“If everyone is working for you then no one is working for you.”
One common concern we often hear is that an exclusive agreement with one company excludes other brokers from working on an assignment.
Let’s address this by considering how the brokerage world reacts to an organization entering the marketplace unrepresented. If an organization’s message to the real estate world is that “we are in the market and whoever brings the space gets the deal” then for brokers it will be a race to bombard you with information on many spaces, in a speedy manner but not necessarily in a clear manner. Where your company would benefit from a prepared report, complete with floor plans, direct verification of availability, availability dates, building operating expense information and other details, you would instead receive information in the quickest way possible so that another broker doesn’t end up hitting “send” on the email just one minute late. It will then be your responsibility to sort and compare information. With several brokers vying to represent you to several different buildings you will be left without a single advisor that can compare all available options for you. Without representation, no professional brokerage will be able to dedicate the time needed to prepare and present quality information.
Searching for properties, verifying availability dates, gathering floorplans, and evaluating tenant improvement packages takes considerable time. A knowledgeable, experienced person or team will handle all of this for you. Establishing an exclusive relationship will enable the broker to dedicate their time and team’s energies toward delivering quality information, scheduling tours, and lending expertise. Simply put – selecting a real estate brokerage team as an exclusive representative means that you actually have a team working for you. That work extends beyond the initial stage of gathering availability information and tour scheduling. A true advisor can provide comprehensive market information, manage a proposal process, provide an evaluation of alternatives, and deliver regular updates on the process.
There are also function challenges faced without representation. Here is an example of an initial roadblock to receiving quality service often encountered when a party does not have dedicated representation:
Broker A contacts three developers to discuss building a company’s new distribution facility. Broker A may want to express to these developers that he is working on behalf of a tenant with $10 million in revenue, looking for 25,000 square feet with a targeted March 2018 occupancy. At this point these developers are aware of the requirement, have gained some level of initial qualification (revenue) and know the best contact for requirement (Broker A). One week later, Broker B calls the same developers (or some of them) and announces a requirement fitting the same description as Broker A’s “client”. At this juncture, the developers will first be in the awkward position of not knowing who to deal with. Next, the credibility of the broker and end user themselves will be called into question and the developer will downgrade the likelihood and seriousness of the potential project. Brokers, investors, and developers share information to facilitate transactions. Clarity and credibility are key in an efficient process.
If somehow proposals were to be gathered from the hypothetical developers with different brokers interfacing on behalf of the distribution company there will be another problem. Those brokers will not be able to properly leverage those opportunities to create value for the end user. Instead the company itself will have to negotiate the options without having a broker mutually aligned in their interests as the brokers involved will be cut out of the deal, with all efforts wasted, if the project they are not interfacing on is chosen. Again, nobody will actually be working on behalf of the organization.
Becoming a Priority
Another concern we sometimes hear occurs when a buyer is looking for off market property. The buyer may not want to exclude brokers from bringing a property by committing to one brokerage team. This can sometimes apply to sellers looking for buyers or tenants looking for space.
Brokers will gladly note unrepresented active tenants or buyers. However, when they find an off-market property they will then be incentivized to try and procure the exclusive listing with the property owner first. The broker is incentivized to collect notes on several tenants or buyers. Since he doesn’t represent you, you will just go in the file as another active buyer or tenant. When he or she identifies a property, the broker will be in an advantageous position to represent the property owner and bring the property to the several tenants and buyers at once rather than bring the property to you first. Without representation, you will not be a priority.
Also, it is very important to note that without representation the broker will not be able to dedicate time towards actively searching through off market properties on your behalf. This goes back to the issue of being able to dedicate resources addressed in the first part of this post.
The Benefits of Representation
The exclusive relationship means that a dedicated team of professionals are being put to work on your behalf. It means that we can make you a priority. At SRE, we want to give our full attention to our clients. We want to establish trust. We want work to be truly fulfilling for us and our clients. We know that the only way that happens is when we can go beyond the transactional. Fulfilling work happens with the establishment and growth of relationships.