Commercial Broker pocket listing and Agency

Rental Property Investor · Scottsdale, AZ · Member since 2016 · 184 posts · 223 votes

Is it generally understood that in-order to get a pocket listing from a *commercial* multi-family broker, you will have that same broker represent both sides of the transaction (i.e. there is no additional "buying agent" involved?)

The same question asked a slightly different way: do you ever get off-market listings through a buying agent that doesn't work in the same brokerage agency as the listing broker?

To keep the discussion focused, please assume: I always use buying agents. You may assume that and I'm fully aware of the advantages of using different representation for both sides of the transactions, as well the potential pitfalls of double-ending and dual-agency.

Thanks!

James

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Joel OwensBusiness Member

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Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes

It varies. I have built up thousands of retail and multifamily contacts over the years to search for properties for my clients.

Some commercial brokerages like to do volume and work for peanuts. So they take a below market commission and then after giving half to their brokerage the only way they make any kind of money is to double end it. It's actually a disservice to the seller and poor negotiating skills of the listing company.

These larger companies often have very large overhead costs and must keep transacting to survive.

I run a different model at my firm. I do my investments and then work with clients one on one. I locate off market property but do not typically list it. I bring the buyer and then usually make a higher amount that way. Since I am the principal broker I am not giving away half to some company I am hanging my license with.

I am on internal systems for first looks because the brokerages know I screen my buyers upfront and look at financials. As you can imagine the low fee listing companies want easy buyers and to do volume to make any kind of return.

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Troy Luster
Investor · Atlanta, GA · Member since 2017 · 136 posts · 54 votes
9y
Not sure what you are asking? I would assume agents would at least attempt to keep the deal in house unless they can not. Some brokerages don't allow this.
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James Kojo
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Rental Property Investor · Scottsdale, AZ · Member since 2016 · 184 posts · 223 votes
9y
my understanding is that brokers typically first shop deals to investors whom they've had previous dealings with, then to other brokers in-house, then to the general public.
My question is, if I have my own buying agent, will brokers still let me see the deals in that first round or do they expect to double-end the deal?
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Keong Kam
San Jose, CA · Member since 2017 · 75 posts · 42 votes
9y
@James Kojo
This is good question, I also had this exact same question in mind recently.
It looks like a lot of good commercial MF deals come directly from brokers before it hits the market i.e. loopnet.
I read several people saying that deals go to loopnet to die... So sounds like relationship with reputable local commercial broker is key to get access to good deals early. However, I have exactly same question as you in regards to whether the broker bringing the deal to the investor is expecting to cover both sides (buyer and seller) transaction hence pocketing all commissions, as oppose to buyer having own agent. I wonder what people do typically. I feel like having one agent covering both side is definitely uncomfortable situation for buyer and also probably conflict of interest on the agent.
Really curious about what experienced commercial investors on BP can comment on this.
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Joel OwensBusiness Member
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Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
9y
It varies. I have built up thousands of retail and multifamily contacts over the years to search for properties for my clients.
Some commercial brokerages like to do volume and work for peanuts. So they take a below market commission and then after giving half to their brokerage the only way they make any kind of money is to double end it. It's actually a disservice to the seller and poor negotiating skills of the listing company.
These larger companies often have very large overhead costs and must keep transacting to survive.
I run a different model at my firm. I do my investments and then work with clients one on one. I locate off market property but do not typically list it. I bring the buyer and then usually make a higher amount that way. Since I am the principal broker I am not giving away half to some company I am hanging my license with.
I am on internal systems for first looks because the brokerages know I screen my buyers upfront and look at financials. As you can imagine the low fee listing companies want easy buyers and to do volume to make any kind of return.
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Debra Grumbach
Frisco, TX · Member since 2017 · 201 posts · 95 votes
9y
Originally posted by @James Kojo:

my understanding is that brokers typically first shop deals to investors whom they've had previous dealings with, then to other brokers in-house, then to the general public.
My question is, if I have my own buying agent, will brokers still let me see the deals in that first round or do they expect to double-end the deal?
I would "guess" that those deals will first be offered to the listing agent's own contacts and then possibly offered through agents s/he has a good relationship with and the best buyers from those agents would get the next "crack at the deal."
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