Do you take a commission when your broker AND buyer??

8 Replies

I am a Broker in Texas and when I purchase residential or small multifamily (1-4) homes for myself, I write in the contract that I receive the 3% listed buyer's agent commission (in one form or another).

I'm about to make an offer on my first larger multifamily (20 unit apartment complex) and the non-disclosure I was asked to sign in order to view the financials has a bullet point that says I'm "acting as an Investor only and therefore am not entitled to commission."

Is this normal?? Do you usually try and take or ask for the broker commission when you are both the buyer/investor and the broker?

Second question: I'm used to making an offer on the TREC or TAR forms when offering for SFR or small multifamily, what do I use to make an offer for an apartment complex? Does the LOI act as the offer or is that just the general intent letter with offer price and terms and then the sellers realtor will provide the contract?

Thanks for your help!

Taylor,

An LOI is just about 'intent' and many explicitly state that the LOI itself is not binding. The terms laid out in an LOI have to be incorporated into a Purchase Agreement which gets executed; many deals fall apart during the negotiation of the purchase agreement. When it does get signed, that becomes the binding document for the transaction.

Regarding commissions; I have seen this in various online confidentiality agreements (CA). Not being an agent, it does not affect me but I would say when you put in your LOI, declare that you are an agent representing yourself and your commission expectations. I believe that the listing agent has a fiduciary obligation to bring any legitimate offer to the seller. When the purchase agreement gets drafted, just make sure everything is spelled out.

The other one that I have seen is where the CA states that as the buyer, if I bring an agent, I am responsible for their commission. I generally don't worry about it since as I stated above, the LOI can redefine things and at the end of the day, the purchase agreement is the only thing that counts.

Oren

@Oren K. Thank you so much! That makes a lot of sense. I was worried I might be waiving my rights to the commission if I signed the NDA that stated I wasn't entitled to it, but when it comes down to it, the only agreement that really matters is the purchase agreement. Thanks again!

Have one of your agents represent you.

By signing an LOI with those terms you could be waiving the issue... or causing the deal to fall apart. Terms stated in LOI are typically not subject to re-negotiation later.

Updated over 3 years ago

I see now this is in the context of an NDA regarding financials. I would strike out and initial the language regarding commission.

In my market, when you get into commercial it is much more common for the buyer to pay their own agent as opposed to them being paid by the seller.

Originally posted by @Russell Brazil :

In my market, when you get into commercial it is much more common for the buyer to pay their own agent as opposed to them being paid by the seller.

Good point. But when I read that language I hear the signer waiving the right to an otherwise available commission. 

Originally posted by @Taylor Philley :

@Oren K. Thank you so much! That makes a lot of sense. I was worried I might be waiving my rights to the commission if I signed the NDA that stated I wasn't entitled to it, but when it comes down to it, the only agreement that really matters is the purchase agreement. Thanks again!

So, you're now becoming happy to outright lie on your signed NDA? 

If I was the Seller, and found you out, guess how happy I'd be about that?

And if I was the same Seller, who knew some good litigation Lawyers?...

[Or am I just trying to be a spoilsport?]

@Taylor Philley    Apartment complex owners are normally smart enough to look at the bottom line.  You should not expect to get any better deal if you "charge a commission" or not.

Everyone else is correct.  Signing the waiver will block you from getting a commission because you will be in violation of several state rules and probably the licensing act itself if you say you are only an investor while acting as a broker.

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