Answer:

This is a question all real estate agents have struggled with at one time or another in our careers.  When do I give up part of my commission to get a closing to happen?  Sometimes it is a matter of your buyer not having enough funds to bring to closing.  Sometimes it is a seller who is in the house tight and ends up having to come up with money to close.  I am sure you have either got your own war stories or heard other agents’ stories about such situations.   It is a difficult conundrum, and you will see people take many different approaches.

Some agents will say, “I do not care what happens, I do not care if I lose the deal and do not make a dime, I am not paying for anything. Period.”  There is no gray area for an agent of this mindset. 

Then there are those of the other side of the spectrum that can sometimes seem like an easy mark.  “Anything goes” in the name of customer service and making your client happy. 

I have to believe that the best option is usually somewhere in the middle.  You will often hear the phrase, “Something is better than nothing.”  The truth is that sometimes you can make far more something than your full commission would have been by helping out a little.  It is also true that helping in the wrong situations or with the wrong intent can turn a little something into a whole lot of nothing. 

I have seen situations where agents will basically make what amounts to a loan to a client to help with their costs.  Not only is this illegal behavior if the underwriter is not made fully aware of what is going on, but it actually undermines your relationship with that client.

You are going to have to develop your own style and your own plan of action when faced with situations like these. 
Some of the lessons I have learned along the way to help you in this process…

I do not agree with an across the board, “I do not ever pay for anything” attitude, and I will tell you why that is.  If it is presented and offered in the right way to the client, paying for something for them can be one of the most powerful forms of advertising and word-of-mouth generation you can find.  I have had people become some of my best referring clients because of really bad situations that I could step into and be the hero.  This is a very delicate balance.  You should never give the impression that you are paying for something because you feel that you are at fault for whatever it is you are offering to pay for… unless of course you are. 

Never make a personal loan to a client.  Think about what your relationship is like with those that you owe money to.  How do you feel about the telephone company? The cable company?  The servicer of your mortgage?  The car finance company?   Your credit card company?  Are those good relationships?   Even if they are not bad, they certainly are not good.  These are generally not the people you want to speak to on a daily basis, invite to a barbecue, bump into at the grocery store, or refer your very best friends to.  There is something that happens to a relationship as soon as money is owed.  If you have ever borrowed or lent money to very close friends or family, you have experienced some level of what I am talking about.  The relationship changes, maybe ever so slightly, but it does change.  You are a little less inclined to spend time with them, interact with them, and certainly want to avoid talking about anything to do with finances with them.  You want to avoid introducing that kind of dynamic into a relationship with your client.  With that in mind, anything that you pay for should be offered as a gift, even a house-warming gift if it is appropriate.  Make it very clear that this is not a loan in any way, both to make the gift sincere and, as a side benefit, will make it less likely that you are treading in illegal arenas.  This sends a powerful message to your client that they are your biggest concern, which should be the truth.  It tells them that you understand the difficult situation that they are in and that you are willing to help.  These housewarming gifts can get pretty expensive, for sure.  But they make an impact.  Put yourself in their shoes for a minute.  They have literally gone from sheer desperation and panic to an even greater relationship and commitment to you.  You must also make it abundantly clear that the best way for them to say ‘thank you’ is by recommending you to their friends and family.  Here is an idea of the style of verbiage to use…

“Mr. and Mrs. Client.  You know how much your business means to me.  I value you as client and I have had a great time working with you, and I hope that this is not the last time that we get to work together.  So what I would like to do is pay for XXXX as a housewarming gift for you.”

They will usually be little surprised at this point and may even be a little hesitant to accept such a gift, but they will usually be willing to accept it.

Make sure you always make it clear that this is a gift with no strings attached and that you are happy to be able to help.  Also make it clear that you would sincerely appreciate any referrals that they could send your way.
Sometimes you will never hear from these people again, but sometimes they will become incredible referrers of your business.  There are some inherent dangers in helping your clients with costs:

• People tend to refer people just like themselves.  Do you want more clients like these people?  If the answer is no, then maybe paying something for them is not such a good idea.
• Ask them to please keep the details of the gift confidential.  Referrals are great, but not if they are all expecting you to kick in money for them.
• Make sure what you are proposing is legal in your state and that you have disclosed what you are doing to all the proper people (brokers, lenders, title companies, etc.).
• Do not give in too quickly.  Giving up some of your hard-earned money too early in the transaction will have your clients eyeing your wallet the next time even a small problem pops up.

If you decide you must give up some of your commission, never do it until it is the very last option.  This will be hard for those of you who either desperately need a sale or desperately need to feel liked.  Keep in mind that the longer you wait, the more you let the client try to work out their own situation, the greater your generosity looks to the client.