Exclusive Broker Agreements: should you sign one?
Once you find a tenant broker, at some point they may ask you to sign an exclusive broker agreement to represent you going forward.
Should you sign it? Naturally, signing any agreement up front can make people nervous, but here’s why an exclusive broker agreement is worth considering.
When Exclusive Broker Agreements Come Into Play
For large transactions that yield a high commission and can therefore take awhile to close, some brokers prefer to work under the condition of an exclusive agreement.
Why? It protects them against working on a client’s case for months, only to lose it to another broker. Exclusive agreements also generally stipulate that, once all parties sign the lease, the broker earns a commission for her hard work.
Buying a home or leasing office space? That certainly amounts to a large transaction with high stakes. You’re more likely to encounter an offer of exclusive agreement in either case than simply renting an apartment.
Working with Multiple Commercial Tenant Brokers
The way office space listings appear online, contacting multiple brokers can be hard to avoid. Most listings lack the kinds of detailed pictures you might see on an apartment listing, for example. Seeing what the space looks like usually requires a physical tour earlier in the process than you might like.
A broker can help vet spaces in advance so you’re not wasting valuable time touring unworkable space. And ultimately, you need a broker to arrange and conduct a tour of any commercial space you visit.
If you inquire on multiple office space listings across multiple sites, that means multiple brokers responding to you. To some degree that can’t be helped.
Which broker(s) dedicate more time and attention to you can be helped, however.
Working Exclusively with a Commercial Tenant Broker
Signing a letter of representation gives the broker confidence that you have confidence in her and that, at that, once you sign a lease, she will earn a commission (one you’re not directly responsible for).
Before signing a letter of representation, it’s fair to ask the broker, however, to demonstrate some value first. That value might come in the form of some initial curated listings that actually match your requirements. It might come in the form of a market survey or commercial space comps. It’s up to you.
We do recommend signing one over working with several different brokers on a non-exclusive basis. It signals to landlords that you’re a hot commodity, one they’ll have to compete over. And one broker focusing on your needs is better than several brokers with no accountability to you rushing you to sign a lease that yields a high commission.