Should I use a buyer agent?

Question

Good day BP community. I recently got interested in investing in MF and have been focusing on learning as much as I can. I found a 16 unit MF on the MLS that I am interested in and have a potential investor that is highly interested. He wants me to get more info on it. Since I have been focused on learning the last couple months and have been busy at work, I haven't had time yet to build a team. Should I just contact the listing agent directly or should I take the time to find my own agent and go through them?

Regardless, I would appreciate any recommendations for commercial real estate brokers, CPAs and lawyers in south central Wisconsin. My focus is on finding value add multi-families in the short run and I want to start building a team.

Chris Tracy · Answer

@Ryan D.- I would get a buyer agent to help you combat the jedi mind tricks that are going to be thrown at you from the listing agent, since you are still learning.  Typically the listing agent splits his/her commission with the agent that represents you, so it won't cost you anything.  One risk however is sometimes the seller and other agent may choose to work with another party that is unrepresented, to save on the commission or they may negotiate you paying your agent the commission- but it may be worth it.  Agents are legally bound by their license to be fair and honest, however- keep in mind that the listing agent doesn't work for you, he/she works for the seller.  So that said, the listing agent will use all of his/her powers to get you to buy the deal (even if it's not a good deal).  Agents will try to sell you the Statue of Liberty.  For example- a common scenario is that buyers for apartment deals are often presented with proforma numbers (which we don't want right?) and shown how awesome this potential investment will be, along with various other curve balls, pitfalls and traps for you as the unwary buyer can fall into.  I don't mean to scare you, as you may have a good deal.  Just my 3 cents.  I would enlist the help of an experienced agent.  Why risk it?  If you are just learning how to be a boxer, would you step into the ring alone with Mike Tyson?

Matt Popilek · Answer

One side note if you don't have representation getting a commission then you should negotiate the Buyer side commission out of the purchase price.  1st get the contract and agree on price paying the 3% commission on the Buyer side, then once the contract is signed you can amend the contract to back out the commission in the purchase price since that will not impact the Seller or the Listing Agent 99% of the time it will work just fine.

Charlie MacPherson · Answer

@Ryan D. I have not done large MFRs, so maybe the landscape there is different than smaller MFRs and SFRs.

That said, the total commission is agreed to in advance in the listing contract, so working with the seller's agent is not going to save anybody money.  The seller's agent will just pocket both sides of the commission.

The seller's agent is also in a fiduciary relationship with the seller.  He is required by law and by ethics to represent the seller's best interests.  Highest price, best terms, etc.

Conversely, a buyer's agent is your fiduciary - your advocate.

Finally, unless you're an experienced negotiator, I don't recommend going up against someone who is.  A good buyer's agent is an asset that's worth his weight in gold.

Matt Popilek · Answer

My 2 cents as a Commercial Broker - I sell MUF property to and for investors.

You don't need a agent to represent you if you can trust the Listing Agent will be honest with you.

If you don't know the listing agent it would be in your benefit to have someone on your side to protect your interest.  Even if it is just another investor that has experience in the MUF sector.

If you build relationship with commercial brokers you could also find a lot of good off market opportunities that you would otherwise miss. So I would suggest getting in touch with as many active MUF brokers that you can connect with just so you get the off market properties.

Todd Dexheimer · Answer

This is a smaller property and your inexperienced, so I would consider a buyers rep if you have a good one you can trust or if you have an experienced friend that can tag along. Usually in the commercial world you go directly to the listing agent, but in this case you may consider a buyers rep.

Michael Le · Answer

For the larger properties I've dealt with the selling broker does not split commission. So it is up to the buyer to pay for the buyer's brokerage fee. Perhaps that is different in other MSAs or in smaller property sizes, but that's been my experience.

Should I use a buyer agent?

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