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Common Hidden Conflict of Interests Faced by Commercial Real Estate Brokers

Author: Jessica Morgan
by Jessica Morgan
Posted: Oct 10, 2019

Hiring a commercial real estate broker for your organization is an important decision for you and your brand. You would personally want to be aware of all the possible conflicts that they might encounter during the course of their job.

These conflicts can often be hidden, which is why knowing them beforehand can help you gauge your commercial real estate broker’s commitment to you:

Vying for Future Listings from the Landlord

Your commercial real estate agent might call themselves a tenant-only broker, but there might come instances where they will be propelled into forming a future listings agreement with your landlord. Most of the landlord-agent relationships develop when an agent first brings a tenant to the landlord. This relationship might change the commitment of the real estate agent to service you.

Representing Competitors

We won’t accuse your commercial real estate agent of corporate espionage as such, but you would prefer your agent to not be in contact with any of your competition. Being in touch with your competition might mean that your agent is spilling some business secrets over to them. You wouldn’t want that to happen, would you?

Representing Tenants with the same needs

While you would preferably want to go for an agent that is active within the area you are in, you wouldn’t want them to represent a client that has the exact same requirements. Imagine you are in a hot market, and there are only few properties with the exact requirements that you have in mind. You get in touch with a commercial real estate broker, and they have other commercial customers looking for similar properties. They will have a conflict of interest as to who they should recommend the property to. Most commercial clients are not okay when their commercial real estate agents work with clients that have the same exact requirements on them.

Landlord Incentives Program

Landlords happen to reward agents freely for getting completing a yearly lease for their building or property. Some of these landlords go as far as offering annual golf getaways or vacations to exotic locations. These trips can cost around $5,000 for each agent, but landlords have a lot to gain through them.

Personal Likings

When your agent brings a list of building and landlords to you, you might never know what and who was dismissed from the list. Your agent will obviously have personal likings, and would only add landlords that they like on the list. They might skip a building with a landlord they don’t like.

Take out all your stakes and cancel the deal if you suspect any kind of wrong doing. Do not belittle any sign of wrong doing and make sure that you take the required action for addressing such concerns.

Last Minute Option

In almost every real estate purchase, a great option can come up when a deal is about to be tied down. This option might be perfect for you, but does the agent deem it necessary to spoil a done deal for allowing you to see an even perfect option?

These are just some conflicts of interest that your commercial real estate agent will face while working with you.

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Author: Jessica Morgan

Jessica Morgan

United States

Member since: Jun 24, 2019
Published articles: 1

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