Do You Understand the Important Differences Between Types of Commercial Real Estate Agents?

by Mike Kushner, CCIM

The use of the term “commercial real estate agents” casts a broad umbrella under which people tend to lump all real estate professionals. The truth is that there’s a big difference between the role of a listing agent and that of a buyer/tenant rep agent. While both might be referred to as a “commercial real estate agent”, it’s important to understand when and how you would use each when it comes to buying and selling real estate.

What is a Listing Agent?

A listing agent might also be referred to as a seller’s agent. This person represents the seller or landlord in a deal. Their job is to list and market the property, attract potential buyers, then negotiate a favorable deal on behalf of the seller.

What is a Buyer/Tenant Agent?

On the other side of the deal is a buyer’s agent. This is the person who represents the buyer or tenant looking to purchase or lease a property. Their job is to find and bring a buyer or tenant to properties which meet their needs, then represent them in a deal to ensure terms and pricing are fair to the buyer.

What is a Subagent of the Seller/Landlord?

There is an important distinction between a tenant/buyer agent and a subagent of the seller/landlord. If the tenant/buyer does not have a formal written agreement with the agent, then the agent who is showing the property and providing information is considered a subagent of the listing agent. This means they are not representing the interests of the tenant/buyer, but instead are representing the interests of the seller/landlord.

How is a Listing Agent Compensated?

Most commonly, a listing agent signs an exclusive right-to-sell/lease agreement with the seller or landlord. This means that only the listing agent’s brokerage is entitled to an agreed-upon commission pending the sale or lease of the property. The brokerage then typically shares the commission with the agent. Exclusive listings are bilateral agreements between a broker and a seller/landlord. It’s important to know that a listing actually belongs to the broker or brokerage, not the listing agent, unless the listing agent is also an owner of the brokerage.

How is a Tenant/Buyer Agent Compensated?

Generally, the listing agent cooperates with the tenant/buyer agent and shares a portion of the earned commission in exchange for bringing a tenant/buyer to the table, if the deal is struck. This is referred to as a “co-op” commission, and allows the tenant/buyer agent to provide services at no additional cost to the tenant/buyer.

Do I Really Need to Work with a Listing Agent?

Legally, no. You are not required to work with an agent and can opt to list your property as For Sale By Owner, or FSBO. There are major benefits to working with a listing agent, however. Foremost, it becomes their responsibility to market and sell your property in a timely fashion and for an agreeable price. They will schedule showing and handle all of the potential buyer contact for you. Having a professional to take these time-consuming tasks off your hands allows you to continue to focus on other things.

Many sellers also benefit from working with a listing agent because their properties sell faster and for a higher price than if they go it alone. The expertise, negotiating skills, and connections of a listing agent can dramatically change the outcome of your transaction.

Do I Really Need to Work with a Tenant/Buyer Agent?

Again, you are not legally required to. However, you will likely experience major benefits if you do. Too often, a tenant/buyer begins looking at properties without hiring an agent to exclusively represent them. Without representation, you can lose the upper hand in negotiations, ending up with unfavorable terms and pricing. Similarly to a listing agent, you want the knowledge of an agent who can make your property search more smooth. Think of them as your “concierge” – their job is to only show you the best properties, and to make your experience as successful as possible.

The most important thing to take away from this is that no matter what side of the deal you’re on, you should strongly consider having your own representation to advocate for your best interests. Whether you’re buying, selling, or leasing a property – we have expert specialists who can help you to achieve your goals. Contact one of our advisors today to get started.

This article was originally published on the Omni Realty Group website by Mike Kushner, CCIM. Omni was an exclusive buyer agent/tenant rep commercial real estate firm owned by Mr. Kushner prior to his joining the Capstone Commercial team. It has been adapted and reposted with permission. See the original article here.

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