Multiple Realtors? Exclusivity agreement?

Question

Greetings from a newbie and thanks for all your feedback. It is very much appreciated!

I am currently looking at 2-4plexes in the Houston area and a Realtor (been in business 20 years or so) is indicating they will not work with me unless I sign an exclusivity agreement. Am I committing an industry black mark by working with more than one realtor?

If a realtor brings me a deal I will work with them exclusively on that deal but constraining myself to only one realtor seems odd. But then again, I am a new buyer & investor and all this is brand new to me. I want to make sure I am professional and courteous and play within the norms and not make a bad name for myself.

Your thoughts on exclusivity agreements? Working with more than one realtor?

Any help is appreciated!

Thanks,

~Jay

Jonathan Greene · Answer

If you work with several realtors at the same time, none of them will give you what you want long-term. It's like meeting someone new, telling them you still want to see other people, but expecting that they won't. Realtors have enough of their time wasted by on-market single homebuyers, they really won't spend extra time working with a new investor who wants to lowball 20 properties if there is no long-term gain or commitment on your end. You have to find the best one, who understands investment properties, and show them that you are committed. That's how you will get the best out of them. Also, the agreements are not airtight. You usually can get out of them with written notice or a message to the broker if you have a reason.

Hai Loc · Answer

Any realtor can find you an online MLS listing. Its the ones who have a much broader network with wholesalers, exclusive listings, pocket listings or simply know a lot of other agents who give them inside info on soon to be released listings. These are the agents you should not mind signing a buyer agreement with.

Also by not signing an agreement they may not take you seriously and you can potentially lose a relationship with a TOP agent who can find what you are looking for..  And they ones who are left may just be very hungry and out there to do whatever they can to make a quick buck..

Remember real estate investing involves building relationships. Whichever path you choose you eventually need realtor(s) to be on your side especially for a newbie like yourself you can learn a ton from them

Stephen David Smith Jr. · Answer

Good Afternoon,

If you have a Realtor you like and trust or a few and they bring you an incredible deal you can sign an exclusivity agreement pertaining to only that property for them being the procuring cause. This gives them a sense of security and loyalty as well as shows commitment on your part, however it really changes nothing for you since they must fill out all the paperwork. I hope this is helpful.

Lydia S. · Answer

@Jayson Wolfe

If you have an existing agreement, read what it says as it will outline the obligations and your options.

Caleb Brown · Answer

@Jayson Wolfe

When I work with buyers it’s a case by case basis. I usually do per property unless investor wants to exclusively work with me. If it’s per property it should light a fire under the agent

Doug Smith · Answer

Are they asking you to sign an agreement for just the deal that they presented to you and that you are working on with them, or are they wanting you to sign an exclusively agreement to only work with them for a period of time. There is a big difference. I don’t think I would take issue at having you sign something on the one deal you were working on together, but I wouldn’t consider signing an ongoing agreement.

First of all, this is not standard operating procedure for most real estate agents. In addition to running the Castle Rock Funds, we opened a real estate sales division to handle our sales in the Tampa Bay area. We do work with several investors to not only find and sell property, but our in-house designer assists those clients with renovating the properties. It is rare that we would request a buyer’s agreement that included exclusivity, but there are instances where we would require one.

Not long ago, we had a very demanding client that requested some very time-consuming and, quite frankly, unusual work from our agent. As the size of the deal was over $2 million, we did all we could to accommodate the client’s requests. Our team spent countless hours catering to the client. We eventually found a perfect home for the buyer and, shortly before closing, the client started to find excuses not to close. Through some of our contacts in the area, we discovered that the client had been looking for homes with multiple agents and had entered into multiple contracts with multiple agents who were all oblivious to what the client doing. The client seemed to not be concerned with the deposits that they put down on the properties and all of the properties fell through.

This scenario is not normal, but it is one where if we ever were to work with this client in the future, we would require a buyer’s agreement with exclusivity.

Although the buyer’s agreement with exclusivity might be great for the agent, it’s rarely helpful for the customer. One of the reasons that we chose to start a real estate sales arm is that we couldn’t find realtors that wanted to actually work. Agents that we listed our properties with didn’t return calls in a timely manner and did a poor job responding to prospective buyers. Once an agent gets you to sign a buyer’s agreement, they might not provide you with the same level of service that you might get if the realtor new that you could walk away from them at any time.

All of this being said, signing an agreement with a listing agent is universal. An agent that lists your property will be spending money from their pockets on advertising and professional photographs. It’s only fair that they have some protection in order to recoup their investment.

In short, it is unusual for a buyer’s agent to request that you sign a buyer’s agreement. Whether you sign one or not is entirely up to you, but if you do, insist on a clause that allows you to get out of the agreement if they are not performing up to your expectations.

Ronald Rohde · Answer

I can go either way, if you don't sign exclusive you need to demonstrate firm commitment to close quickly and make fast decisions. If you sign exclusive, just keep it short, none of the 9-12 month lock ups...

Jayson Wolfe · Answer

I just want to say 'Thank you' to everybody that has helped give their input! So much help! Thanks!

Hai Loc · Answer

You will only breach if you are under contract with 2 agents in the same geographical area, however it is possible that you can sign an agreement with multiple agents in multiple jurisdictions like Houston, Dallas, Austin..   still possible locally like  Forth Worth, Arlington for example  but it must be disclosed on the buyer agreement..  I am speaking for Toronto Ontario  so Texas might have different regulations..

Bryan Barfield · Answer

Hey Jay, I was in the same position as you a few months back. I signed an exclusivity agreement with an agent before I did proper research. Fortunately, my previous realtor let me out of the exclusivity agreement (thank goodness!) and I was able to work with multiple realtors at once. As an investor, it is not frowned upon to work with multiple realtors to find potential deals. My advice to you is to sign an exclusivity agreement on a per property basis. Many realtors will try to push you to sign an agreement covering a geographical area/zip code, which I would advise against. An investor friendly realtor will typically create an agreement for a property which will run past the anticipated closing date (~2-3 weeks) so that you won't take that deal to another realtor. I typically will work the deal with the realtor who sent me the potential deal first. I communicate my approach to my realtors so that they understand other realtors may present deals. A good realtor will understand this and present value-add deals that others may miss. In my opinion, I wouldn't sign an comprehensive exclusivity agreement with a realtor until they have proven that they are far better than their competition at sourcing deals. Most will present you MLS listings based on your specified criteria, which you easily get yourself...  I wish you best of luck!

Multiple Realtors? Exclusivity agreement?

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