Tags:
Jun 01 '09, 06:22 AMI am an Aussie seeking to invest in MFR, and have been learning about and searching the US market for approximately a year. I've found an approx 90-door MFR complex that I want to purchase, and even had my offer - expressed as a letter of intent - "agreed in principle", and both the seller and I are happy with the terms. This wasn't just "one of many offers", casually accepted - I've inspected the property several times, met the vendor a couple of times and had lengthy discussions with him, etc. We have started exchanging unsigned contracts in order to finalise the deal.
Just when I got to the nitty-gritty of signing the contract and embarking on thorough due diligence, finance (some work already done, but no formal application), inspections, etc, my agent has had a family emergency and had to withdraw as my representative, as he feels that he can't adequately represent me at this crucial stage. :cry: This leaves me a bit "high and dry", but I'm also disappointed for him that he's done so much work, thus far for no return. (He's not bothered about this, but I want to do the right thing on his behalf. He usually does SFR and I suspect the commission on this deal would be very significant to him.)
If this property were in Australia, I'd simply proceed unrepresented, but as this is my first US transaction, and I've not previously closed a property in the US, I don't feel confident to do that in this instance.
The listing agent has offered:
1) I can get a new agent, and he'll split his commission with my two agents, in accordance with their level of work. eg if he gets 6%, maybe 3% for my side, in the form of 1.5% to my original agent as a referral fee, and 1.5% to my new agent, or something like that. My reservation is that I don't know that I have time to start interviewing new agents and building a rapport; I need to close this deal ASAP. (Vendor's situation is time-critical for various reasons.)
2) I can proceed with the listing agent acting as an "intermediary", which I understand is a representative of both parties, and he'd pay my procuring agent a referral fee of 1.5%. If the listing agent continues as an "intermediary", does he have a fiduciary duty to me as well as to the seller? (This is in Texas.) How are any potential conflicts of interest gotten around? eg What if the agent knows there's a major structural problem with the property that I haven't discovered; disclosing it prejudices the seller's position, concealing it prejudices mine?
Having met the vendor and the listing agent several times and had lengthy discussions with them - even to the extent of the vendor and I considering a joint venture - I do feel that I trust them both. So my reservation is not about whether the listing agent would do a good job, or is trustworthy. The listing agent is, in fact, very experienced and my agent had expressed a wish to be mentored by him, so I'm comfortable that he knows his stuff. I simply don't want to put him in what I'd consider an impossible situation, with divided loyalties, which could end up harming all parties.
We have no comparable arrangement in Australia. I'd love to tap into the biggerpockets community's expertise and hear about the pros and cons of "intermediaries".
