To make it ethical, the broker needs to explicitly disclose dual agency and obtain informed consent from the customer due to the potential conflicts of interest.
Customers naturally expect a broker to work in their best interest only. This dealer fee creates a potential bias on the side of the broker.
Of course this deal itself was very good, so is not a good example, but this could present issues in other deals.
The disclosure needs to be extremely clear: “I collect both a broker fee from the customer and a separate dealer fee from the dealer on each deal. Please acknowledge you understand this.”
Jesus. You realize this is a $100/ month transaction we are talking about here, not some real estate worth hundreds of thousands or millions. People sure love to make a mountain out of a molehill here. Zero loss suffered!
That’s not how some brokers work on this site. They have pre-negotiated deals that are publicly advertised. If as a prospective customer, you want to take advantage of one of their deals, you can follow their process to lock in a deal after paying their broker fee. At the end of the day, it is a free market. You can choose to do business with a broker or not.
However, if you want to hire a broker (not on this site) to find you the best deal on a particular car, then that’s another story.
I’ve been on the site for years. I know how things work. My point is that new people will not know this, and they will assume things which are incorrect based on the title “broker.” This is why disclosures are important.
First of all, please go through and redact full names in those text messages. Although your sloppiness here is par for the course.
I was a broker for a very brief period nearly a decade ago. It’s not a relevant detail. But that is why:
I’m familiar with the broker side of the business,
I have dealer material and the dealer section of the CA Vehicle Code in my desk drawer, and
Why I don’t mind paying brokers their advertised fee, as long as it doesn’t involve deception. I didn’t have time to work this deal on my own, and I think brokers are entitled to fair payment like anyone else.
Here’s the crux of the matter. So which is it, Seth? A broker fee from the dealership or a selling price reduction? Make up your mind. You still don’t see how these things are contradictory? Or do you think your customers are too dense to figure it out?
No, the GSM went even further. He expressed that there was no such arrangement. Here’s how that phone conversation went, and I’m paraphrasing:
Me: Was there a broker fee on this deal coming from you?
GSM: No, is he saying that we owe him a broker fee? We never had one in place.
Me: That’s what he’s saying. That you had $300 in the deal but you let him collect it from the customer.
GSM: No, but let me check my books. Hold on. GSM opens records
GSM: We had one on a different deal, but not this one. If he’s saying we owe him a broker fee, we have issues.
Me: No, he’s saying that you’re allowing him to skip your Accounts Payable and have the customer pay him directly.
GSM: No, I didn’t discuss a fee with him. How much did you end up paying him anyway?
Me: $1099.
GSM: WHAT?
Me: We agreed to $799, but he’s claiming that you green-lit $300 more.
GSM: Hold on, he’s calling me right now.
Me: OK, just tell him whatever you need to tell him.
In the end, I apologized to the GSM for dragging him into this mess, and told him not to jeopardize his business relationship with Seth. But the GSM unequivocally denied any type of broker fee arrangement in place, and he has no reason to be untruthful here. Why wouldn’t he freely admit that he paid Seth a fee? I spoke to the GSM about this and we had a good laugh about it.
Really? When was she re-contracted at a higher vehicle selling price? Ironically, she did end up being re-contracted, but it had nothing to do with you. The dealership simply ended up using an outdated contract form. They sent the new contract via FedEx overnight, but at the exact same numbers.
I’ve already refuted this claim, but let’s just pretend this is true for a second. What you’re describing here is just the normal course of business. If you have trouble collecting from dealers, that is a business operations issue that you need to take care of on your own. The fee should come from the dealership’s books, plain and simple, whether that’s Net 30, Net 45, or Net 90. Personally, I’ve never encountered a dealership prefers it to be kept off the books. They’re running a legitimate multi-million dollar business, and they document everything: salesperson commissions, broker commissions, and manufacturer kickbacks. Your confusing, edited explanation after the fact doesn’t excuse you.
Your example unwittingly admits to the allegation, even though you may not realize it. I know you have multiple dealers that you source from, and you base your advertised pricing on Dealer B. When you happen to have a deal that comes through Dealer A, you pocket the difference. How would it even work with a Dealer C that has a higher selling price? It wouldn’t, unless you were to subsidize part of the lease payment yourself. Do you see now why your explanation makes no sense?
You cannot admit that you double-dip on deals and have fraudulently assessed hundreds of customers an additional, undisclosed fee because your entire shady business model would come crashing down – not to mention that you would put your dealer license at risk if the state entity were to find out. You simply got exposed here.
If you read my previous comment about OP’s issue, my point is pretty clear. Let me reiterate, the broker should have disclosed all broker fees that needed to be paid upfront when OP locked in the deal for their friend.
Even if you got the deal that was agreed upon between you and the broker? We can agree to disagree on this. I am not going tell brokers and dealers how to run their business.
EDIT: I am done commenting on this topic. We are just beating a dead horse at this point.
I appreciate that, but the CVC requires brokers and selling dealers to do all sorts of things that are a bit impractical in real life (including signed contracts, detailed logs, etc). Although my advice to anyone dealing with Omega is to have some of those safeguards in place. I believe Omega should refund the undisclosed portion of the fee — the portion that is claimed on the Venmo payment as going to Hyundai — which is $300, not $1099.
@adomspam I haven’t seen a response to this but I might have missed it: are you saying this text message is misleading and she wasn’t actually given the opportunity to recontract at the higher price?
Exactly. There is no dealer-to-broker compensation to be disclosed. There is only customer-to-broker compensation here, which he is somehow attempting to pass off as dealer-to-broker.
No. A new deal wasn’t even necessary from the dealer’s perspective. Of course, the dealer wouldn’t have minded a higher selling price, but they were unaware of this supposed “dealer-to-broker” payment so they had no reason to re-contract. Since it was a conflict between me and the broker, I told them I’d handle it on my own. She did end up being re-contracted a week later, but only due to a form change.
It seems like on a normal deal, the selling price would have been $300 higher since the broker got a bird dog. Instead of structuring the deal the way they previously had, they elected to collect that $300 upfront, lower the selling price by $300 accordingly, and process the deal that way. So by collecting it upfront, they did “lower the cap cost by $300”, but it was just very poorly described.
Not the best choice from a transparency standpoint, but I can see the line from A to B.
In the long explanation provided by the Broker, he asserts he did receive $300 compensation from the dealer. The OP apparently disputes this, but the Broker says he did receive the compensation. I do not think having such compensation paid by the lessee (with an ambiguous explanation) to avoid waiting for payment from the dealer, would remove such compensation from coverage under the California law requiring disclosure.
He specifically says he doesn’t receive anything from the dealer since he collected it upfront. Still calling it a “dealer fee” which doesn’t help, but there appears to be no money being given to the broker from the dealer on this deal from what has been posted.
So let me get this straight. You agreed to $1569 with $799. You wound up paying $1253 with $1099. They’re saying you can go back to the original $1569 with $799, but you want to pay $1253 with $799 instead?
