You realize you need professional assistance in relocating your offices, so you interview real estate brokers. The brokers make all kinds of promises about how aggressively they will represent your interests. They deluge you with promotional material demonstrating the size and strength of their companies. You retain the broker who impresses you most.
The search proceeds, and negotiations for space eventually begin. Now you find that the firm you hired to represent you is also the leasing agent for the landlord.
In such a negotiation, whose interests will be best protected?
Here's a hint: Not Yours!
Landlord agencies bring brokers ongoing business, and big bucks. If a brokerage
firm is representing a landlord on a unit of space, it is the agent for the entire building, making money every time space in that building becomes available.
It might even represent that landlord in leasing and managing an entire portfolio of properties. Do you think that
company would jeopardize such a relationship for your little account, which might not become active again in ten years? I don't think so.
Conflict of interest is endemic to the real estate industry. In their sales pitch, brokers try to minimize the appearance of conflict by claiming that tenant and landlord representation are entirely separate divisions of their companies, and that neither division dictates the activities of the other. This is sales talk. It is not true.
Landlords hire a brokerage firm, not an individual broker. That firm is legally obligated to represent the interests of the landlord without compromise of any kind. Every broker in the firm, whether or not they do work on a particular building, is bound by that obligation. Even if your broker would like to fight for your interests, he or she cannot legally compromise the interests of the landlord.
There are a few ways to mollify the effects of potential conflicts, but they are complicated and
usually don't work. The simplest way is the best way: Retain a broker who only represents tenants!
CSI Consultants Inc. represents tenants exclusively. Our standard brokerage contract states, "CSI will not act as agent for any landlord during the term of this agreement." Further, we have a philosophical commitment to non-profits.
Who do you want representing you?