So here's a specific situation I am involved with, looking for advice on how to handle in the most efficient manner:
Property was listed with CBRE last year, did not trade due to price disconnect at the time. I have a buyer group who would be very interested in pursuing the asset, not at previous asking price but still higher than where most bidders were 12 months ago. I approached the owner directly (not through CBRE) and asked them if they would still entertain an offer. They would, but informed me that if we revived the deal, they would want CBRE (same team as last year) representing them. My value-add in this deal is doing a deal direct, and therefore asking the seller to effectively pay me a commission from their end for procuring a buyer at an agreeable price. The seller indicated they don't want to "piss off" CBRE and therefore want to use them and pay them a commission, and asked me to get my fee covered by buyer. From buyer's POV, they would prefer I get paid by seller. Rather than get into a pissing match and potentially get screwed over completely, I am trying to determine a fair and efficient way to work through this issue.
One idea I had was to attempt to work a deal with CBRE to participate in their commission, but from what I have heard, most of the bulge bracket investment sales brokers would refuse this request outright.
Any thoughts would be appreciated.
Does CBRE still have an exclusive with the Seller? If not, I don't see why you wouldn't go to them and tell them what's up. They have a client who wants to do right by them, you have a client that wants to do right by you, and the only way the deal is getting done with your Buyer is for your commission to be covered by CBRE.
They don't want to ruin their relationship (aka future deal flow) with CBRE. If you are bringing your buyer a good deal they should be okay throwing you a bone. How big is the deal? I'd expect to do this for 2/3-1/2 of what the market fee would be.
How good is your relationship with the buyer? Tell them you will try and get your fee paid by the seller but will ultimately look for them to bake it into their purchase price if all else fails.
If you're working to no end to make sure you create a successful outcome for your client they should be glad to pay you a fee for bringing them an off-market deal. Has anyone else shown it to them? Did they write an offer or look at it when CBRE ran a bid-process?
I think you are absolutely correct regarding future deal flow and being in good standing with CBRE.
I suppose I could simply explain situation to buyer and ask them to backstop in case CBRE stonewalls me on a commission sharing agreement.
I think in general most buyers don't want to seem like they are overpaying for the right to buy off market, and if seller is already paying CBRE a market rate commission, anything the buyer pays me or bakes into the price would be viewed as paying "above and beyond" market price.
On a side note, relative to deal size in $, what's a realistic sliding scale on commission %?
Honestly it seems the current owner is being somewhat unreasonable. Yes they have a relationship with CBRE, but they were unable to sell the asset. So thats too bad for CBRE. Also this is a sellers market and brokerage firms are the ones vying to maintain relationships with sellers, not the other way around. Not saying you should burn bridges, but this is simply a matter of a broker not delivering for them, and they should look else where. I don't think they'd hurt CBRE's feelings given that they got a first shot at it.
Agree with this 100%. It's absolutely absurd to think a brokerage like CBRE wouldn't drop to their knees at the word go to get another piece of business from their client, even if the client insists on their covering your portion of the commission. Brokers are middlemen, especially brokers who can't actually execute on their assignment (like this CBRE team seems to be); there is always another equally competent broker next door who can do exactly what CBRE is trying (and failing) to do.
Tell the owner that in nicer terms. If not, tell your client what's up, tell them you want to get them the best possible deal and not overpay for an "off market" transaction, but you won't work for free, and move on.
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