Recently, I experienced a property listed for sale and the listing agent is not sharing information because there is little or no fee to share. In most cases, the Seller is unaware that their property is being marketed to select individuals only- namely those buyers that are likely to work with the listing agent directly. How does that serve the Seller’s best interest?

Good question! I wonder whose interest is really being served?!  I wonder how many sellers of commercial real estate really understand how their listing agents operate after the listing agreement is signed?!

A recent event caused me to make the time to write this blog… Scenario: Listing agent convinces Seller to sell a property. Seller agrees to all the strong marketing practices presented pre signing.

Post signing, the listing agent and brokerage are not sharing information or fee because they prefer to double end (represent the seller and buyer) the deal for the purpose of collecting more fee. Because there is no language in the listing agreement specifically addressing the marketing procedures- some agents will contact their own buyers first in an effort to double end the deal.

Dual Agency transactions are not by themselves illegal or unethical- BUT that is only part of the story- how the listing agent or brokerage established the Dual Agency is very important. If the listing information was never shared on the open market- then the listing agents’ intent was to find a buyer internally and represent both Seller and Buyer. I can’t imagine that such a business plan is in the Seller’s best interest. In the end, such a transaction does not represent what the market will bear but rather what the agent’s database of investors will bear.

Conversely, as president of Commercial MasterMinds (CMM), I made it a point to include in my listing agreements that every property will be marketed on day one to all agents and all investors for the purpose of establishing the highest price that the market will bear. Sharing the fee is the only true incentive for other brokers to search their databases for a qualified buyer. Imagine having thousands of brokers calling on their own database in an effort to sell your property listed for sale! How does this effort differ from a brokerage who calls only on their own database of investors?

The difference is HUGE- by reaching out to ALL investors, the highest and most qualified offers rise to the top quickly. Now the Sellers best interest has truly been served! It is possible that the highest and best offer comes from the agent’s own database- however, not until the entire market has a chance to review will that be known.

I have heard many objections; “we know who all the buyers are” is my favorite! Of course, when I ask which country invested the most dollars in commercial real estate in the United States the conversation goes silent. That is because they don’t know those buyers. How do you know that overseas investors have the same objectives as investors inside the United States? For that matter, they may pay more than you think because their objectives are different!

It amazes me that asset managers of commercial property funds have accepted the idea that they know all the players. The “We’ve always done it this way” mentality prevails. Sadly, their investors, the very people who have provided funds, do not know of the inner workings of these funds.

I hope this information will make you and you colleagues and associates more aware of how commercial properties are sold.

I am NEVER too busy for your Commercial referral and I am happy to pay a 25% referral fee. Your comments and feedback are appreciated. To learn more about my background, visit Consult Pete. To learn more about my company services, visit Commercial MasterMinds. I can be reached via email at Pete@CommercialMasterMinds.com or just call (925) 719-3569

Continued Success, Pete