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realtor conflict of interest

Discussion in 'Real Estate Discussion' started by safsad, Oct 26, 2010.

  1. safsad
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    safsad New Member Registered

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    Is it wise to you buy a property from a listing realtor directly[multiplex]? I have been looking at a property recently and am having difficulty determining whose side the realtor is on-he is obviously in a position of strength because he knows exactly what both sides want.
    Is it true that most commercial deals are sold usually with just one realtor ie the listing realtor.Is this not a serious conflict of interest.

    The listing realtors are also very reluctant to show you other realtor listings or tend to highlight the negatives in other properties--is this a sense other people get.
     
  2. gwasser
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    gwasser New Member Registered

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    QUOTE (safsad @ Oct 26 2010, 10:48 AM) Is it wise to you buy a property from a listing realtor directly[multiplex]? I have been looking at a property recently and am having difficulty determining whose side the realtor is on-he is obviously in a position of strength because he knows exactly what both sides want.
    Is it true that most commercial deals are sold usually with just one realtor ie the listing realtor.Is this not a serious conflict of interest.

    The listing realtors are also very reluctant to show you other realtor listings or tend to highlight the negatives in other properties--is this a sense other people get.

    I never heard of that. The listing Realtor is definitely in a conflict of interest position. In Alberta, this situation is sometimes referred as `dual agency` and in more recent terms as `transaction brokerage`. If the listing Realtor is the only Realtor involved he should have explained that to you or you may have reasons for legal action.

    The Realtor should also explain to you that when you are in `transaction brokerage` he can only help you and the seller with filling out the purchase offer documentation. He is in no position to provide advice to either party, and he is obliged to act in good faith (honestly), to act with reasonable skills and disclose any confidential information he posesses from either the buyer or the seller to the other side.

    In simple residential deals this is not often a major issue. However, both the seller and the buyer have the right to reject the `transaction brokerage` (which in terms of commissions is sometimes referred to as `double ending or double dipping`). When either buyer or seller declines `transaction brokerage`, typically the party that first engaged the Realtor will stay and the other party will get his/her own Realtor (from another brokerage than the first Realtor). This way no longer a conflict of interest exists and both the Buyer`s and Seller`s Realtors provide full services and have full fiduciary duties to their client`s side of the deal.

    In your case with a commercial real estate transaction, I would personally never accept `transcation brokerage` and get myself another Realtor. This is too complex a deal doing it all on your own you need experienced advice and representation on your side.
     
  3. CalvinPeters
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    CalvinPeters New Member Registered

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    there is a TON of commercial buidlings that never see an advertisement. Commercial is the very difinition of "old boys club" There is a lot of commercial realtors that have their pockets stuffed with listings, that most people will never see, on account of they are GOING TO double end the deals. It is a lot smaller world, and if they have been around long enough to get a listing in the first place, they are likely to be able to find a buyer for the same building. If the property has made an actual listing, it is likely that the seller is asking for too much (that happens all the time despite all this discussion on CAP rates) or there is something undesirable about the building.

    If the deal was good enough, it would have already been bought...and likely the realtor would have both ends.

    is that right or wrong? I dunno. I suspect (as an owner of commercial buildings myself) that I would sell my properties to whoever gave me my ask price, if it was double-ended by a well-heeled realtor, so be it, why not work with a realtor that has buyers?

    A lot of those realtors are so old school they dont even have email address` so to suggest that they change the way things have "always" been done, is perhaps a bit of a stretch. Some of them still hand-write pro-formas.

    You are however, more likely to get a discount on the commission if he does both ends, some of those commissions are pretty spicy.
     
  4. housingrental
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    housingrental Active Member REIN Member

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    Go with the listing agent if you are comfortable in your own abilities to assess everything
    If you are looking for the services of a realtor use a different, skilled one, as a buying agent
     
  5. bizaro86
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    bizaro86 Active Member Registered

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    QUOTE (housingrental @ Oct 27 2010, 11:58 AM) Go with the listing agent if you are comfortable in your own abilities to assess everything
    If you are looking for the services of a realtor use a different, skilled one, as a buying agent

    How does that work with pocket listings? If you found out about a pocket listing from an agent, it seems like they probably won`t be very happy if you show up later with a buyer`s agent asking about it...

    Is that an issue?

    Michael
     
  6. gwasser
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    gwasser New Member Registered

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    QUOTE (bizaro86 @ Oct 27 2010, 01:14 PM) How does that work with pocket listings? If you found out about a pocket listing from an agent, it seems like they probably won`t be very happy if you show up later with a buyer`s agent asking about it...

    Is that an issue?

    Michael


    I would say "So what if the listing or selling Realtor is not happy"? Afterall you have to act in your best interest. You`re not obliged to use the selling Realtor. In fact the Realtor must tell you that you have the option to use another Realtor. So, by all means get your own experienced commercial Realtor and if the deal is succesfull then both Realtors can split the commissions.

    The selling Realtor cannot oblige you to allow him to `double-end` unless you allow him/her to in writing! If he/she refuses to present the purchase offer to his client, the Seller`s Realtor is acting against his client`s interest and may be liable/reprimandable. So don`t worry about what the Seller`s Realtor wants. Get your own.
     
  7. housingrental
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    housingrental Active Member REIN Member

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    What Godfried wrote
    Except I`d add that in many purchases list price might be what, or very near, what seller will take. It might require an offer above list price (or your realtor to work for reduced comission) if brining on another realtor.
    The listing realtor might also stop contacting you on future listings if you bring in another realtor - discuss this with them first.
    Also if you are sophisticated enough to source non mls commercial purchases do you require the services of a realtor at all times?

    QUOTE (bizaro86 @ Oct 27 2010, 03:14 PM) How does that work with pocket listings? If you found out about a pocket listing from an agent, it seems like they probably won`t be very happy if you show up later with a buyer`s agent asking about it...

    Is that an issue?

    Michael
     
  8. safsad
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    safsad New Member Registered

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    The listing realtors get extremely ticked off when u even suggest getting another agent.I had one guy a few days ago insist a buyers agreement be signed before he even sent me the listing.
    This listing was not on the MLS and I had the address but no other info eg. price etc.I had never even met him but had called him up because he had another listing that was on the MLS.

    My sense is that this is a widespread practise as some of u have noted.I can understand the motives.However if u want to be shown listings from different realtors because they are a closely guarded "secret" what is one to do.Do we sign buyers agreement with many realtors.

    I appreciate some realtors attempt to remain ethical and their adherence to their organizations principles but in the real world a lot of realtors do their own thing- and this is why everybody gets painted with the same brush.
     
  9. ThomasBeyer
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    ThomasBeyer Well-Known Member REIN Member

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    It behooves the astute multi-family investor to contact multiple agents.

    Some are listed on MLS, but not most .. some are on loopnet .. but not many .. and some on ICX .. but not all !

    Always use the agent that brought you a deal .. and if you get the same deal from several agents use the listing agent if you know him/her !

    Often the listing realtor also is your (buying) agent .. thus a dual agent. This is quite common.

    Where is the actual problem here .. besides you know too few realtors ?
     
  10. housingrental
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    housingrental Active Member REIN Member

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    safad: In that case make the buyer agent agreement limited to only that particular property

    Thomas: What is this loopnet you speak of?
     
  11. gwasser
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    gwasser New Member Registered

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    QUOTE (housingrental @ Oct 28 2010, 12:37 PM) safad: In that case make the buyer agent agreement limited to only that particular property

    Thomas: What is this loopnet you speak of?


    Loopnet is a website for commercial properties in North America: http://www.loopnet.com/
     
  12. Rickson9
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    Rickson9 Well-Known Member Registered

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    QUOTE (gwasser @ Oct 28 2010, 03:23 PM) Loopnet is a website for commercial properties in North America: http://www.loopnet.com/

    Loopnet is mentioned prominantly by David Lindahl in his book "Commercial Real Estate Investing 101". It`s an interesting read.
     
  13. housingrental
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    housingrental Active Member REIN Member

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    Where are the listings from derived? Is this something that non realtors have access to post from or?
     
  14. bizaro86
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    bizaro86 Active Member Registered

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    QUOTE (housingrental @ Oct 29 2010, 08:48 AM) Where are the listings from derived? Is this something that non realtors have access to post from or?

    Anyone can post on Loopnet, and a basic listing is free. The catch is, only those who have the "premium membership" can view basic listings.

    Alternatively, a premium listing is $229, and gets you extra features and exposure to everyone at loopnet.com for 90 days. The premium membership ($55/month and up) apparently also includes listings.

    Michael
     
  15. housingrental
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    housingrental Active Member REIN Member

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    So this is similiar to something like bytheowner.com or fsbo but also posted on by realtors and targetting commercial properties?

    Do a lot of multi-family properties in Canada get posted on this that don`t get posted on ICX ?

    QUOTE (bizaro86 @ Oct 29 2010, 10:55 AM) Anyone can post on Loopnet, and a basic listing is free. The catch is, only those who have the "premium membership" can view basic listings.

    Alternatively, a premium listing is $229, and gets you extra features and exposure to everyone at loopnet.com for 90 days. The premium membership ($55/month and up) apparently also includes listings.

    Michael
     
  16. gwasser
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    gwasser New Member Registered

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    QUOTE (housingrental @ Oct 29 2010, 09:12 AM) So this is similiar to something like bytheowner.com or fsbo but also posted on by realtors and targetting commercial properties?

    Do a lot of multi-family properties in Canada get posted on this that don`t get posted on ICX ?

    I checked it out once when looking for multi-family properties in Calgary (there is so little and so overpriced). The results were modest. But I did not want to pay the membership fees, so I guess it may not be the total picture.

    You may ask why I was so cheap. The answer is that I felt that I paid already enough on real estate membership fees, MLS fees and other realtor fees. Also, I lost my enthusiasm for Calgary multifamily very rapidly. It is an insiders game and it feels a bit like the `Wild West`.

    Those who own multi-family have little financial incentive to sell. So, they only sell when they get an offer that is difficult to refuse. Hence a lot of commercial realtors do not much more that soliciting bids for unlisted properties and presenting them to the owners. This is then called `pockett listing`.

    The other source is the CLS - the commercial counterpart of the MLS - and what is offered there is a pittance as well. Considering all the unfamiliar rules, higher acquisition costs, higher mortgage rates, environment assesments, building inspections, and the `Wild West` conventions (I don`t think rules are very well followed) of this market, I decided I was too much of a novice to spend a lot of time on it.

    My current tactic is to focus on a few communities with low to medium cost condo complexes and buy when prices are attractive. I can buy here single units as cheap if not cheaper than doors in multi-family complexes on the CLS.

    I have also looked around in Edmonton and prices appear there a lot more reasonable. However, as Calgarian, it is difficult to manage units in Edmonton unless you have a lot of units (30 to 40) otherwise you may experience
    the PM horror stories listed on this forum. So, I have been retrenching and focus only on Calgary.

    I definitely feel that this multi-family stuff is for the not-faint-of heart and with a lot of real estate experience under the belt. Maybe start with four-plexes, then several four-plexes close-to-gether and once you`ve have the experience then a careful move into multi-family. For a silver member only intend to diversify my overall investment portfolio this is not a market for me. Obviously I am not Thomas Beyer.
     
  17. housingrental
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    housingrental Active Member REIN Member

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    Thanks for your thoughts Godfried.
    In Ontario, it is also a very competitive market with limited supply, but in most areas often more appealing than SFH`s as investments.

    Is CLS one and the same with ICX?

    Does anyone have any experience with loopnet? Are most of the postings duplicates of whats already up on ICX?
     
  18. ThomasBeyer
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    ThomasBeyer Well-Known Member REIN Member

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    QUOTE (housingrental @ Oct 30 2010, 12:47 PM) Thanks for your thoughts Godfried.
    In Ontario, it is also a very competitive market with limited supply, but in most areas often more appealing than SFH`s as investments.

    Is CLS one and the same with ICX?

    Does anyone have any experience with loopnet? Are most of the postings duplicates of whats already up on ICX?
    Check them all .. Most properties are NOT even on one of these websites .. But more and more they are as the "old guard" of middle aged realtors get more web-savvy or replaced by younger Internet-era realtors !!
     
  19. bizaro86
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    bizaro86 Active Member Registered

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    QUOTE (ThomasBeyer @ Oct 30 2010, 02:05 PM) But more and more they are as the "old guard" of middle aged realtors get more web-savvy or replaced by younger Internet-era realtors !!

    Indeed! Information wants to be free, as the cost of gathering and distributing information (like property listings) trends toward zero with increasing technology. Eventually all listings will be online, even if they are in different places. Then aggregators will spring up, to allow for viewing of listings from everywhere in one place. (Like in the travel industry, first there was online travel agents, and now there are aggregators that search multiple online travel agents)

    Michael
     
  20. gwasser
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    gwasser New Member Registered

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    QUOTE (bizaro86 @ Oct 31 2010, 01:18 PM) Indeed! Information wants to be free, as the cost of gathering and distributing information (like property listings) trends toward zero with increasing technology. Eventually all listings will be online, even if they are in different places. Then aggregators will spring up, to allow for viewing of listings from everywhere in one place. (Like in the travel industry, first there was online travel agents, and now there are aggregators that search multiple online travel agents)

    Michael

    Did you know that Expedia charges 25% commission of the hotel room rate for bookings? I wouldn`t call that a cheap seller`s commission as some try to get with MLS.
     

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