Buyer's Contract with Broker

General Real Estate Investing
1

Hello all,

I am newbie to this website and to the commercial re world.
I am trying to invest in commercial re and started talking to the realtors. One of the realtor is asking me to sign a buyer’s contract so that he can spend time putting together a thorough site package for me.

Please tell me
Whar are the risks in signing the buyer’s contract?
If my relatioship with the broker doesn’t workout then can I back out of the contract?
If the financial situation of my investor group changes and we drop the plan of investing for a short term then can we back out of the contract?
What does the broker trying to protect against besides someone else eating his commission on a property that he showed?

Thanks in advance for any insight on this?

2

Hi,

 This agent is looking for you to sign a buyers agency agreement as he would like to be the exclusive agent for all he shows you, however the answer is easy, call other agents as all of them will not necessarily want a buyers agency relationship and will be perfectly happy to show you a few things and trust that if you make any offers on what your shown, you will make the offer through them!


              GR
3

Thank you Gold River

4

I am talking to a realtor from one of the big re company in Illinois. I had my first meeting with this realtor. She is fairly new to the field and I realised she is exclusively a single family home speciality broker but trying to send me listings for apartment bldgs. In my meeting with her today I learned that she didn’t have even min knowledge abt the business. I asked her what is the cap rate for the apt that she showed me, she kind of confused as if she heard this term for first time. She said it is not listed on the listing and she will find out. She didn’t even know that cap rate is unique to neighborhood but not something that is attributed to a particular apartment.

How do I go about working with an experienced commercial realtor from the same company? as I already started talking to her?

Please comment… Thank you

5

Hi,

Just ask her if she can refer you to an experienced commercial agent within there company who has specific knowledge and expertise selling and buying commercial properties!


            GR
6

Thank you GR

7

You need to contact a commercial broker’s office.

There’s several issues to consider when choosing to work with a particular agent.

Here’s a list of things that I consider… in no particular order…

  1. Has owned/owns income property like what I want to buy. If this isn’t the case, I do not work with this person, regardless of how much business he has done/does. He will not understand or appreciate the nuts, bolts, and intangibles of owning/operating/analyzing deals …from an emotional/internalized perspective. Nothing educates and forces an investor to prioritize what’s important than owning income property.

The following are not hard and fast rules, but are merely preferences…

a. Same age as me.
b. Same/more experience with management/ownership of income property.
c. I get along with him.
d. Has good relationship with other agents in the area as in he knows how to close on a deal.

Keep in mind that even the better agents are more concerned with a closing than they are about the quality of the deal.

If you search my blog for “Agents work for themselves, not us!” there is a great illustration as to why we need to recognize agent’s motivations when it comes to negotiations.

As an aside, a sophisticated agent whose been around the block a couple of times may not be a good fit for you at the get-go. He’s going to have his own stable of proven buyers. He’s likely not going to show you the really juicy, pocket listings until he’s convinced you’re a player.

I’m sure this doesn’t apply to you, but there’s lots of posers out there, who are “faking it, until they make it” and waste agent’s time. So, you’ll need to show that you’re ready to play ball, if you want access to the real deals.

This brings me to my last point that the low-hanging fruit NEVER shows up on the MLS. Just saying.

8

Javipa,

Thank you for your insight on this. Greatly appreciate it.

9

Thank you all for reading and posting on this thread.

Help me with my scenario. I am working with 2 realtors. One realtor didn’t ask me to sign anything. The other realtor asking me to sign a
IAR form # 339, Non - exclusive buyer representation contract. Both the realtors are showing the same listings , obviously they are pulling them from MLS. What is the risk I am going to run into if I want to pursue a listing which both of them showed me?
What are the risks of signing the agreement (this realtor is good).

Please reply

10

Have different agents for different territory. Don’t make them compete with each other. That’s a fast way to get black balled.

The agent that wants you to sign the agreement, also doesn’t want to work for nothing. The one that didn’t ask for the document is an idiot and you should stay away from him/her. Trusting is not the same thing as competent.

I once made offers on one property through two different agents by mistake. The second offer was higher, because the second agent told me they had a higher offer on the property already. Needless to say I was negotiating with myself, because “I” was the “other” offer.

When the first agent discovered that I had made a second, competing offer, through another agent, he told me that I could do something with my body that I thought was otherwise physically impossible. I was embarrassed.

Since then I’ve learned to keep track of who referred deals to me and instruct the agents where I want them to look, so there was little overlap geographically speaking. You’ll still get information on properties from multiple sources. You’ve just got to be clear about what you’ve seen already. It’s better to say “I’ve seen that already” then to lead the agent into believing that you’re a flake, because you won’t respond about it, or make an offer, or give feedback. Meantime, I’ve never had an agent get mad at that approach (giving them a territory/type of property by size, etc.).

The best approach is just to settle on one agent. However, you should maintain contact with other agents in order to stay on their pocket listings “list.” I do this now. I tell the agent that I don’t need help with listed properties. I just want to know when they come across an “x” grade property with “X” units that I would be happy to make an offer, if it hasn’t reached the MLS yet.

You will have to keep in contact with these agents, just like you would with any bird dog.

Finally commercial real estate professionals live in a SMALL world where everyone knows each other, and they all know who the players are. So, it’s a very good idea, especially if you plan on working through agents in any given area and not digging up deals yourself, to both make friends with the agents, and demonstrate loyalty.

I could say a LOT more here, but I’ll wait for more question…

11

Javipa - Thank you for your response. You are awesome.

Here is my situation. The Realtor1 (the one who said dont worry abt it when I asked if I need anything to sign) showed me MLS XXXXXXX and didn’t mention anything abt it. The Realtor2 showed me tha same MLS XXXXXXX and said a lot abt it and how it meets my criteria etc.

I am really interested in this property to see and do the due diligence.

Can I just go with Realtor2 and don’t mention anything to Realtor1 at all? What is the best thing to do to proceed on MLS XXXXXXX

PS: The reason I started working with multiple realtors is to keep the contacts… Fixer Uppers are not easy to find that why I want multiple fishing lines.

Thanks again,
Pawan

12

You want to work with the agent that gave you more information and wants you to sign the document…

I don’t know what you’ve said to the first agent, so you’ll have to wing it. But don’t have the first agent looking up deals for you that are listed. Make him one of your pocket listing sources. He doesn’t have anything going anyway, so don’t expect much from him any time soon.

Meantime if agent 2 meets the criteria for owning property like what you want to buy, and he is competent enough to have you sign a agreement that you’ll only buy through him, if he brings you a deal, then I would go with him. If not, you’re not done looking for agents, as far as I’m concerned.

Don’t burn your bridge with the ‘idiot’ agent 1. Just be professional and explain to him that you are “going a different direction” without going into details…and that you would still be interested in making any offers on properties through him that fit your criteria …that are not listed yet.

Otherwise you won’t need his help on listed properties. After all, who does need help on “listed properties?” Can’t you find every listed property on the MLS just by going online in the first place?

All agent 1 is going to do is do what you could do yourself. You just need someone to represent you that is knowledgeable and competent to make offers and help you negotiate a deal (and understands income properties ownership, acquisition and management).

And of course we’ve come to the conclusion that agent 2 is your man.

13

Thanks again Javipa.
I am going with the agent 2. Yesterday I walked around the property and liked it. I am asking him to show it and also provide the financials.

I will sign the Non-Exclusive Buyer representation contract before seeing the property. In future if another realtor shows property in defferent territory, I would be able to go with him too.

Regarding your comment on MLS : Can anyone have access to MLS? I am not aware of this?

Regards
Pawan

14

Yes, you won’t get all the bells and whistles, but you can find all the listed property on line. Try mls.com

:beer