Pros and Cons of Having Go to Brokers
I've been thinking lately about the pros and cons of having brokers that I will constantly feed stuff to even if they weren't the one to bring me the deal. I.e. I find a listing on Costar and have a broker I like represent me as the the buyer's broker. So far I have:
Pros:
-Helps build strong relationships with brokers who will in turn do me favors and send me the "good stuff."
Cons
-The seller's broker may reveal more information than he should if he stands to gain a double commission. He'd rather close today at $8 mil and collect a double commission than wait around for 6 months for $10 mil and no double comission.
-Some deals/firms refuse to split their commission and it comes out of the buyer's pocket.
-The more brokers you talk to the more opportunities you will come across.
Anyone have thoughts on this?
Only use one if you think you need them to help with transaction management or DD.
Second this. Use only when absolutely necessary, anything else is a waste of money.
Anyone mind elaborating on how it is a waste of money if the seller's broker is splitting their fee? I see that as a problem for the seller's broker but I'm sure I'm paying for it some how.
Two things come to mind: first, you can use your lack of a broker to negotiate a discount. And second, a broker's numbers generally will just have to be rerun by you anyway since they underwrite so aggressively so having them look at it is a waste of time. The only time I could think you'd need them would be if you didn't know the appropriate cap rates to apply to the market.
What about splitting fee with buyers broker post closing under the table? Seems like motivation enough?
Hic nihil voluptatibus eum assumenda nam. Sunt eius consequatur ut sed. Voluptas cupiditate ipsa reiciendis commodi est nisi aut fugiat. Mollitia voluptatum magnam ipsum aliquid.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...