Proper etiquette when communicating/working with brokers in commercial real estate

[John Barnes]

In searching for commercial real estate to buy, I’m reaching out to a number of brokers in the area and explain to them what I’m looking for. 

#1: Do I tell them I’m talking to other brokers? They often allude to me speaking with others as if it is expected. 

#2: If a broker brings me a deal off-market, am I going to link up with a different broker to ask as my buyers agent? Or am I expected to have that broker work both sides of the transaction?

#3: If it’s an on-market deal as mentioned in #2, does that change who I have in my corner?

[Ryan Konen]

Quote from @John Barnes:

For an off-market deal, the broker doesn’t necessarily have a fiduciary duty to me if I’m the buyer, correct? In that case I’ll want a real estate attorney for the closing process. Any other advice you can provide in that situation to make sure I don’t get taken advantage of?

Certainly! Here’s the advice restructured into paragraphs for a forum post:

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In an off-market deal, it’s important to understand that the broker typically doesn't owe you a fiduciary duty unless it's explicitly stated in the agreement. This means they are generally working in the best interests of the seller, not the buyer. Given this, it's essential to have a real estate attorney involved in the transaction. Your attorney will review the contract, help with due diligence, and ensure that the closing process is handled properly. They will also spot any terms that may not be favorable to you and can assist with negotiating the deal.

Due diligence is key in any real estate transaction, but especially in off-market deals. Start by conducting a title search to ensure the property is free of liens or legal disputes. Verify the zoning laws and any required permits to ensure the property is suitable for your intended use. Don’t skip a professional inspection of the property, as there could be hidden issues such as structural damage or code violations. If it’s a larger or commercial property, consider conducting an environmental check to assess potential risks like contamination or flooding.

It’s also important to request a full property disclosure from the seller, which may include known issues or defects with the property. While some jurisdictions require this by law, it’s always good to ask for confirmation and ensure it’s documented. Given that the deal is off-market and there might be limited information on pricing, you should compare the property to recent comparable sales in the area (comps) to confirm that the price is fair. Getting an independent appraisal can help verify the market value.

Even though you may be dealing directly with the seller without a broker representing you, don’t hesitate to negotiate the terms of the deal. Your real estate attorney can help ensure you get the best terms possible, and they can also guide you through any challenges that may arise. Be sure to clarify all aspects of the financing and closing costs as well, as these can vary depending on the type of property and deal structure.

Finally, while off-market deals can sometimes seem quicker, it’s important not to rush through the process. Take your time to carefully review all aspects of the transaction, and make sure you’re fully informed before moving forward. By being diligent and involving an attorney, you can avoid potential pitfalls and ensure that you’re protected throughout the deal.