3 questions to ask your Tenant Broker up front
After payroll, commercial is typically the second biggest expense for your company. Your lease isn’t just another line item; it’s key to the long term success of your company.
Here are three questions to ask a broker who is courting you.
What (and When) Was Your Last Successful Transaction?
Listen for details about how they have restructured deals in the past to negotiate for burn downs, lower security deposits, increased tenant improvement allowance for building out the office, free rent, and what everyone loves – lower rent.
Do you or your firm represent landlords and their listings, too?
If a broker or firm you’re in talks with represents any landlords and their spaces, then you have a conflict of interest on your hands.
Why? Because the broker could potentially double-dip, collecting an agent’s commission (from the landlord) and a tenant broker’s commission (also from the landlord).
They may tell you that repping landlords gives them greater access to inventory or that they can help you save on a lease through circumventing a tenant broker commission, but that’s not really the case. Commissions are part of a real estate pro forma, landlords account for them up front in their budgets. And even though it’s the landlord paying all commissions, not you, the broker has every incentive to nudge you toward listings in their portfolio over those that aren’t (but might be a better fit for you).
Do you or your partners at your firm have other clients with similar space requirements to mine?
The chief reason to find this out is because they could be representing clients competing for the same spaces you are. In fact, they could be pitting their clients against each other in a bidding war.
As a tenant, you need to know you’re operating under a fair, transparent framework. Don’t be shy in letting brokers know that’s what you expect.