A commercial real estate broker wears many hats but their base expertise lies in facilitating the successful purchase, sale or lease of real property. From marketing a property for sale and finding qualified buyers to negotiating the best lease contract for their tenant clients, Brokers are the necessary hired professional to navigate every type of commercial real estate transaction.
While a Broker is hired to work for anyone who needs assistance in a commercial real estate transaction, whether that’s a buyer, seller or tenant, they don’t work for everyone at once. In today’s post we answer a question we get a lot at our office, “Who does a commercial Broker work for?” Essentially there are four types of commercial real estate representation, which really means four types of relationships Brokers have with their clients.
Commercial Real Estate Representation: Who Does a Broker Work For?
Below we outline the four main types of relationships, both exclusive and non-exclusive, that commercial Brokers have with their clients.
Tenant Representation
In this capacity a commercial real estate Broker is in an exclusive relationship with their tenant client who is seeking to lease space in a commercial property. Referred to as a Tenant Rep, a Broker in this role solely serves the interests of their client in all communications and negotiations with a property’s owner/landlord or listing Broker. Basically, when you hire a Broker to be your Tenant Rep you hire someone whose only goal is to look out for you, getting you the commercial space that: (i) meets your needs, (ii) at the best possible price, (iii) and best possible terms.
Owner Representation
In this capacity a commercial real estate Broker is in an exclusive relationship with their owner client who is seeking to either sell or lease their commercial property. Often referred to as a Listing Broker, a Broker in this role is duty-bound to serve the interests of their owner clients in all dealings and negotiations with potential tenants, buyers and their Brokers or Tenant Reps. Beyond sale/lease negotiations, a large part of this role lies in the Brokers ability to locate and acquire quality tenants or buyers for the commercial property. When you hire a Broker to act as an owner representative their main goal is to (i) successfully lease a property to 100% occupancy at the highest price and best terms or (ii) sell a property at the highest market value in the shortest amount of time.
Both Tenants or Owners
Most commercial real estate Broker relationships fit under this category. When not working directly for a tenant who needs to lease space, or an owner who needs his or her space leased or sold, a Broker is working for everyone else. This can be an investor seeking to purchase an asset for their portfolio or someone seeking space options in their market. In this capacity a Broker will show their client commercial properties that are currently represented by other Brokers. Even though this is not an “exclusive” relationship as defined in the previous representations we listed above, a Broker in this capacity is always duty-bound to act in the interests of their client. This means getting them the best deal at the best value, something you can always count on when you hire a reputable commercial real estate Broker.
Dual Agency
Here is where Broker representation can get a little tricky. While this type of relationship doesn’t happen too often, and is illegal in 8 states, it is legal in Wisconsin and can have some advantages. In this capacity a Broker will provide limited services to both the buyer/lessee and seller/landlord with no obligation to represent the interests of either party. Typically working on a discounted commission a Broker in this role will take a neutral role in negotiations, not providing any party with ways to gain advantage over the other, but rather simply acting as a transaction expert, connecting the parties, advising them on terms and provisions and preparing contract proposals.
Are You In Need of a Commercial Real Estate Broker?
Whether an investor looking to dispose or acquire assets, a tenant seeking to lease space or an owner seeking professional management…you need a commercial real estate Broker who is going to fight for your interests. At SVN | Hintze Commercial Real Estate our dedicated team of Brokers have helped countless owners and tenants achieve the most optimal outcome for their real estate goals. If you have a commercial real estate need in and around the metropolitan Milwaukee area then please reach out to see how the SVN difference can get you the most value out of your next transaction.
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