The Role of Land Brokers?
It seems that the role of a land broker can vary from market to market, with the value maybe more dependent on land supply constraints. In California where the developable land supply is constrained and competitive, a land broker may have an exclusive listing and add value to a seller by increasing the competition for the land and therefore the price. As well, a land broker may earn commissions as a buyer’s agent because the land buyers need all the help they can get in such a competitive market.
In these land-constrained markets, the use of a multiple listing service (MLS) is not generally all that prevalent. The concept of the MLS, particularly in the housing markets, is that the listing broker needs the help of buyer agents to successfully bring seller and buyer together. A good land broker, however, will probably know most of the developers, builders, and buyers for land in their market. Thus, the listing broker may not need to share any commissions with the buyer agents because they all know the same targets.
In markets where the competition for land is not as competitive, I have seen land offerings on the housing MLS. As well, Loopnet seems to be the leading MLS-type service for commercial properties, such as office buildings, shopping centers, apartments, and other income-producing properties. Available land can show up in Loopnet, yet again not so much where the land supply is limited.
So how does a land broker earn a commission as a buyer’s agent in a competitive land market if the listing broker is not offering to cooperate with other brokers? Many builders and developers will agree to pay the commission to a land broker if they make them aware of available land. Again, it is the competitiveness for land deals that dictates whether a land buyer believes it is worth to pay a commission for an opportunity. And if so, it is a matter of negotiation between land broker and buyer as to what that commission will be.
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