Navigating the broker/principal divide

One of the weird things about our business is that I am both a broker and a principal investor. That means I look at deals for other people and for myself.

Who cares? Other brokers.

Brokers make money as middlemen. Their goal is to know who’s selling and who’s buying and match the two together. Simple, right?

The problem I sometimes have with brokers is that they are worried about sharing information with me. On the one had, they know that I buy all cash, close quickly, etc., so, in some ways, I am an ideal client.

On the other hand, they are aware that I also help other people buy stuff and they are concerned that they will share some information with me about who is selling and that I will then sell the deal to one of my clients, thereby cheating them out of a commission.

This is a totally reasonable and valid concern.

Here’s how I handle it: I never, ever share information about deals which brokers bring to me as a principal without getting their permission first.

The reason is simple: Sure, I could use the information to make a quick commission. But I’m in this business for the long haul. It does me no good at all to get a reputation for screwing brokers out of commissions… they’ll just stop bringing me good deals!