Real Estate Buyer's Contract: Exclusivity??

Question

My spouse and I are just getting started in BRRRRs and flips in the Portland Metro market (Oregon), and we have a question about working with a Real Estate agent. We're selling a property to have our seed money, and working with an agent that initially seems to be very well connected, professional, and can deliver. Once sold, we plan to BRRRR a multifamily. The agent has brought up a buyer's contract and I'm wondering...

1) What if we are looking at wholesale? Or using our own connections/marketing to find a property? Does exclusivity in the contract limit our ability to do this?

2) What if we find our own property, using means unrelated to their support? Current investors: do you have standing buying contracts with an agent? Or just an understanding?

3) We like the person we're working with, would definitely send referrals their way, and would like to hear about leads they find that meet our criteria. If they're helping us find properties, I do want to make sure their compensated appropriately, but if they aren't at all involved in finding something, negotiating, or closing, is it common practice and curtesy for them to still get a commission?

We'd like to do this right where we are maintaining healthy, mutually beneficial working relationships, but don't want to pay when we aren't utilizing a service.

Brad Hammond · Answer

I never use an ongoing buyer's contract. If a buyer does not want to work with me, I don't want to hold them to it via a binding contract. When I am representing a client on an off-market deal, I will have my client sign one for that one deal. That outlines how I will get paid and the title company will need that.

I would ask this agent for clarification as to why they want you to sign one.

I would ask this agent for clarification as to why they want you to sign one.

Aften Hennricks · Answer

Thanks, all. This is helpful. I'm meeting with my agent/team next week (we're still dealing with crazy ice/storm conditions in Portland Metro) and will talk it through with them. I'm hoping they will be onboard to helping find/procuring the properties that I'm looking for while also recognizing that we'll sometimes do things on our own. We definitely want to enrich and support the people that are supporting our business. It's a newer relationship though, so fingers are crossed that they're open to fostering that working partnership for the long-run.

@Brad Hammond@Chace Fraser@Sonny Vu

Chace Fraser · Answer

@Aften Hennricks kudos to what @Brad Hammond said. Also, your questions are justified and well thought out. I'd take them directly to your realtor and just have a conversation with them. "Hey, we did a little research and asked around..."

Sonny Vu · Answer

I am a RE agent. A buyer's contract is usually presented when the offer is made, to make sure that the buyer's agent gets properly compensated. It sucks, being a buyer's agent, taking the prospective client to a bunch of showings and spending hours and possibly multiple days, doing research on properties only to have the people end up making an offer with their RE agent cousin. That being said, I think most buyer's agent know this risk and get a feel for their prospective clients and will know whether to put proper effort and deliver a high level of service where the prospective client will not dump them. The exclusive buyer's contract does bind you to that agent for a specific term, but that doesn't preclude you from making sure that you also get the terms that you want. Make sure that the agent is ok with only getting commission on the property that he has procured for you. If you find your own deal then you don't need to pay a commission to the agent. Make sure that is in the agreement and if the agent doesn't agree then get another one. If the agent is reasonable then this qualification of the terms should not be an issue as most agents will only pursue commissions that are due to them from doing work for you. Hope that helps!

Charyl J. · Answer

I've personally never had a realtor present me with a Buyers Contract. I heard a similar question on a podcast awhile back. I think it was the Real estate rookie podcast. Every situation is different but it doesn't sound like something that comes up often from what I've heard. It would depend on the contract and the realtor, but I personally wouldn't be crazy about the idea. Again just my personal opinion.

Stanley Pearse · Answer

Humm...would be interested to know if it was the same Portland real estate agent that we were talking to as well.  We were a bit taken back when presented with a Buyers Contract.  We back peddled.

Real Estate Buyer's Contract: Exclusivity??

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