Sale/Rent Broker Contract Question

if the broker is smart he will

If in a year from now he is not representing the seller than most likely no.. the longest period I have heard of after a contract has ended is six months and as low as 90 days. It does depend on the contract though and if the relationship is a good one I am sure the agent will be representing the property for sale when your lease is up so..

There will likely be a clause in the owner's contract with the broker about this--usually there is an expiration date on such an agreement. It is possible, though, that the broker will be able to show procuring cause for a sales deal if you do decide to make an offer sometime down the road. This is between the broker and the owner/seller.

If this is a small private landlord and the broker is preparing the lease then it will be in the lease somewhere that if the renter ends up buying the broker will get a commission. Look for it in the lease! You will find it.

Wanderer, what clause number is it in the REBNY or Blumberg standard lease?

I doubt this goes in the lease. The lease is an agreement between tenant and LL. Why would it contain a term on LL paying a sales fee to the broker? There is a clause where the tenant warrants to have paid any required rental fee & imdenifies the LL, but I don't remember what you mention.

You figure this would be in the listing agreement...

>I doubt this goes in the lease. The lease is an agreement between tenant and LL. Why would it contain a term on LL paying a sales fee to the broker?

Why don't you just get your facts before making an uninformed "doubt"?

Read the lease.

Wanderer, I went over the REBNY lease. I didn't see any such clause.

nada, wanderer is correct -- in circumstances where we as landlord brokers think this is likely we will write it in as a separate rider. No attempt is made to claim a full sales commission (at least not by me) but a lower commission is negotiated with the landlord and written in.

This clause is written as a co-broke, so the tenant's representation and the landlord's representation are both compensated for the value of having made the match between the property and the tenant.

the tenant of course sees the rider clause when he/she signs the lease.

ali r.
DG Neary Realty

So I also looked over a rental fee agreement a broker once sent me who was going to show me their exclusive listing. I politely refused to sign it, which wasn't a problem.

In there, it states (without time limit) that if you buy a property the broker has directed you to, you'll pay them 6% unless the seller does. No conditions. What if you buy the apt 12 years later w/ buyer and seller both represented by other brokers? What if the property is sold and then you buy it from the subsequent owner?

No wonder brokers are so loved.

Other gems, on the rental side.

At least there's a 6-month term. But, fee must be paid on any apt in building regardless of whether it's the one shown. No provision for condos / coops.

If LL compensates broker or pays them a fee, this does not change the fact that you still owe 15%.

That last bit makes me crazy!... there is no need for double-dipping and it blemishes the entire profession.

ali r.
DG Neary Realty

as a buyer or renter, who needs a broker??

all downside

FP, do you have the contingency written into the listing agreement as well?

FP, that was from Corcoran BTW. Not some shady operation.

Interesting question, and I'll have to check.

Remember too, though, nada, that my business is very atypical -- I consider myself to be building a better boutique, and as such, maintaining good long-term relationships with my clients is off-the-scale important to me.

So in reality what happens is there's a rental deal, and then years elapse, and then there's a possible sales transaction -- at that point I'm talking to the landlord client about the whole universe of possible sales transactions. I'm not brandishing this piece of paper in his/her face and going, "ha, remember this technicality?"

It's more in the context of, "thanks for thinking of me as your sales broker .. if I put it on the open market I can get probably you $X and I'd charge Y% to do that; if you want to do a deal with the current tenant, I can probably get you $X (or maybe $Z) and as we'd already discussed, I would charge less than Y% to do that, because in some ways the scope of work is reduced -- and in another way, I have already been somewhat compensated on the deal."

ali r.
DG Neary Realty

rider to the lease nada.

FP, if the seller has to pay the fee, why would you put it in the lease? As a tenant, I'd tell you to screw off. I never asked for you to be my buyer's broker, and that which is between you and the seller does not belong in my lease.

When I sublet my co-op the language addressing compensating the broker in case of a future sale was in my contract with the broker. Not in the lease agreement with the renter.

Nada, it goes in the lease because it addresses the question of the compensation of the tenant's broker. I know you don't use a tenant's broker, but many people do, especially for co-op sublets, which is where this comes up.

Bram, when you sublet your co-op, didn't the tenant's broker bring this point up with your broker? Did they just do a side agreement?

ali r.
DG Neary Realty

Ali--my tenant did not have a broker. As far as I understood the agreement was between me and the broker--the tenant was not affected.

"Nada, it goes in the lease because it addresses the question of the compensation of the tenant's broker."

Got it. I've never had it any lease I've seen, even when I was represented by my own broker. But then again, the apt had never been for sale simultaneously, which brings its own set of problems: shorter desired renting duration from owner, skewed incentives on the side of the listing agent to get a sale rather than a lease done, etc.

Nevertheless, my response would be the same to a tenant's broker: "Screw you, I never asked you to broker a potential future sale for me; I asked you to broker a rental."

Thanks for all the insight. This question arises from a place I have my eyes on that is well priced but I'm not looking to buy for another six months at minimum. The rent is higher than I think it is worth, especially after co-op and broker fees. For perspective, the rent is higher than the monthly payment (pre-tax impact) would be after the purchase. However, if the owner saw the light and wanted to place a bet that they may save the 6% by easing the rental terms now for a prospective buyer, it may make the rent/fees attractive from my side.