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What would you Do? Commercial Realtor Suggests Potential Lessee Bypass their Realtor...

By Glenn S. Phillips

Real Estate Broker/Owner with Lake Homes Realty

July 30, 2008 06:30 AM

Okay, this one ran through our office recently and I'm curious on what thoughts any of you may have on this....

BACKGROUND: We are not real estate agents. We provide transaction management services and other real estate support services.

Outside of our work arena, we are acquaintances with the owners of a restaurant we like to eat at periodically. They are needing to relocate and we suggested a Realtor that could help them locate a new place to lease that meets their goals (location, cost, etc). Cost is a big concern in the deal to the restaurant folks.

So the Realtor shows these folks a number of properties. One of them looks very promising and the restaurant folks are very interested.

questions THE ISSUE: During a meeting with all present (the restaurant folks, the Realtor representing them and the Realtor representing the commercial space), the Realtor representing the space tells the restaurant folks that he can work out a better deal if they EXCLUDE the Realtor that brought them to the property.

And yes, he said this in front of the Realtor he is suggesting be cut out of the deal.

Now, I have my thoughts on what should have happened from this point forward and, candidly, this is not a deal I am actively involved in. But the Realtor we suggested called and relayed this information. While he didn't ask, I believe he was wanting guidance on how to not get cut out of the deal and how to not become the villain in the deal.

The Realtor showing the properties has a signed agreement to represent the lessee.

What might your thoughts be on this?

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James Iodice

Coldwell Banker Weir Manuel - Waterford, MI

Associate Broker, Selling Homes and Offices

Wow. I have seen some situations similar to this, but none where the Tenant Rep agent is clearly the procuring cause with no confusion. One follow up question to the listing agent is "How?" If there is a listing agreement, that agreement between the owner and the listing agent should spell out the commission. In our market, there are circumstances where the there is a higher commission paid if an outside procuring broker brings the client. That cost however is not passed on to the tenant, and most always the mere fact that they are represented proves to be a better deal in the end for the tenant.

I am also curious as to how the listing agent can support his fiduciary responsibility? His fiduciary responsibility is to the owner or landlord of the property (unless he is one and the same). The very first thing he did was negotiated against himself and offered a possible discount on the space? How is he acting on ownerships behalf in this case, with an immediate price reduction.

Ultimately, the fair market rent is what it is for the area. Your associate likely knows if the rate they are reviewing is in line or not. I have told a few agents in our market the following "It is not up to you or the owner who represents the tenant, it is up to them and they have made it clear they would like me to represent them."

Jul 31, 2008 06:38 AM

Glenn S. Phillips

Lake Homes Realty - Birmingham, AL

CEO, Lake Homes Realty / LakeHomes.com

Update... we found out the client in all of this later remarked to the agent we suggested that the other Realtors comments were very improper. Looks like they will be working through on pricing now. Still a very strange occurance. It is interesting what people think they can get away with.

Jul 31, 2008 09:25 AM

Michael Setunsky

Woodbridge, VA

Your Commercial Real Estate Link to Northern VA

First of all the agent representing the space was very unprofessional and I can't say much about the agent's ethics. I have come across situations where some commercial brokers don't pay co-op fees. It is always important to first ask if there is a co-op fee otherwise, you may not get paid.

I see in your update, it may all work out. In my opinion not as strange as you might think in the commercial world of real estate.

Aug 01, 2008 02:08 AM

Michael, yes, shows my need to know more about commercial aspects. It does appear it is going to work out. I think some folks will throw out something just to see what they can get away with ... fishing I suppose. Thanks for insight! G

Aug 07, 2008 03:04 AM

Gregg Fous

Market America Realty and Investments, Inc. - Fort Myers, FL

I tell my agents all the time, over and over again,, if you blow the relationship, you blow the deal. This guy obviously built up a realtionship with his clients and they supported him. Good for him.

The offending agent thought it was about money - not relationships. He won't be around long.

Gregg

Aug 08, 2008 12:12 AM

What would you Do? Commercial Realtor Suggests Potential Lessee Bypass their Realtor...

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