Real Estate Agent asking for Exclusivity.. is this normal?

Question

Hi BP,I'm starting to look for properties in West Los Angeles (Culver City/Mar Vista, etc), and I found an agent who seems decent, but she's asking for "Exclusivity" no matter what I buy.This is the first time I've worked with a Real Estate Agent that is asking for exclusivity (I purchased 3 properties before)... and although I'm happy to buy through her on anything she shows me, I don't want to be boxed in if I find something else one day in a totally different area (potentially from another Realtor).Is asking for "Exclusivity" normal? This is the first time I've heard of it. She does seem to brag about how she can get investors deals and her RE/MAX team is #2 in the nation, but if someone is worth exclusivity, they better be damn good in finding me a deal...I'm just concerned before I sign any papers. Also, if anyone knows any honest, investor-friendly agents that have 10+ years experience in the West Los Angeles market, please feel free to PM me.

George Hermann · Answer

Exclusives for investors is unusual. I require a 1 year exclusive for buyers. This is because they are inexperienced and need a lot of time and guidance throughout the entire process of finding and buying their home. Without an exclusive they will waste six months of my time and then buy something on impulse from a listing they find on StreetEasy or Trulia.I have a contract with investors that obligates them to pay my commission only on a property that I bring to them. So, I find the deal, bring it to the investor, work with them through closing the deal, and get a commission.

Steve Babiak · Answer

Don't sign any exclusive buyer agent agreement if you are an investor buying investment properties.Imagine you decide this agent isn't working out for you but you have that exclusive agreement in place - anything you buy will earn that agent a commission paid out of your pocket whether or not that agent actually did anything to earn the commission.

Dan Mackin · Answer

Exclusivity is a fairly normal thing. As an investor I would never sign an agreement like that until you have vetted the agent thoroughly. As a general rule agents do it to protect themselves. Showing properties takes time and having a client use your time to just circumvent you in the end sucks. My final note is that just because someone is #3 in the nation doesn't mean they are great with investors. Most top rated teams are focused on retail buyers not investors.

Joe Villeneuve · Answer

Homeowners sign exclusive agreements with agents.REI don't.

Joe Villeneuve · Answer

3I have never, and will never sign an exclusive deal with an agent. Agents sign this with homeowners...not investors. The one's that insist on it are not REI friendly. You may like her, and if you do, have her find you a property to live in...not investment properties.Here is my criteria for an agent:1 - Must be able to handle HUD offers2 - Must make all the offers I want to make (no "it's too low")3 - Must make offers for me before I look at a property. I do my inspections on accepted offers only.

Brandon Gentile · Answer

Yes this is standard operating procedure. Any agent worth their salt will have a buyer enter into a contract. Most big firms are traditional agencies now. Which means they must have a designated agency or exclusive agency agreement with their client. It used to be that firms were traditional agency and these rules were more lax and a little more broad. That being said there are some changes you can make to the contract so that it says the agent is just your agent for the deals that they work with you on and that is it. That is something that you might do for an investor. But someone already mentioned that a traditional residential buyer usually is very unaware what is going on needs a lot of time and attention so they have a contract to protect their time. Long story short is the firms that made you use a designated agency contract are actually following the letter of the law. A lot of firms don't have you do this and if were audited could be in trouble. You don't want any of those firms possibly coming back to you in any way looking for something. I was at a previous broker who did not do this and they were a very big chain that you all would know. Just because some or most agents do not do this does not make it correct. But there are different forms and variations you can make to that contract to benefit both the investor and the agent. I do not know the law like the back of my hand but I did just go through this process with a residential buyer who had an attorney as a father and we went through a weeklong escapade dealing with the contract so I got a pretty good dose of this from our legal department just recently. I would just make some small tweaks to it so it benefits both of you! An agent who is friendly with investors should understand. If the agent does a good job for people then the contract usually should not be a huge sticking issue with some small tweaks because the client or investor would always want to work with them and refer them anyway, right? ;)

Joe Villeneuve · Answer

Now here's someone I would work with. If you're ever in Michigan...

Manolo D. · Answer

Short period seems ok like 6 months, if she brings you 2 good deals in half a year and you close on one, maybe you could renew it for another half. I'd be careful in what the terms will be, don't give in to all terms that they draft, don't modify too much as it won't be that attractive to them. If they are THAT good.

Eric Zunkley · Answer

The agent is just trying to protect her time.

Joel Owens · Answer

It's all about how in demand a broker/agent is.If someone is that good then they have a deep network of contacts and properties. When you have demand you get contacted by lot's of people daily. You have to decide as a broker/agent what business you want to accept.I don't feel anyone should be trapped in a partnership. That goes for the broker/agent as well.My clients on the commercial side we have a mutual understanding. Investors in it for the long term do the right thing. If an investor tries any funny business with me they are blacklisted forever with me working with them or presenting a property to them. One strike and your out is the philosophy I use.You could list specific areas of exclusivity covering only the first property purchased through them to see how it goes or give a short exclusivity period.There is not all or nothing as these agreements can usually be negotiated to both parties comfort levels. At the end of the day if a bunch of other investor buyers are willing to make a commitment to get access to properties and you are not then it's your decision on what you want to do.No legal advice given.