It isn’t uncommon for people to try and go through the commercial real estate process on their own without consulting a brokerage or agency. However, typically this happens because they are unclear on exactly what a listing agent or a tenant broker actually does, and are unaware of the value they bring to real estate transactions.
Some people use general terms like “realtors,” “real estate agents,” or “real estate brokers” to refer to the people who interact with property sellers, lessors, and renters during real estate transactions. However, while they may have all gone through similar training or passed the same licensing exam, not all realtors, agents, or brokers are always acting in the same capacity during a real estate deal. Some commercial real estate brokers will work exclusively as a listing agent, others will take on tenant representation only, and some will represent both sides.
In commercial real estate, it is the listing broker who represents the interests of the building owner or landlord through the leasing process. That includes marketing the landlord’s properties and finding suitable tenants for those properties. Meanwhile, a tenant broker can also be brought on to represent the business looking to lease a property for their new office home. Here we examine the differences between a listing agent and a tenant broker and their roles in the commercial leasing process.
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Listing agent vs. listing broker
Let’s start some terminology. Usually, a real estate agent is any individual who has passed a broker license exam. The biggest possible difference between the terms real estate agent vs broker is that a broker can own a real estate firm and hire real estate agents. In general, however, the terms agents and brokers are used interchangeably by their clients.
Now let’s focus on the real estate professionals representing the property seller or lessor in a transaction. They may be called listing agents or listing brokers, but, either way, they represent the property owner. Whether referred to as a listing broker or agent, they are responsible for the interests of the lessor under a listing agreement.
The listing broker looks out for the best interests of the property management, not the tenant, in the leasing of their commercial real estate. This includes negotiating terms with the tenant or tenant broker and using their knowledge as a licensed professional to ensure that the outcome is favorable to the landlord.
The listing broker or agent is also required to find suitable tenants to lease the property and is paid a commission by the landlord for that service.
What is a tenant representation broker?
The tenant broker or tenant representative is responsible for supporting clients looking to rent real estate throughout the commercial leasing process. A tenant broker can become a renter or a buyer’s representative, acting on their behalf in a commercial real estate transaction.
For tenants, it’s important to remember agents count on a prospect’s lack of commercial real estate knowledge in order to secure the highest rent possible at the lowest possible expense to the landlord. That’s why it’s beneficial to have a real estate professional holding a broker’s license exclusively on YOUR side as well.
How tenant brokers can help your business
Finding a new home for your company can be very challenging. Getting the assistance of a broker with commercial experience can ease a number of difficulties and level the playing field. Here are a few of the advantages of seeking out a reputable brokerage and utilizing real estate agents in your search:
Professional expertise – Most real estate brokers have gone through training and passed a licensing exam to become a broker, so you are getting the advantage of having expert knowledge from a licensed real estate agent during negotiations.
Save time – The search for the ideal home for your company can be very time-consuming. You may not be able to escape the work of touring numerous spaces, but you can at least have the help of a real estate agent to do a lot of the research and legwork.
Find a space that meets your requirements – A tenant broker can help you assess your requirements so that you focus on what is especially important in your search. A good brokerage will have a knack for teasing out a business’s most critical needs, be they location, types of property, lease term, rental costs, etc.
Get access to the best places on the market – A real estate agent will have a broad knowledge of available spaces or sites that fit your preferences. A really good one is able to earn special relationships with landlords that may mean you can see a space before anyone else.
Lead negotiations – The tenant broker has the experience to negotiate on your behalf with the owner on a lease, using their skills to your advantage.
Get a better deal – Realtors and real estate agents with experience advocating on the tenant’s behalf may be better able to secure a more advantageous deal, whether it means saving money on rent or getting other beneficial terms in the lease.
How do I know a broker is a licensed professional?
Individual states typically each have their own real estate commission to handle issues around higher education, training, code of ethics, and licensing, so you should do a search for the relevant state commissions or associations for more information.
The National Association of Realtors is also an important federal member organization for professionals. Their website can be a useful resource to find member realtors and associates, learn about homes for sale, buildings for rent, information for buyers and sellers, insights on buying and selling, and more.
Real estate agents benefit both sides
You may like the idea of having experienced real estate agents working on your behalf as your company searches for a space and negotiates a lease, but you may worry about the cost. However, if the tenant has someone representing them, the landlord will often cover the costs of the tenant broker, as well as their own agent.
If you are looking for commercial office space, then you should seriously consider having a knowledgeable tenant broker or real estate firm by your side to give you better leverage in a lease negotiation, offer independent advice, and help you find the right space for the right price.
Get in touch with SquareFoot to speak with one of our expert tenant brokers today.