Should I sign an exclusive agreement with 1 realtor? Out of state

Question

I'm looking out of state to purchase buy-and-hold small multi-family.

Yesterday I had a call with a realtor in Austin, TX. She deals mainly with investors, and focuses on multi-family. So that's great, just what I need. But...

I was then sent an exclusive agreement, good for 1 year from her. She asked that I sign this before she sends me any properties.

"Client grants to Broker the exclusive rights to act as Client's real estate agent for the purposes of acquiring property in the market area."  Time in place: 1 year.  (it covers Austin, as well as surrounding counties Travis, Hays, Williamson, Bell and Burnet).

Basically, if I sign this, I'm limited to deals through her and her alone. If I personally find a deal, obviously I can bring it to her to represent me, but if I were to find/buy a property with another broker, she gets the commission from me as a penalty.

My understanding, is that you want multiple agents sending you 'deals' to find 'the right one' and then you buy it.  Have them working for you, and that's how they make their commission.

But I also understand, that they wouldn't want to work all those hours finding and sourcing deals and sending them your way, if you're just going to buy a different property with someone else and waste their time.

I'm all about 'everyone gets their fair pay for their fair work.'  But please everyone, let me know if this is out of line? Or the normal practice?

thanks for your wisdom!

-Chris

David Barr · Answer

That length of time is too long, but you are not limited to using only that agent.  You are limited to that agent for the properties they bring to your attention.  In real estate lingo, it's called procuring cause.

I understand that agent's request for a buyer broker agreement, since I've been burned wasting time with investors only to find they go do a deal themselves after I have sent them properties.

Have her shorten the length of the agreement to 90 says and make sure the representation agreement has language about procuring cause.  If you like her and her service, then extend it to mutual benefit.

Joe Villeneuve · Answer

If I was buying my own house to live in, I would sign an exclusive agreement. As an investor, looking for my investment properties, I would NEVER sign one. I have 4 agents that I use. They all know eachother too.

Now, if I'm buying in another state, I use wholesalers. I find handcuffed if I'm restricted to one agent as an investor.

Now, if I'm buying in another state, I use wholesalers.  I find handcuffed if I'm restricted to one agent as an investor.

Chris Collins · Answer

Thanks everyone for the replies and feedback. Glad to know I wasn't the only one thinking 'hmm, does this really make sense for me, the investor?'

So nice to have this resource here, and to hear from agents who are doing the same thing, but with no exclusivity contract, and still doing business. That's what I expected and what I'll be going for.

thanks,

Chris

Jake Thomas · Answer

I work with several out of state investors and would never think about making them sign an exclusive buyers agreement. What happens when you sign this and she only send you listings once a month and you're stuck with them. Good realtors don't need them because they are keeping the pipeline full of potentials and the buyers have no need to go anywhere else.

David Stone · Answer

I had to sign an agreement as a "I don't know anything about real estate and am buying a home for my family" type buyer.  I understand the agent doesn't want to waste his/her time showing multiple properties for me to run off and purchase with another agent.  But... as an investor I would not sign one of those agreements.  This could place you in a 1 year contract with an agent who really doesn't know what they are doing.  (If this is standard for the area, and you have proven their ability to be an investor-friendly agent then this may be different.)

I have never been asked to sign an exclusive agreement here in WA.  I would reach out to many different agents/brokers and see if this is standard in Austin.  If it is, you might want to interview a few candidates before signing an exclusive agreement.  Otherwise, shop around and focus on proving yourself as a legit investor so the agent doesn't feel like they might be wasting their time.  Good luck!

Omar Merced · Answer

Hi Chris. I think you answered your own question. Yes, sometimes agents request that you be exclusive with them for the time that are going to put in behind the scenes which many investors don't realize, however the time that she is requesting might be a little excessive. Are you sure it is as you stated? I ask because I too in the past have asked for the buyers commitment but it was for 90 days to work exclusively with me and I had a 180 days after our agreement ended for properties that I had presented. For example, I show you a property and you do not buy, but later you do after our relationship had ended for whatever the reason. Under those circumstances I feel that I was the reason you looked at the property and ended up buying it and thus entitled to the commission. I think you have a conversation and let her know that you are willing to try her out for X amount of days and re-sign as you go along. Remember the best thing about real estate is that everything is negotiable. By the way I've only heard of agents going after the clients in very, very few circumstances and usually the buyers were blatantly trying to cut out the agent. Brokers hate lawsuits in any form and fashion. I think we all do.

Mike Hanneman · Answer

Here in North Idaho I have 2 realtors and one had me sign a contract for 6 months and the other doesn't use them. They both know about each other and I use them in different areas.

The one that I don't have a contract with found me the property I'm closing on next week.

Mike Hanneman · Answer

The length is long from my experience, most realtors I've dealt with just ask for 6 months, if they ask for one at all. Also from my experience, the better realtors I've had don't use these sort of contracts, they use the honor system and have the confidence and competence that they don't need the contract. The realtors I've had that had me sign these were a little more lax. about getting me answers to my questions, and other dealings.

I personally don't like the contracts becasue why would the realtor have to work as hard for you knowing that they have you for a year. Just my opinion though.

This might just be my area I was in at the time, Northern CO.

Should I sign an exclusive agreement with 1 realtor? Out of state

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