I recently had an agent that I know over to talk about investment properties ect. I was really just looking to see what all he knew investment wise and if he'd be an agent I'd want to use if he knew his stuff.
Well he's wanting me to sign an agent exclusivity agreement.
Is this typical or even a good idea?
I was more under the impression I'd want to not be tied to any individual agent so I can try to leverage the selling agent (so the selling agent would get dual commession). Also not sure what impact this would have to any off market deals.
I personally would not sign an exclusivity agreement; especially since you are still trying to feel out if he knows what he is talking about.
I would find an agent that is very experienced with the type of properties you are looking for and work with them. I would not worry about dual commissions; just about finding someone that is able to help you recognize good deals and assist you with negotiating throughout the process. You also want to be able to tap into their contacts; plumbers, HVAC, inspectors, lenders etc.
@Cameron Leckliter The exclusivity agreement is very typical, but usually only signed once you have agreed to use his services. It makes perfect sense if you think about it- showing property and doing the research is time consuming and that agent wants to make sure he/she is not wasting their time- they deserve to get paid if they do all the work.
I would never sign one as an investor and have never used them as an agent. In my opinion, if you do your job as an agent, you don't have to worry about an unenforceable piece of paper. However, on the agent's side, a lot of investors will waste their time and use several agents so they want the security for their time not because they want to force a sale. With that said, I would still never sign one and they are not really enforceable anyway. If you don't like an agent, no brokerage is going to sue you because you won't stay with them.
We don't use buyers agents and we don't sign exclusivity agreements. Why tie yourself down and limit your options. We like to speak directly with the sellers agent or ideally, the seller. Our experience has been that buyers agents have 100% of the time misunderstood or misconstrued something and ruined negotiations.
We don't ask for exclusivity until we are making an offer on a property. If you are just having an initial conversation then I wouldn't really consider it.
I agree with @Cole Simpson 100%. I don't ask for this until we are making the first offer, unless someone needs me to hunt down an unlisted property. I want to earn the business by showing my value before I ask anyone to make this kind of commitment. We have them sign it during the offer process to make sure the buyer understands our role in representing them in the transaction. Without it in place at the time of the offer, we are considered transaction brokers and are limited in the advice we can offer. Now, if you find an fantastic agent that you want to work with and their office requires buyers agency from initial contact, I would not hesitate to sign it as long as I understand the conditions under which the agreement can be terminated. If the agent brings you the property & provides you information, they should be protected on that deal. Hope that helps!
As an agent my broker requires this agreement. I only need it signed when we offer and I do it per property so you aren't tied to me. I gladly share knowledge and thoughts before needing it signed.
@Cameron Leckliter I have a lot of thoughts.
1 the idea that using the selling agent gives you leverage is not really based on facts. There is no way for someone to truly represent both parties impartially so you could be paying more by not having your own fiduciary expert.
2. If you are asking him
To do research and work remember he is not making money until he closes a deal for you. If you are expecting research and work you should give him that commitment otherwise don’t sign if you don’t feel like you want him to be on your team.
3 people think real estate is just filling out paperwork and a lot of agents do bring little more to the table but when you find a good. agent they are a team mate on your road to financial success. They are worth their weight in gold. There is so much strategy that goes into getting a good deal. You will be over paying by trying to save a little on commission
@Amanda Jacobellis Those were the points I was trying to make, but I think you articulated it a little better than I did. Once you are ready to use an agent, especially a really good agent that will go the distance and really do extensive research for you, I believe they are worth the signed agreement. Especially in light of what others stated about it being not enforceable anyway. It just shows that you won’t take all their research and time and go to another agent with it.