My husband and I are not currently working with any agents. We have been looking at multi family properties in an area we are looking to invest in, and recently contacted an agent about some mls listings. He has contacted listing agents with our questions, and we just asked him to put together an offer for us. He emailed the offer purchase contract to me along with the Exclusive Right To Buy Listing Contract. I have never received one of these before (we have bought other multi family properties in other areas before and never got this before).
This contract appears to state that we would be required to use this agent as our buyers agent for the next four months. I have heard of these types of contracts before, but am unsure of why a buyer would ever agree to sign one. Is this just normal in some states? If we don't sign it, would they agent be unlikely to want to submit offers for us? What are the pros and cons of signing this?
I have not signed one but have had bad stories from clients who wanted out. Amazingly one agent wanted to continue in that contract after my client had a bad experience with a sale that fell through. While I had concerns with there being proper consideration, i simply told the realtor fine but you realize if my client chooses to take out a half page add saying you would not release him and please no one else ever sign one, and place that add next to his weekly sales add he could legally do it, he quickly signed a release. I guess I can understand why a realtor wants one, but no idea why a buyer would want one.
This works for the real estate agent. If you buy a building through him, he gets paid. If you buy a building through someone else, he gets paid. If you buy a building on your own, he gets paid. He's got you tied up.
You could sign his agreement, if he shortened the term to a couple of weeks. Or better, you sign a non-excluvive agreement with him, so that you pay him when he brings you a deal. But you don't pay him when someone else brings a deal, or when you find your own deal.
When I've had agreements like this I added a clause stating the agent would be paid only if I bought a property they had presented to me. If I found a property through another agent, wholesaler, or some other means, they would not be paid.
@Kimberly T. As an investor, you should absolutely NOT sign such a contract. It removes the advantage you have of dealing directly with listing agents and giving them the opportunity to earn both sides of the commission (and thus advocate your offer).
An investor friendly agent will not ask for this. Tell him he will be your buyer's agent for any deals that he works on for you or brings to you. If he doesn't want to do that, move on. If you are doing all the prospecting and you know what you are doing you should just work directly with the listing agent. Otherwise, a buyer's agent can do the scouting for you and help you out with the process.
Thanks guys, that's all in line with what I was thinking. I will go back and reread it, perhaps it is only related to properties that he brings me (good point @Jon Holdman !). He seems like a good agent, very helpful, he has looked into several properties for me already, and I even found lots of good reviews for him online (for whatever that's worth!). He has lots of experience with multi family deals, which is great. I have no reason that I wouldn't want to work with him, but I just don't see the point of signing this.
@Larry T. yes, we've used the listing agent for 2 of the multi family properties we've bought in the past, and I'm pretty sure it helped us get the deal through, so I know what you mean about that.
@Kimberly T. this isn't an unusual clause. Agents will definitely try to get this in. But most buyer's agents work with owner occupants, not someone who's going to be looking for deals in lots of places and, at least potentially, buying multiple properties.
To me it shows a insecure agent or arrogant agent. Times have change. At any given moment or time If we the agent can't entertain or correct our behavior the buyer can use someone else.
It's like marriage. If I treat my wife wrong, stop washing her car every sunday and start laying on the couch she has every right to leave my as*.
Everyone has to be on top of there game, 24/7, 365 days out of the year. The minute you let your guard down watch out.
In my state (NC), you can't be a buyer's agent for a client without them signing a buyer's agency agreement. If you don't sign it, the agent can still present your offer, but he will be working for the seller, not you.
I usually have my clients sign it for a short amount of time, or make it property specific.
I'm having great difficulty finding agents/brokers who will sign non-exclusive contracts, even contracts for duration of less than 6 months. I do my own research to find homes. I want a realtor to do accurate sales and rent comps and to open a few doors, give honest opinions based on experience but never pressure me, or go against my interests, help with the offer letter, and take half of the seller paid broker fee. I don't want to be obligated if the seller doesn't pay. From start looking to offer takes about 4 days of work. Commissions are many thousands of dollars. I don't understand this profession.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Join the Largest Real Estate Investing Community
Basic membership is free, forever.