Sleeping with the Enemy Broker

For those companies who prefer not to formally engage real estate service providers because they choose not to sign representation agreements, answer me this:

“Do you enjoy sleeping with the enemy?”

That’s right! The commercial real estate broker with whom you are working, the one who presents properties to you, the one to whom you have disclosed important information about your company, the one who says he’ll keep your information confidential, the guy who said he’d get you the best deal…is the enemy!  He has a legal, binding, fiduciary obligation to disclose everything about you, your company, and its real estate needs to property owners, including your confidential information. He is compelled to negotiate against you on behalf of property owners, to get you to pay as high a price as possible, and to get you to agree to terms that would be more favorable to property owners.

That’s right! The law of agency requires that, absent a written agreement to the contrary, a real estate broker is the agent of, and must protect the interests of, the entity from whom he or she receives compensation. Since, in most commercial real estate transactions, broker commissions are paid by landlords, without a written agreement between you and the broker stating that the broker represents you even though he’ll be paid by the landlord, you’re out of luck!

Surprised? You shouldn’t be.  Don’t take my word for this.  Ask any attorney how this really works.

But, deals are done this way all the time….right? So, why change things now?  Formally engaging a real estate professional to represent a company in acquiring real estate is not a new concept.  In fact, most commercial real estate transactions nowadays include both a landlord representative and a separate tenant representative, where the tenant representative has been formally engaged by the tenant through a written agreement.

Don’t landlords sign representation agreements with real estate brokers?  Doesn’t your company sign other agreements and contracts, such as leases, purchase agreements, service plans, employment agreements, vendor contracts, and others?

So, why not hire a real professional and protect your company’s interests?  Perhaps you don’t trust your broker or would not want to be bound to him.  That’s an easy one!  Find the right broker…and, hire him by a written agreement that protects your company’s interests.

Then, you and your company will be protected, and you will be assured that you won’t be sleeping with the enemy!

About Real Estate Strategies Corporation
Real Estate Strategies Corporation is a respected corporate advisory and transaction services firm that provides thought-leadership, decision-making, planning, project management, and transaction execution services to finance and senior executives at management team-led public, private, and portfolio companies, and not-for-profit organizations.  Under the leadership of its award-winning CEO, Andrew Zezas, RealStrat’s clients engage the firm when acquiring, disposing of, renegotiating, or enhancing occupied leased or owned real estate in New Jersey, Pennsylvania, New York, Connecticut, and throughout North America.  By creating and executing Business DRIVEN Real Estate Solutions and identifying hidden Opportunities, RealStrat drives greater operational and financial performance in support of its clients’ stakeholder objectives, M&A requirements, and exit strategies.

In the current economic environment, RealStrat’s efforts are focused on uncovering, capturing, and re-purposing hidden liquidity and minimizing risk in its clients’ leased and owned real estate.  The firm provides counsel as to competitive advantage strategies in preparation for the eventual economic recovery.  Visit www.RealStrat.com. Read about timely commercial real estate issues at RealStrat’s blog at www.CorporateAdvisor.wordpress.com. Follow RealStrat at http://www.Twitter.com/RealStrat.

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Copyright Real Estate Strategies Corporation 2011.  All Rights Reserved.

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broker, commercial real estate broker, landlord, commercial real estate, office space, industrial, warehouse, distribution, commission, representation, New Jersey, RealStrat, zezas, Real Estate Strategies Corporation
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THIS WORK IS DESIGNED TO PROVIDE PRACTICAL AND USEFUL INFORMATION ON THE SUBJECT MATTER COVERED AND REPRESENTS THE OPINION OF THE AUTHOR. HOWEVER, IT IS PROVIDED WITH THE UNDERSTANDING THAT THE AUTHOR IS NOT ENGAGED IN RENDERING LEGAL, FINANCIAL, ACCOUNTING, OR OTHER PROFESSIONAL ADVICE TO THE READER. IF LEGAL, FINANCIAL, ACCOUNTING, OR OTHER PROFESSIONAL ADVICE IS REQUIRED, THE SERVICES OF A COMPETENT PROFESSIONAL SHOULD BE SOUGHT. THE AUTHOR SPECIFICALLY AND EXPRESSLY DISCLAIMS ANY LIABILITY THAT MAY BE INCURRED AS A RESULT OF THE USE OR APPLICATION OF THE INFORMATION THAT IS CONTAINED IN THIS WORK.

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