Negotiating Splits with Your Partner

Welcome back to another episode of CRE – The Unspoken Truth. I’m Charlie Coppola with my father, Craig. And today our topic is negotiating splits with your partner, or just negotiating splits in general. And so, I think you said this the other day, this is one of the most common topics that brokers and other people in your industry are asking you for your opinion on. Why do you think that is? And what would you say on that?

So there really is two topics here, and let’s be clear what we’re going to talk about today. The first topic is how do you negotiate splits on a team? That’s a long conversation, because there’s several ways to do it. And the second way is how do you negotiate splits on just a transaction. Maybe it’s within your team, if you guys have individual splits, or if someone brings you a deal, how do you negotiate that split? And so how do we look at it? And I think today we want to talk about just a transaction a broker is bringing you, or you’re bringing them, and then you go, okay, let’s talk about how we’re going to do this split.

Sure. And what are some key points of that? Is that fair? And then maybe on a, I think next year we’re going to talk about, on one of our webinars, we’re going to talk about negotiating team splits. So we’re going to do that on a more formal basis. It will be with all the people that join us for our quarterlies, right? Yeah. Yeah. Okay. Yeah. So we do those quarterly, and that’s one of the topics we have in, I think, at the end of ’26. So we’re gonna do that. We’re going to do, right, I think at the end of ’26. So that topic is coming, but today we’re just going to talk about.

What’s happened, and it’s really been interesting to talk about how negotiating deals and splits has changed over the last 20 years, and where we are today, and where I see the future going. Yeah. So how has it changed? I guess that’s a good question there. How has it changed over the years, and where do you see it going?

Well, when I first got in the business, a referral, if you just had a client and you referred it to another broker, was worth 10 to 20%. 10% of the whole deal if you were on both sides, or 20% if you just were on a tenant rep side. And so today, fast forward 40 years, today a referral and/or a control of a client, not just a referral where they have to go chase business. If I hand you a deal, or I’m gonna work with you on a deal, it’s worth half to start. So there’s a 30 to 40% increase in the value just for controlling the client. Yeah.

And so that is a massive, massive change, if you think about it. And so we still have some old-time brokers who say, “Oh, somebody referred me a deal and they get 20%.” So let me just talk about what that is. Let’s say you get a call as a commercial broker from a residential broker, and they go, “Hey, I’ve got this client. I sold him a house and they’re looking for some office space.” That’s typically 20%, right? So that’s 20%. They’re giving you a name and a phone number and a warm intro.

Control means, “Hey, this is somebody I’ve done deals with in the past,” or, “This is my fraternity brother,” or, “This is somebody that we represent, but I just can’t do this transaction.” And so I’m going to walk you into the deal, and that’s worth 50%.

Is that usually, like, an over-state-lines type of intro there, or it doesn’t matter? Or a different asset type, if you focus office but you have a client who’s venturing into retail? Like, are those the two scenarios, or?

No, I think it’s control. I think it’s control. How much control do you have? If you have total control, if they’re close, then it’s worth 50%. If you have somewhat control, like, we get referrals all the time, “I’m going to refer you a deal and you have to go pitch it,” it’s like, that’s 10% or 20%. You know, I still have to go get the business. I have to win it. Or somebody’s going, like, “Hey, I know this broker out of Seattle. He’s representing this group and I want,” now you’re a broker’s broker. There’s a lot of crazy things that go on, but I always start with control. Yeah.

And so how much control do we have? And I check that out up front. It’s like, and the questions are easy. The first question is, “Tell me, how do you know these people?” And then they’ll tell you their relationship. “Well, I just did this with them.” Well, that might be not that much. Or they said, “I’ve known this person since they were five, and they’re one of my best friends,” right? You know, one of our users, Derek, came in, and his big client across the country, I mean, they’ve known each other since they’re 25 years. That’s control. Derek shows up with him. That’s like, okay, that’s immediately half of the deal. And so you go, that’s the start, right?

One thing I’ve been surprised to learn since we started OneSource, because my exposure, my experience in this industry has been through your lens and watching you and your team. One thing I’ve been surprised to see is a lot of brokers have partners on a deal-by-deal basis, not so much a team like yours, which shares everything. You negotiate splits once a year, and then it’s like you guys are a full team on everything. Which, yeah, and teams. Yeah, we’re gonna get into that on our webinar.

We’ll get into that. But let’s just say, but here’s how I would say: first of all, control. And then, so we talk about, and if you talk, I use control, some people use procuring. So who is procuring the business, and how much, if we just get more detailed, who’s procuring the business and how much control do they have? So if it’s a tenant rep side, that’s easy. It’s a one-out deal. But it gets more complicated if this is a client that you could potentially turn into a multi-transaction, or across state lines.

So one of the second thing that I say is, and control, that’s the first question. The second question is, how big is this referral going to be? Early in my career, I was fortunate to work with a broker out of New York, Sam Razie, who controlled Sigma, and we made a deal up front. It was 50/50. 20 years later, it was 50/50. Now, Sam hadn’t been around for five years, but I honored that agreement. A lot of brokers wouldn’t have done that, but I made a deal with him. I had a big client for a long period of time, and so I stayed with him. A lot of brokers will say, “Look, this is 50/50 for the first deal. I might pay you a little bit on the second. By the third deal, you’re out.” Yeah.

And so then the second piece of this is to talk up front, when you’re either giving the business or getting the business, about what the expectations of both parties are. If this is a one-out deal, we’re going to sell a piece of land for a family. This is the only property they own. That’s easy. If this is a multi-state client, and you’re going to do all the business and we’re going to run it, you’re going to talk about, okay, look, we’re going to pay you this much for the first two or three, and then we’re going to pay this, and at the end we’re going to pay X as we do these transactions, or after 10 we’re not going to pay you. I don’t care how people negotiate it, but it needs to be done in negotiation up front.

And then, number two, it needs to be put in writing. I can’t tell you how many times people negotiate these deals, they walk away, they never put it in writing. And then guess what? A year later, when you close the deal, they go, “I thought I was getting 50.” And you go, “No, no, we agreed on 40. Remember that?” And so the third thing is, how I put in writing: send an email and just say, send back, say, “Here’s what we agreed to today. Reply to me, ‘Agreed.’” That’s all you need. You don’t need a, I guess you could do a formal document, but I don’t think you need to do that.

Yeah. Yeah. What? So you’re talking a little bit, like, do it up front, do it in writing. A little bit more, like, the numbers you’re sharing, 50%, 40%, 10%. What advice would you have to brokers, like, approaching those conversations? And I know just one or two of them, you said do it up front. We say be a buffalo, is like, just go talk about it. Don’t sit there and hope it resolves itself. Any other kind of soft skill tips you would give?

Yeah. Well, I think you want to know several things, right? In the email, it’s going to say, “You brought me this deal on this day. This is the transaction.” Because sometimes somebody will bring you a 5,000 foot office deal or a 50,000 foot office deal, and you go, “Ah, it’s worth 30%.” And then it turns into a 2,000 foot sublease. It’s like, well, okay, that wasn’t what we agreed to. So this is a new transaction. I’m gonna come to you when it changes and talk to you about that.

And a lot of times they’ll bring in, brokers bring in deals, like, “Hey, I got this sublease deal. It’s a good client of mine, and I still want 40%.” It’s like, no, I’m doing you a favor trying to sublease your client’s space. We’ll go, we don’t take anything. Like, we’re going to give it all to you. Like, we just did a deal in Denver last year. We were just taking care of our client. We’re like, “This is a shitty sublease. If you can get it done, great. You’re going to get the money.” And so we do that all the time. Not all the time, but we do it.

And so this idea of having the conversation, and I would ask multiple questions, right? Who procured it, the relationship depth, what we’re agreeing to for what transaction. And then, if it changes, we have the right, you don’t put it in there, but everybody should agree, “Hey, if it doesn’t turn out this way, Lyn, let’s have another conversation.” Yeah. Yeah.

Because I will tell you one thing. What? 100%. When you do the deal and there’s a commission be booked, everybody will be there with their hand out. Yeah. That’s what we know. When the money’s on the table, everybody was, “Oh, that was my best friend I’ve ever known.” Even though they didn’t know him. You know, this is, “I’m going to take you to arbitration.” So lesson learned on my end, multiple times. Trusting partners, trusting other brokers, and not getting it done. So if you’re a junior broker, you got to get it in writing and go, “Look, I want it on there, because I’m going to spend my time on this.”

It’s probably best practice always to be in writing. You know, it doesn’t hurt, even if you do have the trust there. It doesn’t hurt to just add an email, you know. Yeah, it doesn’t hurt. You, well, I would say you need to have it. It’s best practice for sure. Yeah, you said that.

Yeah. So what percentage of your deals are you having these types of conversations on? Because I feel like some brokers build their business on more of these types of deals, where they’re pulling in a partner or a partner’s pulling them in, and.

Yeah. Well, if you’re a lone broker, you’re probably doing this 80 or 90% of your deals. Yeah. For us on our team, we’re doing them on all, across state lines. So if we’re not doing the deal in Arizona, and we did deals in 18 states last year, every single one of those is a negotiation. And just so you know, we’re getting more than 50%. Cuz we’ll bring a national client, and we’re going to run the deal from Phoenix. We need your local, we need your brokerage license, but we want more. And why do we want more? Because you’re going to tour, you’re going to tell us what the market is, and we’re going to basically do everything, because that’s what we do for all these transactions.

And so those conversations, they’re really quick. They’re up front. And the broker has the right to say no, but they also know if they say no, then we just go to somebody else. So a lot of times people are just like, “Yeah, for that kind of work, I,” and, you know, they’ll say something like, “If that’s all I have to do is tour them, and not send out proposals or not do this or not negotiate that, then I’m happy. But if I have to do more, then I’m going to come to you and we’re going to get more from you.” And we’re like, “Of course.” You know, here’s what we’re telling you we’re going to do. And if we don’t for some reason, and occasionally it happens. Yeah. A deal gets sideways. You need them to tour twice. She needed to do something. The building falls out, they need another building.

That sounds like a core kind of principle or value of your teams, though, is you guys want to retain control of your clients. Do you see that across, like, the deals that get referred to you in Phoenix? Like, the other way, where you don’t own the client, do you see other brokers saying, “Hey, this really important to us to own the client and run the deal, even though we need you boots on the ground”?

It’s 50/50. I mean, it depends on who the broker is and their relationship. Some brokers just have great relationships. There’s an SIOR out of, he’s out of Mississippi, and he has this one client, and he, for 20 years he won, the SIOR has a national, for a national award for giving referrals to other SIORs. Just award. And he won that award, I would say, 10 or 15 years in a row, because he had this client, and they were doing 30 deals a year, and he was referring to SIORs. And, like, that guy had a relationship. Yeah.

And so he was there every year. And if you’re a good broker, and one of the things we found out, and you know this, we have a lot of small shops that have hired OneSource. Those small shops are in business because they have great relationships, and if they run with a deal, they usually, they’ll handle them pretty well.

Yeah. Yeah. No, it’s fascinating. So do you have any stories? I guess, last question I want to ask here. Any stories on a deal that’s gone sideways? Maybe a lesson learned, any specifics, to where, “Man, we were negotiating this. We did it all the wrong way. We didn’t follow any of my best practices, and then we got screwed because of it.”

I don’t know if we get screwed. So I’ll just give you one that’s going on right now. It’s ongoing, which is really an interesting one. So, as you know, I always have two runners that we’re training at all times. So one of my runners. I have a client who, the father, I’ve known 25 years. I invested in his company. We made money together. He did really well, and we have a great relationship. Well, the son goes into business, and the son needs an office space. So I give it to one of my runners, and our deal with all of our runners is, you know, it’s a referral from us and we keep the relationship.

Well, the son’s trying to build relationships outside of his father. So the father gives me the son, and the son likes my runner. So he calls me and says, “Hey, I want to work with your runner,” who’s no longer my runner anymore. He’s on his own. So I go to the runner and I go, “Hey, this is a normal art deal.” He says, “We’ll do 50/50.” And I said, “Great.” I said, “Great.” He runs the deal.

So the next deal comes up, same guy. He’s looking to do a second office. And this time he goes, “Hey, I, he deals takes a lot of work.” And I go, “Hey, I’m happy to do a little less.” So we negotiate. It’s like a two-minute conversation, because he’s a good guy. We’re not trying to screw him. So we’d agree to do 60/40. Okay. So we do 60/40 on the next deal.

Now the third deal comes up, and he calls me. He says, “This time I think I want to use your guys, your team.” So I met with him last week, and I said, “Look, it was 60/40 you, because you ran the deal. We’ll do 60/40 me if we run the deal on our side.” And it’s like, what’s he going to say now? Because we have them, you know, we had already given him the 60/40. He says, “Great, I don’t really care.” And so this is the kind of, happens all the time, and there are just these little conversations.

Now, with this, this is my former runner. He sits right next to us. We have a great relationship. I’m not going to do anything to screw him, because we trained him and he’s doing great. He’s made principal at Lee. I don’t think he’s going to screw us, because we trained him and we’re principals together. But this is how deals, this is just a normal, if you’re not in the business, you don’t recognize, wow, this stuff happens all the time.

Yeah. You can’t be afraid to have those conversations, because you have to. I mean, it’s part of the business, part of the job.

One of the things that’s really hard, if I’m looking, because it’s easy for me, because I can come in and bully people. I don’t want to say bully, but I can lead with authority. Let’s say that. And these young people are like, well, they need the business. And so they’ll give up more. And in a lot of cases, they should give up more, because they’re getting a deal that they wouldn’t normally get. They’re going to make some money on it. Gives them exposure into the marketplaces. But in some cases, they’re like, “Yeah, you’re referring to me a 1,200 foot guy that doesn’t know what he wants, and he’s going to tour 20 times. I’m going to give you 20%.” And if you don’t like that, like, I’m going to go get something else.

And my comment to all the young people is, if you’re busy enough, you can say that to somebody. Yeah. If you’re not busy, if you’re not out there cold calling, generating your own business, then you can’t say it, because you’re begging for business. Yeah. And people know who’s out there and who’s busy and who’s not. People know. And so a lot of times we give it to, like, we’ll bring a guy in because he’s not busy, and we know this is a tougher deal. It’s like, “Hey, you want to run this and we’ll split it with you?” And he’ll, like, “Yeah, I’ll take it.” Like, he spends a ton of time on it. He’s bummed. I’m like, “You took it.”

I said this, I had a conversation this morning with someone, and I said we have gotten, and I have gotten better personally at managing difficult clients, now that we have a lot more customers, because I don’t need them, you know. And it’s like, I have way more confidence to say, look, like, here’s why we’re doing it the way we’re doing it, and you can like it or not. But early on, when you only have a couple customers, it’s like you got to do everything. And so I understand, and I agree, the best way to get out of that position is to build your pipeline.

The definition of efficient market: when there’s a ton of buyers and a ton of sellers, and then they negotiate all together, and the market, like, it, like what Amanda does to your wife. Yeah. There’s buyers and sellers all in these marketplaces, and they create value, and then you understand what that marketplace is. When you have very few buyers or you have very few sellers, then the market gets skewed, and it’s always constantly changing.

And so what senior brokers tend to forget is the market’s always moving. And so you have to, like, I had to ask Nick White House the other day, our young guy, “What’s the current deals?” Because I’m not running these deals that are out of state. I’m like, “What do we normally get?” And he rattled off, “We get this, this, and this.” And I’m like, “Perfect.” Now I know the marketplace today, because we’ve got 15, 20 deals in other markets going right now. So now I know what it is. And our guys, because we do have 15 or 20, and we did 20 last year out of state, they go, “Hey, look, this is what we got. We got these seven marketplaces. This is what the deal is.” And other brokers go, okay, that’s a market data point.

Yeah. Yeah. Very interesting, very valuable stuff, and interesting for me to hear on a niche inside the business, you know. So not something we’re at OneSource talking about all the time, but it’s definitely something that a lot of brokers are thinking about.

So let’s take this and tie it into our system. As a broker, you get a referral, and you go to the guy and you negotiate the splits. You send an email to that guy with, on the subject line, here’s the transaction, and you store it in your prospects deal. It’s there, right? It’ll mirror up. It’ll mirror up with your transactions, because you’re going to link it to the deal. And a year later, you’re going, “Hey, what did we agree on that split?” You pull it up and you’re just going to go right down. It’ll synchronize your inbox with your Outlook, and you’re going to see it right there. And so it’s stored. It’s there. It’s a piece of cake. And this is just one way to do it through our system.

Yeah. Yeah. So you’re not second-guessing. It’s in writing. It’s easy to find. It’s right there. Yeah. Yep. To take the drama out of it.

Well, you need it. And then, guess what then brokers do? You show up with your piece of paper, and they go, “Well, that was a year ago, and the deal changed, and I had to do this, and I had to do that.” It’s like, “You should have come to me, man.” Right? The minute the deal changed, you should have come to me, and we should have agreed on something. “I did come to you and tell you, this is the conversation.” “I did tell you, yeah, but you didn’t say anything about the splits. Here’s the writing.” And so.

Well, here’s what I’ve learned, too, working with brokers the last four and a half years, is they love to negotiate. And so, like, man, we get, like, you can just see these guys trying to negotiate with us on our price and tactics and all these things. And it’s just, they enjoy it. So it’s funny to kind of watch. Yeah. Right. And then we’re like, “Hey, we’re SaaS. This is what we charge.” Yeah. And they’ll negotiate any opportunity yet. So I imagine the same goes for this topic as well. Yeah, absolutely.

It’s good. All right. Good. Thanks so much. Another episode in the books. Thank you. Thank you.