Commercial Brokers: Are they needed....
Category Commercial Information
The foundation of commercial sales is primarily based on forming sound relationships and strong networks.
With these relationships in place, valuable information is obtained and business connections made. A recent scenario has again highlighted the importance of using brokers and the real value of what brokers can do for their tenants and landlords. One of my landlords was under pressure with their property and was open sell one or more of their properties should a potential buyer come to the fore. A buyer was introduced but unfortunately, no deal was concluded. Having followed up with the buyer further down the line, it was discovered the landlord and buyer were communicating directly about the sale of the building and had opted to exclude the broker.
Where does this leave the commercial agent who made the initial introduction? The agent may have reason to believe they were the effective cause of the sale.
Without damaging hard-earned relationships, how far should an agent be prepared to push the fact? An introduction was made and at what cost? Effective cause is well documented and can be defended in a court of law. Is it worth the cost of the relationship?
On another recent incident a leasing broker was asked to compile a short list of possible new office opportunities for a client. The client, in his own time, went past the various buildings, saw the owners 'To Let' board and decided to call them directly and requested a meeting. A lease agreement was concluded at R10.00 p/m2 less and a change of carpets were thrown in by the landlord.
The broker was informed by the tenants PA that they had found new offices and his services were no longer required. The broker soon realised this was as a result of the information provided to the tenant as requested.
The broker, who had a good working relationship with the landlord, met with him. The owner was made aware of the situation, and as a token of good faith the landlord paid the broker 50% of his commission recognising the value and importance of the relationship over time.
A sound enough ending to the story or so the broker and tenant thought.
As luck would have it, the broker happened to bump into the tenant at a social event a few months later and got into a discussion regarding their rented property. The broker informed the client he received commission on the transaction and trusts the client received all the perks and allowances that were on offer, prior to moving in.
The tenant was horrified to learn that the landlord was offering additional incentives to brokers in the form of rent-free periods as well as generous rebuilds of the office's internals should they find a long-term tenant.
The client angrily confronted the landlord on why he only received new carpets and not all the other perks? To which the landlord responded.... " I gave you what you asked for".
My advice, use an experienced broker. Saving money on commission upfront may sound like a good idea, but a broker has an in depth understanding of the market, trusted relationships and years of experience in brokering a transaction that is amicable to both landlord and tenant. They are able to present workable agreements that favour both parties and protect the good name and relationship on both sides.
Contact a Seeff Commercial Property Specialist if you are interested in buying or selling your commercial property with peace of mind you are receiving the very best service.
The foundation of commercial sales is primarily based on forming sound relationships and strong networks.
With these relationships in place, valuable information is obtained and business connections made. A recent scenario has again highlighted the importance of using brokers and the real value of what brokers can do for their tenants and landlords. One of my landlords was under pressure with their property and was open sell one or more of their properties should a potential buyer come to the fore. A buyer was introduced but unfortunately, no deal was concluded. Having followed up with the buyer further down the line, it was discovered the landlord and buyer were communicating directly about the sale of the building and had opted to exclude the broker.
Where does this leave the commercial agent who made the initial introduction? The agent may have reason to believe they were the effective cause of the sale.
Without damaging hard-earned relationships, how far should an agent be prepared to push the fact? An introduction was made and at what cost? Effective cause is well documented and can be defended in a court of law. Is it worth the cost of the relationship?
On another recent incident a leasing broker was asked to compile a short list of possible new office opportunities for a client. The client, in his own time, went past the various buildings, saw the owners 'To Let' board and decided to call them directly and requested a meeting. A lease agreement was concluded at R10.00 p/m2 less and a change of carpets were thrown in by the landlord.
The broker was informed by the tenants PA that they had found new offices and his services were no longer required. The broker soon realised this was as a result of the information provided to the tenant as requested.
The broker, who had a good working relationship with the landlord, met with him. The owner was made aware of the situation, and as a token of good faith the landlord paid the broker 50% of his commission recognising the value and importance of the relationship over time.
A sound enough ending to the story or so the broker and tenant thought.
As luck would have it, the broker happened to bump into the tenant at a social event a few months later and got into a discussion regarding their rented property. The broker informed the client he received commission on the transaction and trusts the client received all the perks and allowances that were on offer, prior to moving in.
The tenant was horrified to learn that the landlord was offering additional incentives to brokers in the form of rent-free periods as well as generous rebuilds of the office's internals should they find a long-term tenant.
The client angrily confronted the landlord on why he only received new carpets and not all the other perks? To which the landlord responded.... " I gave you what you asked for".
My advice, use an experienced broker. Saving money on commission upfront may sound like a good idea, but a broker has an in depth understanding of the market, trusted relationships and years of experience in brokering a transaction that is amicable to both landlord and tenant. They are able to present workable agreements that favour both parties and protect the good name and relationship on both sides.
Contact a Seeff Commercial Property Specialist if you are interested in buying or selling your commercial property with peace of mind you are receiving the very best service.
Author: Danie Antill
