Valuable Insight Into The Broker’s Role in a Lease Transaction

It’s important to understand the various roles commercial brokers serve in the Commercial Real Estate Industry. You should be clear about who is representing the landlord and who is representing the tenant (and whether the same individual is doing both).

Double Edged Sword

All 50 states allow commercial brokers to represent both sides. But although it’s legal, this practice can cause complications. Both sides may feel misrepresented—the landlord might believe they’re not getting the amount of money they deserve, while the tenant could feel they’re being charged more than the space is worth. It can seem as though the broker is only looking out for themselves.

A Look at Agency Representation

Before you move forward in finding a workspace, make sure you understand the differences between the most common types of agencies.

  1. Single Agency
    This term is straightforward and is considered the gold star standard of representation. In a single agency, the broker only represents one side, either the landlord or the tenant—not both.
  2. Designated Agency
    A designated agency is one where the company represents both parties. Two brokers within the agency each take on one side of the transaction to diminish the conflict of interest. Basically, this means that one agent oversees the landlord’s interests, and the other agent represents the tenant.
  3. Disclosed Dual Agency
    In a disclosed dual agency (as mentioned earlier in this article), the broker plans on working with both the landlord and tenant. In this case, the law requires the broker to inform both parties of a conflict of interest and receive a signed and written form of consent before moving forward.However, even with written consent, there will be limitations on the type of relationship that the broker can have with each side. In general, this dual agency isn’t ideal since both parties won’t receive individual representation. That can cause problems along the way.When choosing your broker, be sure to find someone who has your best interests in mind.