In the following paragraphs, we’re exploring the role from the ‘flow of money’ and considering whether the landlord’s or the leasee’s desires are put first because of this.
In a commercial property framework, the ‘flow of money’ means the payment of a rental agent by a landlord for securing any lease. While this is common practice in the property sector, it raises the question regarding whether this incentive (the commission) contributes to the actions of the realtor unduly favouring either the owner or the leasee.
What is the flow of money?
A landlord will engage a rental agent to secure a hire deal; in return, the agent will be paid a commission-based fee. This is called the flow of money (or flow of commission). The particular tenant, meanwhile, is going to be required to deal with the leasing agent to be able to obtain the lease.
Will the flow of money favour the landlord or the leasee?
The question associated with whether a rental agent is ultimately behaving in the best interest with the leasee or landlord is a complex and delicate one. Understandably, the character of the lease or perhaps engagement with the landlord will affect the characteristics of the proceedings.
As an example, if a commercial renter is seeking long-term surety for his or her business, they may take part in a lease phrase of 3, 5 or 10 years. For the leasing broker, this means any possible income arising from the actual transaction will only occur at these relatively long intervals. This will impact any profit the agent stands to achieve from the transaction, especially if this is the only home they are representing for this landlord.
On the other hand, if your leasing agent is symbolizing a landlord across multiple properties, you have the potential to gain numerous fees within the same period. This elevated incentive could potentially affect the actions of the agent, who may act strategically in order to maximise their earnings.
Some agents will provide impartial information in order to help a fair deal for all celebrations, the fact remains that the details an agent discloses with a potential leasee is up to their particular discretion. This officially means that the renter or landlord will finish up being disadvantaged if the pull of commission swings the particular favour in the other.
Brokers vs CRES - that do they favour and who pays?
It’s furthermore worth considering the role regarding broker commissions and corporate real estate services (CRES), which may work in the favor of either the owner or the property occupier.
Brokers act on behalf of the property owner. They are paid the commission when they are been shown to be the “effective cause” of the lease transaction, e.gary. by providing an approved offer you and a signed rent. The broker’s commission will be added to the cost of the tenant’s lease rental and amortised over the cost of the particular lease - thus essentially, the actuel pays the fee.
CRES providers represent the particular interests of the occupier of the properties (the actuel or the owner-occupier). Their expertise in commercial property will benefit customers by supporting them save money on rental and property expenses, and reducing risk through assisting with strategic home decisions. CRES providers are typically paid by the party whose interests they will represent and are not usually paid from the home funds.
How can neutral Property Reviewed help level out the arena?
As discussed above, the current flow of money system creates a ‘loophole’ which means, sometimes, a potential tenant may not receive the complete picture in regards to a commercial property, together with certain pieces of information staying undisclosed. This leaves the particular leasee at a distinct disadvantage when making a decision on a commercial property.
By giving an online platform which lets former as well as current tenants leave unbiased reviews about a property, we aim to close this gap and bring much-needed transparency for the commercial property business.
Future tenants reap the benefits of clear and open up information about the property, while property owners and administrators gain access to valuable home analytics and insightful feedback about their room.