Multifamily - Should I have a Buyer's Agent?

[John Accardi]

I'm looking at 10-40 unit apartment buildings in the Lansdale, PA area. Should I have a buyer's agent represent me? This will be my first deal. 

When I ask listing agents, they always say that it's not common for a buyer to have a buyer's agent in commercial deals. They say that usually a buyer will work with an attorney and any other 3rd party service they need during due diligence. 

I'm a little skeptical because I'm not sure if the listing agents are saying that so they don't need to share the commission. I want to be sure I don't make mistakes in negotiation and due diligence but I also want to make sure my offers are competitive and maybe having a buyer's agent makes my offers less competitive.

What is standard and what would you suggest?

Thanks a lot,

John

[Brandon Sturgill]

@John Accardi Yes...

who pays commission in your state?...the seller...so, you're agent may be free of charge. Just make sure you are dealing with an agent/broker that is versed in the asset class you are pursuing. You want experience in your corner. 

And yes, agents that run both sides of the deal generally make a higher commission....dual agency...typically motivation for unscrupulous commission-driven agents to increase income from deals. Dual agency is not always a bad thing, but outright telling you a buyers agent is pointless is bordering on an ethical violation. 

It's your choice 100% 

[Will Barnard]

Sounds like BS to me as well. It is very common for a buyers agent to represent the buyer in such a transaction and in some cases, it may be prudent to also have your attorney look over the contract.

In other instances, it may be a negotiating tool for you to come in and have the list agent rep both sides, and you can negotiate a lower price since the seller will save on commissions (in a double ended deal, the seller often has in their contract to have a lower commission payout and if not, you can ask them to negotiate that and save you on the purchase amount.

Since you are new and this will be your first purchase, a 10-40 unit deal should absolutely include your RE attorney who has experience in these deals and the contracts associated with them.

[Russell Brazil]

In my market, most commercial deals do not offer a coop fee or will offer a fee below what an agent will typically work for, so buyers will typically pay their own agent.