Buy Side Broker
Is their such thing as a buy side broker who will exclusively find off market deals for a buyer, and in return have the buyer pay him a commission for any deals that the broker brings to them and that they end up closing on. I know that the sellers usually pay the commission, but will a buyer come out of pocket for a deal a broker brings them. I currently don't have my license yet and have a few opportunities I've come across with owners of commercial properties that are looking to sell. The prices their asking make sense on a rough underwriting, and I've presented them to some investors I'm working with. However since I have yet to get my license I've just had to draft up some bullshit contract saying that if they close on these properties, that I'm entitled to a 2% acquisition fee. I'm starting to get pretty close with my investors, and have brought them some great deals, but I just don't know how protected I am since I don't have a license and all I have is some contract that I typed up basically saying for them not to screw me and go around my back. Anyone have any advice on how I should go about this. i've thought about trying to get the properties under contract and then assign the deal, but haven't made the leap yet of doing that.
There definitely are brokers who bring firms/individual buyers off market deals, and in return ask for a fee. Our firm typically includes a fee cooked into the sales price, (50 bps to 200 bps) depending on transaction size.
the issue with buy side brokerage is that you are not in control of your destiny. these are essentially "off market transactions". brokers have a client who wants to buy an asset between 100 - 200 units and a price range of 200k-250k per door.
if you are a broker in the market, you will be making cold calls to owners to see if they want to sell their assets to your clients.
you don't have control because you will call so many damn people and you have to convince owners to sell rather than engage your team in an open market bidding war. buyers expect a compressed cap rate in these situations and more often than not, the seller won't even share financials so you are making a BULLSHIT BUY.
i almost took a job at CB, Cushman, type firm for a role like this.
So how would the buyer compensate me. I'm working on a deal now that the investor whom I brought the deal to is going to submit an offer. Say this offer gets accepted by the owner, and my investor closes. What me and my investor have talked about is me getting a 2 % interest in the llc that was created to take down the deal and then the investor essentially buys my interest out after we close on the deal. Still not to sure how that would work and either is he. Say I do go get my license, as I have my sales test this upcoming month. Now that I have my license how could I approach my investors with an off market deal I find and get entitled to an acquisition fee once they close. These investors wouldn't want to cough up straight cash or is that just how the commission would have to be paid out. When I get my license and I find an off market deal, would next step be to go to an investor and get them to sign some type of exclusive agreement with you stating that nay deal you bring them off market and they close on you are entitled to a commission.
At this point, why wouldn't you just draft up a 'partnership agreement' with your investor or just become an acquisitions person on their team? I haven't reviewed the laws in a while but I'm pretty sure unless you are employed by this person in some way officially you are in violation of the RE law since there's an agency relationship formed and you don't have your license, but I could be wrong.
It's called a consulting fee. You don't need to have a brokers license to collect a consulting fee.
Right on, so that's how the contract's drawn up with that specific language. Just didn't know if that was something commonly done.
Yes, but you have to be careful here if you are advising on the actual pricing/transaction process. He mentioned he may want to try and do this with other firms/investors as well, and in that case there's an agency relationship formed since you aren't only working with one person/group.
I know someone that got into trouble doing something similar. Very low probability that you would get outed/discovered, but just something to consider.
EDIT: Also, he should want to get his brokers license because that's how he's protected. If this guy decides to be a prick and shaft OP, OP doesn't really have any recourse if the investor is able to circumvent him. If he has his license, he can actually draw up a definitive listing/agency agreement which guarantees that he gets paid if a deal goes through.
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