off-market purchase, who should be paying broker fee?

my company owns an apartment complex in the Los Angeles area. a broker friend of mine calls me up and tells me that he has a client who is interested in the property. i provide some property information and tell the broker that his client can submit an offer if interested. the broker then proceeds to email me a copy of his fee agreement, which stipulates that the seller will pay a 2% broker fee upon close of escrow. why would i pay the broker, when he is not repping me, he is trying to find off-market deals for his client, shouldn't the buyer be paying the broker the fee?
In Buying Property - Asked by Eric G. - May 16, 2011
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Answer(s)

Rob B.
Chandler, AZ

Eric...
In the end it is all a matter of pricing. It really doesn't matter who pays the commission as long as you achieve the net from the sale of the property that meets your expectations.
Onward and upward Eric... Rob Baird, CA RE License #544165 (One of the oldest, active licenses in CA) 951 515-5855 Email: rob@capratecommercial.com

May 17, 2011
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Chris R.
Broker/Agent
Denton, TX

Rob makes an excellent point. Your "price" should reflect costs of sale - whatever those may typically be in your area. Thus - if you agree to pay the 2% then your ultimate sales price - or - your final bottom line - would be reflective of allowing for a commission and should that work out to be a deal that both parties are pleased with then all walk away happy with the deal.

May 17, 2011
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John P.
Broker/Agent
South San Francisco, CA

We need to be more professional in our dealings with clients. Whomever the broker/salesperson represents is the person that should pay the commission. When I represent either a buyer or seller I have an agreement they will pay me a commission and what the split will be if I work with another agent to complete the transaction. Why work for anyone who won't sign a contract to pay an agreed to fee?

May 18, 2011
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Dawn L.
Broker/Agent
Boca Raton, FL

It's been my experience that the landlord pays the commission. If I find a property that a client is interested in that is not represented by an agent, I give the landlord a commission agreement. If the landlord does not sign it, I will not show his property to my client; plain and simple. There was one occasion where a landlord did not want to sign the commission agreement, and the client really wanted to look at the property, so in that case, I did explain to the client that the landlord did not want to pay a commission, and if the client wanted my representation in that deal, they had to agree to pay a commission, which they did.

May 18, 2011
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Dawn L.
Broker/Agent
Boca Raton, FL

It's been my experience that the landlord pays the commission. If I find a property that a client is interested in that is not represented by an agent, I give the landlord a commission agreement. If the landlord does not sign it, I will not show his property to my client; plain and simple. There was one occasion where a landlord did not want to sign the commission agreement, and the client really wanted to look at the property, so in that case, I did explain to the client that the landlord did not want to pay a commission, and if the client wanted my representation in that deal, they had to agree to pay a commission, which they did.

May 18, 2011
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John P.
Broker/Agent
Glen Burnie, MD

The agent could be representing you by default if the agent has no formal relationship document with the buyer/tenant. I have 2 "one-time" showing forms. One allows that I represent the seller/landlord, the other the buyer/tenant. The forms clearly state the terms of the relationship(s) and eliminates the possibility that the agent is fishing. Client/customer name is clearly stated along with their status-CLIENT or CUSTOMER an important distinction. The buyer/landlord pays commission as he/she controls the asking price! How do you compensate your attorney or CPA?

May 19, 2011
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Gregory G.
Broker/Agent
San Francisco, CA

Everything's negotiable.
.
.
Gregory Garver - Commercial Real Estate Broker
Broker License #01716531
(415) 968-6065
greg@nnnbrokersusa.com
http://www.gregorygarver.com

Jun 11, 2011
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Jeremy C.
Broker/Agent
Reading, MA

In Massachusetts commercial real estate, you'll find that many off-market brokers who represent a client will attempt to price their fee into the sales proceeds. Consider asking the broker to make a net offer acceptable to you and then offer to add his fee to the purchase price.

Jul 10, 2011
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