Dispelling Commercial Real Estate Myths

February 9, 2018

Myth #1: You can save money without a tenant or buyer agent.

Tenants or buyers may think “If I don’t have an agent, I’ll get a better deal”. Listing agents frequently insinuate or make this comment with the goal of keeping the tenant or buyer uneducated. An uneducated or under-educated tenant or buyer means more for the owner and more for the listing agent. In most cases, when a tenant or buyer does not have an agent, the listing agent will get paid the full commission set aside for both brokers who close a transaction. They are incentivized to get the highest price, lowest concessions and to work alone. Sometimes the owner will simply pocket that money. This leaves the tenant or buyer in a position where they do not save money at all, and what’s worse, they typically receive a substantially inferior deal by paying more and receiving fewer concessions than they should have.

Many owners and listing agents understand that everyone wants to feel like they are getting a better deal without representation. The reality is, 99% of the time, they are not. Landlords are in the business of making money, real estate negotiations are how they do that. It’s common for a landlord and listing agent to put together a “padded offer” that contains a lot of room for negotiation. This gives them freedom to encourage the tenant or buyer to counter their offer so they feel like they are really ‘negotiating’ and have made significant progress with the terms. The tenant or buyer leaves with the impression they have saved money without representation, not realizing this is all part of the owner’s or listing agent’s strategy. When a commission has been set aside by the owner, your broker or representation should split it with them. This keeps the economics of the deal the same and gives you the representation and protection you deserve as well as the best possible outcome.

Summary: Commissions for the tenant’s or buyer’s agent are built into the vast majority of commercial real estate transactions. Going without representation typically results in the tenant or buyer losing money and receiving substantially inferior terms, while sacrificing dozens of hours of their valuable time that could have been better invested in their practice.

For more information about how you can maximize your profitability through your next real estate transaction, visit our FAQ page or click the following link to start a conversation with an expert agent representing healthcare providers in your area: Find an Agent

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