the NAR code.

(3) For listings that fall out of negotiations or escrow without an excuse that seems to make sense, you should calendar a reminder for three (3) months in the future. Without P's return to his conscience, A would have been unaware that tens of thousands of dollars in commission were owed. It only takes five minutes to check public records to confirm that your principal and the other party havent conspired to cheat you out of a commission.