If you choose to work with a commercial real estate agent, they will likely ask you to sign an exclusive representation agreement that specifies that they will represent you for the purchase or lease of real estate. An exclusive representation agreement provides security for the real estate agent that after all the time, effort, and expense they’ve invested, they will get a commission from the sale. However, an exclusive representation agreement protects both parties. For the client, the agreement can outline the contract terms of the relationship between the agent and client, defining the business arrangement in black and white.
For obvious reasons, a real estate agent will always want their client to sign an exclusive contract as it protects them from losing out to another agent even after they’ve done all the work. In fact, most experienced agents (and especially the ones you want representing you) will require some form of representation agreement. As a buyer or tenant, an exclusive agreement can benefit you too. However, there are some questions to first ask a commercial real estate agent before signing an exclusive representation agreement, such as:
Will you charge me for any other expenses? While a real estate agent earns through commission, they may offer other services that are priced separately. While uncommon, consider asking if they provide other services that are charged separately, such as inspection services.
Do you specialize in the geographic location that I am interested in? The real estate industry is a massive community. Brokers will talk to other brokers, along with property owners. What you need is a representative that specializes or has experience in the geographic area you’re interested in because it means they may already know the right people to begin their search.
Can you tell me about your experience as a real estate agent/broker? Length of experience in real estate is not as important as the type and depth of experience. One real estate agent may have been in the industry for decades with little success, while another agent may be fairly new yet can share one success story after another. Therefore, you should be more concerned with how consistently active they are in the market rather than how long they’ve been an agent.
Can you tell me a time when your expertise played a crucial role in contract negotiation? There are various types of commercial real estate. Not only is it ideal that the agent you work with recognizes the right product for you, but they also need to perform well when it’s time to negotiate the terms of the sale or contract. They need to make a competitive offer within your budget.
In what circumstances will I have to pay you a fee? Most of the time, an agent’s commission is paid by either the seller or the landlord. If so, and if they are paying a market rate commission, then you should not have to pay your agent a fee in addition to what they’ve received from a seller or landlord.
Looking for commercial real estate isn’t easy, especially if you’re not experienced in negotiating contracts, aren’t familiar with the area, or don’t have time you can devote to searching for the property that meets all your requirements. A commercial real estate agent can save you a lot of time and money, going through all the listings and dealing with the listing agent. When working with a commercial real estate agent, you’ll have someone representing your best interests and maximizing the returns when negotiating a contract. Thanks to their skills and experience, agents can streamline the process and ensure you’re getting the most favorable terms.
For more information on representation agreement, or commercial real estate, please do not hesitate to reach out to joe@joekillinger.co.
