The Hidden Trouble with the Landlord’s Real Estate Agent0

Posted by Thomas Miller, CCIM

sharkThis is a thorny issue and it requires a bit of background, so let’s first establish the fact that there are always two parties to any real estate transaction – the buyer/seller or the landlord/tenant. More times than not, both sides have separate real estate agents, though most states allow one agent to represent both parties in certain circumstances. You can decide if that sounds advisable or not.

When our industrial real estate company works with clients, we take on a partnering relationship. Our single goal is to help you achieve your real estate needs to the best of our ability, using all the skills, tools, experience and expertise we possess. In order for this to work effectively, both parties need to work together to help the common cause. Our job is to show you the best path. A significant factor in the transactions is our ability to achieve the very best deal we can for you, and maximizing your bargaining leverage is a big part of that.

In order to get the maximum benefit of your negotiating leverage, your real estate company needs to have all its tools available to them. In this instance, that translates to complete control of all information going to the landlord’s side of the table and that includes what information is exposed, as well as when, why, how and where. To achieve this, it is of the utmost importance that no information is inadvertently or unintentionally passed onto the landlord’s agent by the client. Unfortunately, it happens all the time.

You’re likely thinking, “Why would anyone give away bargaining power in an important transaction like a real estate deal?” The answer is that no one would – intentionally. But people do it all the time. And it costs them dearly.

“Oh, yes, I called off a real estate sign and talked to a very fine fellow and told him what we were looking for. He’s getting back to me.”

An exchange like this one is one in which a potential tenant tips his hand. He saw a commercial real estate signhand of cards on a building and called the number listed – the number of the real estate agent representing the landlord of that building. The agent with a contractual obligation to secure the best deal possible for his client – who happens to be the landlord. Even if the conversation was relatively preliminary and benign, the agent is now on the scent. We can cite instance after instance where landlord agents do enough preliminary web research to discover which company you’re with, what your relocation or expansion timeframe is, your motives the move and even why you prefer one location over another. All of this helps the other teams and hurts ours.

The hand tipping continues. During property tours, we routinely hear comments like:

  • “This could work.”
  • “How many dock doors? Six? Oh, good.”
  • “This place reminds me of our Ohio plant.”
  • “I like the high ceilings.”
  • “This will fit Nancy’s operations well over here”
  • “It has 480 volt power, that’s what we need.”
  • And on and on…

 

Comments like these, however innocent or general or offhand they may seem, expose how you feel about the property. And that is ammunition for a landlord’s agent, which makes it a big disadvantage to our team’s ability to maximize your negotiating leverage. Sometimes, the smallest comment costs you more than your agent could possibly recover through his skilled handling of the transaction.

Here’s the bottom line. A landlord’s agent is contractually obligated to work in the sole interests of the landlord and to extract the best deal for the landlord from the transaction. It’s never smart to enter into dialogue with a trained, skilled real estate negotiator; it’s like chatting with the prosecution’s attorney. There is a reason your lawyer tells you to just stay silent. And you are hearing it again from your professional real estate partner. Stay silent, don’t expose anything and let your agent come up to bat with the biggest bat he has.

Our posts are intended to educate commercial real estate users so they can
make better decisions in their real estate use, investments, buying and
selling. We encourage your input and commentary. If you are enjoying these
posts and finding them useful, help spread the word via Facebook, Twitter,
LinkedIn, Google + or email with the buttons below.

Our posts are intended to educate commercial real estate users so they can make better decisions in their real estate use, investments, buying and selling. We encourage your input and commentary. If you are enjoying these posts and finding them useful, help spread the word via Facebook, Twitter, LinkedIn, Google + or email with the buttons above.

About the Author

Thomas Miller, CCIM

Thomas Miller, CCIM is the president and broker of Miller Industrial Properties in Reno, Nevada. He has worked in industrial real estate since 1991, with 15 years of previous experience designing and building industrial warehousing and manufacturing facilities in the northern Nevada market. Contact Tom at tom@mipnv.com or 775-742-9891.

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