Working with residential agents on commercial deals
I'm a commercial agent that mainly reps sellers and landlords. I get occasional showing requests from residential agents. It's usually clear that they have little to no experience dealing with commercial property. Often they haven't done any relevant research on the property itself or even their clients' needs (whether the zoning allows for their use, financing, etc). 

Sometimes their buyers/tenants are legitimate, but for whatever reason have chosen to use a residential agent for representation. I've completed a handful of deals with residential agents on the other side. Almost every time it's been a hassle and I've basically had to hold their hand through it. 

What are some polite ways to feel out the agent before wasting your time (and their client's time)? Sometimes it seems like they're doing a disservice.
[{"id": "gjq0a5x", "text": "Talk to them and the broker.  Time IS money.", "replies": [], "depth": 1}, {"id": "gjq0cdg", "text": "I would send a strict list of needs first. If you want to be nice about it don\u2019t make it as much financial but more about the tenant needs. If they don\u2019t know what they want and then you\u2019re going to waste a lot of time", "replies": [], "depth": 1}, {"id": "gjq0rlz", "text": "Require a proof of funds before scheduling any kind of tour or extended call. Explain, specifically, what the fee structure is on the first call with the agent. Those two things will weed out 90% of resi realtors. Explaining to them that I would not be sharing fee or that I was paying half a point, not half my commission, always provided for a great bit of entertainment.", "replies": [{"id": "gjqe29k", "text": "Other than getting the 1/2 %, what is a commesurable fee for the residential broker to charge their client in these kind of scenarios?", "replies": [{"id": "gjqfsan", "text": "Entirely depends on the size of the deal and the relationship between client and broker. Frankly if a residential agent asks a Buyer to cover their fee, they will probably balk unless there is a really strong relationship there. Plus there is a question of whether a residential agent can actually service the client in a manner to earn the fee under their local rules/ethics. For example, Texas requires that an Agent be competent in the knowledge surrounding the transaction. If a resi agent doesn't know the different between full service and full service gross and is trying to help a client buy an office building, they would be committing malpractice (whatever the equivalent) if they did not explicitly tell the client of their knowledge shortcomings.", "replies": [{"id": "gjsrd3w", "text": "The different between full service and full service gross? Is this a trick question?", "replies": [{"id": "gjtqi9o", "text": "Yes :) wondered if anyone would catch that. Granted I actually did have a client who advertised his modified gross rates as \"full service gross\" because he thought it sounded better...that guy was fun. His books were also handwritten. In 2017.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "gkntpzg", "text": "If you are refusing to split your fee (assuming you are charging a fee that is designed to be split) or telling tenant brokers (even if the tenant accidentally or intentionally selected a residential one for a commercial transaction) that you\u2019ll only give them 0.5% and not 50% of the total fee, you\u2019re harming your client. You want all good offers in the pool, even if it means more work for you. That\u2019s why we get paid as much as we do.", "replies": [], "depth": 2}], "depth": 1}, {"id": "gjq0ywc", "text": "I\u2019ve seen residential agents get actual commercial sales listings before (20m+). They\u2019re an absolute fucking joke.", "replies": [{"id": "gjqzwuf", "text": "In my city (mid-major market), I was invited to be one of the founding board members to start a division for residential and commercial brokers to somewhat merge together (was supposed to be some big deal as it what originally described).  And guess what it turned out to be?  Just an easier way for residential agents to do commercial deals, have access to our info, etc.., they nearly fell out of their chairs when I told them that I had zero interest in ever selling or listing a home so why would I encourage them to get into something they have literally no clue about.  Needless to say it lasted for about 1 hour.", "replies": [{"id": "gjr0fic", "text": "There\u2019s no real synergies there.\n\nI can\u2019t emphasize enough how little respect I have for Rezi ppl.", "replies": [{"id": "gjr5u3a", "text": "When someone refers to me as a realtor I want to throat punch them", "replies": [{"id": "gjr9axs", "text": "Almost as bad as someone from M&amp;M trying to \u201cconnect\u201d", "replies": [{"id": "gjt5rs3", "text": "M&amp;M?", "replies": [{"id": "gjtnbtz", "text": "Marcus &amp; Millichap.", "replies": [{"id": "gjumv9u", "text": "I\u2019ve only seen one of their signs in my city. They are trash?", "replies": [{"id": "gjvb0qf", "text": "Not necessarily. The original poster was just referencing the penchant for corporate-speak. \n\nI think they're like any other brokerage company, but depending on your market they may not have a huge presence. They do a lot of business in multifamily and senior housing, which are 2 spaces where you almost never see actual \"for sale\" signs on the property, they make the tenants nervous.", "replies": [], "depth": 9}], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}, {"id": "gjs5j7j", "text": "Lol! I aggressively correct them every time. Barf.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}, {"id": "gjs70z5", "text": "I was asked to do a CRE 101 class at the local association. Those type of classes do more harm than good and the whole class should be an email \"Refer it out\"", "replies": [{"id": "gju2wox", "text": "lol", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gjq1wza", "text": "Usually when they do not understand $ /SF or what a NNN is, it's a dead giveaway for me.\n\nThat being said, if it's a good tenant it's a good tenant and you have to push them and walk them through it unfortunately. I would rather have a qualified buyer / tenant with a crappy agent than vice versa.\n\nDealing with residential agents leasing I usually prepare an LOI and send a full package of everything I need directly from the client. And you have to follow up with them every day because residential agents are lazy as shit and don't know how to do things", "replies": [{"id": "gk53r9t", "text": "\ud83d\ude10 someone should really rethink about their career if they don't know $/Sf or NNN is.", "replies": [], "depth": 2}, {"id": "gknufjr", "text": "This is the right approach. Offer more handholding until you understand if their client\u2019s tenancy would actually be a good one for your client. And if the residential broker\u2019s commercial client is in fact a good one, work with them because that is what your client would want. That could mean reaching out to the residential broker\u2019s managing broker, but it shouldn\u2019t mean a blanket refusal to share or fairly split your commission unless your client says that\u2019s okay.", "replies": [], "depth": 2}], "depth": 1}, {"id": "gjq5c2u", "text": "You could always call their principal broker and inquire about their agent acting outside their area of expertise. A principal broker ultimately has the say in what type of business one of their agents pursuits and understand you position. Offer a referral fee to the brokerage house if the prospective lessee/buyer is legitimate and you believe you can execute a lease or sale.", "replies": [], "depth": 1}, {"id": "gjqb462", "text": "Oh boy, I have a lot of experience with residential agents doing commercial deals. I would say my experience is very much like yours, but I had one or two guys who were competent enough. In South Florida I always laugh with boomers saying \"I have 15-20 years of experience in real estate\" when I point them out that what they said is wrong. One of them didn't even know that in zoning R stands for Residential!!!! (I am selling a multifamily lot in Miami and she wanted me to tell her if her client could open a tennis school in my lot, which I told her she should check with zoning if they would allow the change or put it as  conditional with the offer). I also had a sales agent who was representing his uncle on  renting a retail space. The property was advertised at $25 sq ft gross. The guy asks me for a rebate. I work with the owner and got him $22 sq ft gross. The guy says \"it is just $2, we want to rent at $18.\" I asked the idiot to show me any comparable at that price. He showed me a warehouse in a street with no traffic and with a NNN contract. \ud83e\udd26\u200d\u2642\ufe0f My space has a 30k traffic.", "replies": [], "depth": 1}, {"id": "gjqjg1q", "text": "I use a residential broker but have closed 3 small multifamily deals in 2 years with him. I invest in a smaller market where CRE brokers do everything. Use him because I started with him and can trust him as my boots on the ground (I\u2019m 2200 mi away). For all deals, he\u2019s kinda been a pass thru and I run everything (even telling him how to negotiate).\n\nThat said, I do want to expand into other assets within CRE, and for that I\u2019ll use a CRE broker. I\u2019ve been wondering how to handle this - do I tell him? He doesn\u2019t know the market for these other assets.", "replies": [{"id": "gjs6inn", "text": "I would be honest. He might try to refer you to someone he knows will pay him a referral but feel free to interview a few different agents.\n\nIf you find a commercial agent that you like, on your own, you could always have your resi agent call the commercial agent you pick and do the referring...giving him a chance to potentially negotiate a referral fee.", "replies": [], "depth": 2}], "depth": 1}, {"id": "gjqkub1", "text": "It's actually a violation of the realtor code of ethics to operate out of their field of competence unless they engage someone who is competent. If its clear they don't have any experience I ask them if they intend to bring in a commercial broker to assist them, or if they'd like to receive a referral fee and I'll handle it all. If they insist on representing the client I offer a reduced co-op fee but this can be an issue if the fee is already defined in the listing like many MLS systems have. I was a residential agent for 10 years before moving to commercial 5 years ago. Residential agents are some of my best referral sources especially after you start throwing around a ton of acronyms that they clearly don't understand.", "replies": [], "depth": 1}, {"id": "gjqskbo", "text": "I\u2019m a lender and I tell prospective clients this all the time. Just because your \u201cbuddy\u201d or neighbor is a residential agent doesn\u2019t mean they can competently handle a commercial deal. \n\nI had a guy one time, a very wealthy guy, who wanted his sister (a residential agent) to represent him even though she wasn\u2019t going to actually do anything. His grand plan was to get her to pay him her commission under the table in cash as a way of getting around paying the full agent fee. Needless to say, she didn\u2019t go for it.", "replies": [{"id": "gk1syjb", "text": "I had a commercial listing where I had a potential buyer talk to me directly and then use a residential agent.   They had actually tried to get this property the previous year and ended up wasting the sellers time.  The bonus is that the previous time this property was listed with another-you guessed it residential agent .  The resi agent didn't even want to put a commercial sign out when the owner asked because it was \"too big and expensive\".  This is often what happens when residential agents do commercial properties.\n\nAnyways a few days later I have a lady contact me out of nowhere who is asking about the property and representing the buyer that I talked to earlier.  She had no clue what she was doing.  She was telling me she saw the property on Zillow and proceeded to get all of the information wrong.  She also had no idea how negotiations worked and tried to get a due diligence period of 3 days on a commercial property for her client that needed extensive soil testing. She also wanted me to call the zoning department and do her due diligence for her.\n\nI asked her why she would trust me to do her due diligence as I could tell her anything and she was just confused.  I then told her the seller didn't feel comfortable with someone handling the transaction who wasn't versed in commercial real estate and that I could give her a referral fee or she should have a commercial broker assist her.\n\nNeedless to say we went with someone else as she just wasted our time moving goal posts and  kept changing the terms and pissing the seller off.\n\nResidential agents then wonder why commercial brokers don't often like working with them and this exactly explains why.  The buyer probably thought they were helping out a friend or an acquaintance but these are very large deals and commercial doesn't have the same protections to buyers that residential often has so you can get into a lot of trouble really quickly.", "replies": [], "depth": 2}], "depth": 1}, {"id": "gjrmai7", "text": "Its the legit ones who toss to their family and friends that piss me off.  \n\nLike you meet with a decent company and a few of their high ups, follow up and hear they intend to offer and then \"Karen the 2008 focus in the car wrap 2nd inner circle 8 years in a row super realtor sends you a 3 sentence email like \"sorry I missed the site visits, busy market!  My client xyz inc wanted to offer $x a month, 1 month deposit .  if that works send the lease over.  Please also verify offering commission\"", "replies": [], "depth": 1}, {"id": "gjrropm", "text": "Florida commercial broker here. I have found deals with residential agents can be dangerous and get you into a lawsuit if you are not careful. My experience is that residential agents seldom bother to read or understand the contracts, leases or inspection reports and just assume they are the same as residential. There are very few residential agents who are also competent with commercial no matter how long they have been doing it. I usually call their broker and have a discussion with them and let them know I am concerned and expect the broker to oversee the agent carefully. Often this will change things up because their E&amp;O insurance doesn\u2019t cover commercial.\n\nThe biggest issue I have has is that the residential agents think they can get their buyer out of the deal at the last minute with no penalty. Because I normally require large escrow deposits, this can cause a real mess when a buyer\u2019s agent threatens to cancel the contract after the contingencies are waived as a negotiating ploy thinking they can get the escrow money back (evidently you can do that with a residential contract).", "replies": [], "depth": 1}, {"id": "gjru5dn", "text": "You have to extremely vet them on the first phone call. Most won't say their firm when you pick up. They'll say, \"This is John Smith, I have a client interested in the property you have listed. Can we see it tomorrow?\" Of course their email address will be a dead giveaway too or if they ask to see it on a weekend or if there is a lockbox. If I get the feeling they're residential, I'll ask them everything I can think of to feel them out. In my first year, I wasted too much time driving an hour to one of our properties for it either not to lead anywhere or they have the balls to not show up. Sometimes they do stumble on a good property and get the listing or get the great tenant looking for a 15-year lease. Then we usually just suck it up and offer a much reduced co-broke like you said. Until the states start demanding a separate commercial license, which would solve all of these problems, that's the best we can do.", "replies": [], "depth": 1}, {"id": "gjrwa2l", "text": "I enjoy reading all these, but don't make assumptions based on an email address or the firm they're with. I specifically joined a residential firm for 2 huge reasons. I can make up my own hours, and I get 100% of my commissions I earn. Im sure not a single one of you in here can  say that.  I spent 3 years doing commercial development, and did small shop leasing and helped with many diverse  real estate transactions with the developer I worked for. My email doesn't say that whether it says @JLL.com or @podunkrealty.com", "replies": [], "depth": 1}, {"id": "gjs35d4", "text": "As an investor, I know I'm in for a good time when I see a 30 unit multi-family building or 20,000 sq ft commercial property listed by a name I don't recognize, and see their only other listings are two condos and a single family house.  \n  \nThe first fight is always getting a subject removal period of more than 3 weeks - \"What do you mean the bank won't pay your appraiser?  How much are you pre-approved for?  What's a Stage 1 Environmental Report?  My brother is a mortgage broker, if you say it's your primary residence you only need 5% down!\"", "replies": [], "depth": 1}, {"id": "gjshml1", "text": "Sometimes I just suck it up and smile and move forward as helpful as I can be. A few times though I\u2019ve had resi agents coaching their clients very poorly to the point of the buyer asking if they can just deal with me. In those situations I generally explain the issue to the agent and offer to pay them a referral if they just step back.", "replies": [], "depth": 1}, {"id": "gjsps5w", "text": "I like  u/becerwin response.  I'm not as polite and am direct that they will need to be compensated by their client.  I exclusively rep multifamily and am not a realtor so I have the luxury of having plenty of buyers. They often get upset but honestly I'd rather pull my hair out than work with most residential brokers as they just don't know the process.", "replies": [], "depth": 1}, {"id": "gjtcf98", "text": "Resi agents make me vomit", "replies": [], "depth": 1}, {"id": "gjtyt1r", "text": "I've got a lot of respect for the professional residential agents, the good ones have forgotten more than I know about the local housing market and buying/selling houses. The pro's also understand that they are out of their element in a commercial deal, others believe in chasing anyone that will return their calls. On the sell-side I explain that I'm not paying a fee, require that they demonstrate some form of deal/client control- generally through a exclusive listing agreement. I generally negotiate directly with the owner, however if the realtor wants to be in the room to learn I'm OK with it if they are equally respectful.", "replies": [], "depth": 1}, {"id": "gjuq4q2", "text": "I can't emphasize enough. I would kindly ask them to step aside by offering them a 30-40% referral of the co-operating portion and put the offer terms together myself... and he can just funnel the paperwork back and forth for signatures.", "replies": [], "depth": 1}, {"id": "gjwzxlp", "text": "When I was first starting in research and as an admin in my market the industrial teams at our CRE brokerage kept seeing a lot of resi agents trying to do deals. Economy was doing well so lots of small local and regional businesses expanding and seemed like business owners would just hire their family members or the person who sold them their last house to procure their space. We played a game throughout the year for whoever had the most \u201cproof\u201d of having to deal with resi agents haha. Our scoring system: 1 point for email signature with the agent\u2019s headshot, 5 points for business card with the agent\u2019s headshot, 50 points for an agent having a headshot on their car. Bonus prize went to the broker who found the resi agent with the best slogan (the winner of the last year I worked there was \u201cNow you see it, now it\u2019s sold!\u201d Haha). We loved those resi agents but they were just way out their depth. If they have a legit tenant for the space, just hold the agent\u2019s hand through the basics but make it clear that you don\u2019t work for the tenant, your owner client will appreciate it. And highly recommend documenting in a commission agreement that the landlord doesn\u2019t pay on renewals, if they barely did any work upfront, no reason they are entitled to a fee 3-5 years from now.", "replies": [{"id": "gjwzy5b", "text": "I\u2019m still tranced out on Montgomery\u2019s card\u2014the classy coloring, the thickness, the lettering, the print\u2014and I suddenly raise a fist as if to strike out at Craig and scream, my voice booming, \u201cNo one wants the fucking *red snapper pizza*! A pizza should be *yeasty* and slightly *bready* and have a *cheesy crust*! The crusts here are too fucking thin because the shithead chef who cooks here overbakes everything! The pizza is dried out and brittle!\u201d\n\n___\n\n^(*Bot. Ask me how I got on at the gym today.* |) [^(Opt out)](https://www.reddit.com/message/compose/?to=botrickbateman&amp;subject=Opt%20out)", "replies": [], "depth": 2}], "depth": 1}]