My sisters and I inherited a commercial piece of real estate with a lease that is due to expire this year. When we were notified that the lease would not be renewed, the executor, attorney and 2 of us met with potential commercial brokers to market the property for sale or lease.

We decided on the broker and he was notified by telephone and a contract was to be negotiated and signed the following week. However, one of the brokers not chosen called with a potential buyer and requested 30 days to submit an offer and consider counter proposals - this request was conveyed to and agreed upon by the broker that was chosen.

We were notified of a potential offer and last week our attorney contacted my sister and said a verbal offer was made – this offer was refused. The broker not chosen was advised of the refusal and was told to submit any further offers in writing.

The 30 days was over and once the decision was made to refuse the offer we agreed it was time to ‘[i]move on’ [/i]and sign the contract with the broker to get the property on the market. Then we were notifed of a written offer that was contingent upon the purchase of an adjacent property. This adjacent property is owned by the lessee and we have right of first refusal and have discussed a lease of the property with the option to buy.

The potential buyer has commercial properties across the country and this written proposal has a lot of stipulations including the buyer having 45 days to negotiate a sale for both properties or backout with the refund of any earnest money paid if a purchase was not made. Not only would we lose the 'earnest money' but we would also lose valuable time to market a property in a bad economy.

We are suppose to submit a counter offer next week, and not until we received this offer in writing did we know the broker not chosen was actually operating as the agent for the buyer – NOT the seller but he expects us to pay him a broker commission.

When we agreed to give this broker not chosen 30 days before listing the property on the market, we fully expected that he was operating as our agent, on our behalf and in our best interest, not the best interest of the buyer. If we had known he was the agent for the 'buyer' we would not have agreed to the 30 days. Had it not been for the fact that the broker not chosen was considered as our agent, he would not have had foreknowledge of the property – IMHO this amounts to ‘insider trading.’ Do we request that the broker disclose his agreement with the buyer? And because he is the agent for the buyer, is the buyer obligated to pay his commission?
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You need to understand a few things. Residential and commercial transactions are very different.

In my state GA ehtics have NOTHING absolutely NOTHING to do with real estate liscense law. The code of ethics is from the National Association of Realtors. If their is an ethics complaint the broker/agent can be sanctioned by the board ONLY if the board chooses so AND they are a Realtor.

Many brokers/agent in commercial are not realtors. It is common in commercial real estate to have all of those backout clauses.What the buyer or developer wants to do is assemble pieces of land and then get time to get a committment from the corporate entity that wants to go their before purchasing.

The sellers always want the earnest money.The truth is out of all the offers put out thier maybe 3 out of 10 commercial transactions happen. If a developer lost his earnest money deposit every time he put something under contract we would all be out of business.

So as a seller what do you do? You get everything in writing as verbal means squat.You have the buyer put in writing at what date the earnest money becomes HARD and NON-REFUNDABLE.This is when the buyer reaches a point in their project when they have lease committments in place or funding from their joint venture partner.

It sounds like the project is based on multiple land assemblage os if they can't get all properties for their price they can terminate and retain all their earnest money.

Sometimes it can take 6 months or more to get anchors to committ for a project. What you need to do is insert a clause that you reserve the right to continued marketing.This way if another buyer comes along with a better offer or immediate non-refundable hard money than the first buyer has immediately act or lose the deal.

I make the developer go make the earnest money non-refundable upfront help by ME or the continued marketing is inserted.This protects my seller and keeps options open.

If you haven't put anything in writing yet do not be pressured.It's common in commercial for a buyer to try and get the seller to pay the buyer's broker commission first before they pay it.

You need to make sure whichever broker you choose has experience to protect you. I have worked on projects upwards of 650,000 square feet mixed use projects assembling 20 plus parcels at once.

No legal advice.Hope it helps.

thanks for the input. I really want to sell this particular property, but I don't want to sell it for less than it's worth. It is an 11,000 sq ft office/retail space with a little over 1 acre.

We're meeting with a contractor on Monday to go over some building costs, but we could have sold the 2 properties - an additional acre - as a whole for more and that was our initial plan, to have a lease with the option to buy, like I said, this broker basically used what he knew against us in favor of his client, but all along we were thinking he was acting on our behalf. One thing for sure, he won't be considered for our other property and it is worth far more than this one.

In business, you have to assume the only one on your side is you.



If this broker puts the deal together and you walk away happy, why not use his expertise to sell your other properties? Would you rather have an ineffectual loyal broker or one who will get the job done? This isn't a personality contest. Just cover your bases and keep your mouth shut about important things. You need to keep quiet about the private important matters regardless of who you use.