Exclusive marketing rights to raw land property?

Question

Curious as to whether anyone's ever signed an exclusive marketing contract with a potential buyer. Essentially, I'd like to pay the seller a fee for granting me the right to marketing his property. I'd pay him $500, market his land to my buyer's list, and take care of the transaction and closing costs once it sells, possibly giving him a portion of the profit.

This would be for a piece of raw land that has a couple of 'question marks', e.g., an adjoining landowner has built a fence through it, it can only be accessed via a private drive. It does have value and I do think it will sell (eventually.)

Obviously, the point of this would be to mitigate my own risk so I wouldn't have to invest my own cash to purchase the property. Has anyone ever heard of this type of agreement?

Kyle Conrad · Answer

@steve haight no - there's no relationship to speak of - he's an absentee owner but he's VERY motivated to sell. Normally, I'd purchase the property outright and sell it myself but in this case there are too many red flags to for me to post my own funds. For example, the land is on a private drive (that is currently being used by other neighbors), the neighboring landowner appears to have 'adopted' the property as his own, and there are no utilities available. All that being said, it's a quality chunk of land that's assessed at around $30k. I think I could finance it to someone for $10k-$15k but  there's a slight chance that a) the neighbor could be a hassle and/or B) I can't access my own land because it's not connected to a public ROW and the private drive is 'reclaimed' by the rightful owner.

Steve Haight · Answer

@Kyle Conrad

You cannot control everything. Even the brokers and real estate agents get bitten every once in a while, there are ways to circumvent the brokers, you would be surprised. What kind of relationship do you have with the owner? There has to be a good working relationship. When I am under contract I let the owner know there may be calls coming in from certain adds you are running so he should ask. The contract sometimes is as good as the paper its written on, you need to establish a relationship, if you feel you have a shady principle pass. You never pay the owner up front, everything is performance based. What are you really trying to do here be more specific and maybe I can too.

Kyle Conrad · Answer

Me neither, Steve. Do you pay the original owner a stipend up front or do you just agree to pay them for a portion of the sale? Also, what's to stop someone from finding your ad, researching the current owner and bypassing you to make the purchase?

Kyle Conrad · Answer

Thanks,

@Aaron Montague - the only issue with using this contract is that I'm not a realtor - I guess I could have my attorney revise the language? The only reason I'd pay him is for the incentive to use me as his representation. Also - what's to stop someone from finding the property through my ad and bypassing me to buy directly from the owner? Or would he just be in breach of contract?

Steve Haight · Answer

Kyle,

Oh sure I do marketing contracts all the time. I am not a broker or realator so I work a different way. It has always worked good for me and with my marketing background I can usually create a sweet deal.Let's face it what developer does not need cash. Yes you do not pay owner or developer anything until the sale is made.

Good luck.

P.S

Let's discuss your buyers list maybe we can make some money together I have the grade A inventory.

Aaron Montague · Answer

@Kyle Conrad

What I believe you are looking for is "exclusive right to sell."  It is a standard sales clause for realtors.  Essentially it gives you the right to take a commission if the property sells within X days.  After X days you may have to renegotiate.

"The exclusive right to sell listing is the most common form of listing agreement. It gives the brokerage firm the exclusive right to sell the property for an agreed-upon period of time, and a right to collect the agreed-upon commission if the listing firm, another firm, the seller or anyone else procures a ready, willing and able buyer during the term of the agreement." -NCrealtors.org PDF page 3

I'm not sure why you would pay the current owner.  Generally they get paid when the property closes.  Do you intend to take a commission from the sale?