(CRE) Realtor buyer commission and exclusivity clause

[Steve Saussier]

Hi,

For those who buy/sell commercial real estate, I had a quick question. How do you work on the terms with your preferred realtor? Assuming you have a one year contract with your realtor:

Apart from the usual buyer representation commission, do you have any exclusive clause with your realtor? For example incase iIf you identify an asset in the market that already has a realtor representation on both the buyer and seller side, do you reserve the right to proceed with the deal independently, or do you have to bring in your realtor? 

[Ryan Konen]

When working with a realtor under a one-year exclusive buyer representation agreement, the terms of exclusivity and commissions can vary, so it’s essential to clarify these details upfront. Here’s how this typically works in commercial real estate:

1. **Exclusive Representation Clause**: Many exclusive agreements mean that if you buy a property during the term of the contract, your realtor is entitled to a commission, even if you find the property independently. This is because the agreement obligates you to work with them on any transactions within that period.

2. **Carve-Outs for Independent Deals**: Some investors negotiate carve-outs or exceptions to this exclusivity. For example, you might stipulate that if you identify a property on your own or work with a property that already has dual representation, you can proceed without involving your realtor. This may require the realtor’s written agreement.

3. **Dual Representation or Referral Options**: If you’re open to a co-brokerage scenario, you could also work out terms where your realtor earns a referral fee instead of the full buyer commission. Some realtors are open to this arrangement if it’s part of the initial contract.

4. **Negotiating Flexibility**: Discuss these scenarios with your realtor and outline specific conditions under which you can proceed independently. Having clear, mutually agreeable terms can prevent misunderstandings and keep your options open.

It’s always best to consult a real estate attorney to ensure the contract aligns with your interests, particularly if you foresee independent deals.