Thursday, June 25, 2015
The Puzzle of Tenant Representation
Some people may wonder why they need a real estate agent to represent them, if there is a sign in front of the building, and space for rent? One big reason is to help with negotiating the lease. Leases vary tremendously from property to property, owner to owner, and landlord to landlord. They can be very confusing. Sometimes it is even difficult to tell what the actual rental amount is. Net leases can be called gross leases with "extra rent", expenses for the common areas can be handled very differently from space to space, and expansions, renewals, rights of first refusal, and other options can seem baffling to people who have not done this before, or not done it often. We even had one client whose lawyer would say "They can agree to this clause now, or I'll hide it somewhere in the lease and get it anyway". That's what your agent is for--to guide you through all the twists and turns, and give you guidance as to custom and prevailing rates in your area. As a reminder for those who may not know, the commission for the buyer's agent is most often paid by the landlord under the terms of the lease: although that can certainly vary, it is common for the tenant not to pay for his/her representative. As a further reminder, the commission is determined by the lease, which is between the landlord and the listing broker; the tenant has nothing to say about it. That's why it is sometimes surprising to hear that tenants (and buyers) believe that they will pay less if they don't use their own broker. Usually, it just means more for the listing broker, who is then handling both sides of the transaction. There are many peculiar things about our industry, and they aren't all in our favor. Most times it really pays to have a tenant representative, or a designated agent within the brokerage firm, advising you, as a tenant, on terms and conditions, as well as on rental rates.