•  scott@parkeradvisorsllc.com
  •  562.304.0614
  • linkedin
  • twitter
  • facebook
Parker AdvisorsParker AdvisorsParker AdvisorsParker Advisors
  • Who We Are
  • What We Do
  • Where We Work
    • Downtown – Long Beach
    • Airport – Long Beach
    • Orange County
      • Irvine Office Space
      • Newport Beach
    • Cerritos Office Space
    • Torrance Office Space
  • Gen II Creative Office
  • Blog
  • Contact
  • Who We Are
  • What We Do
  • Where We Work
    • Downtown – Long Beach
    • Airport – Long Beach
    • Orange County
      • Irvine Office Space
      • Newport Beach
    • Cerritos Office Space
    • Torrance Office Space
  • Gen II Creative Office
  • Blog
  • Contact
Tenant Representation

Dual Agency: Why it creates a harmful conflict of interest

  • June 30, 2020/
  • Posted By : dandeleon/
  • 0 comments /
  • Under : Dual Agency, Tenant Representation

With commercial real estate brokers, their required fiduciary is equal to the highest standard and level of care implied by federal law. You cannot avoid dual agency by sitting on both sides of the table.

The listing broker has a contractual obligation to the landlord…not the tenant

The listing broker’s primary obligation is to get the tenant to sign the lease quickly as possible because “time kills all deals”. This is an industry secret and any honest broker will tell you this. The landlord’s main focus is on maximizing the value of the building through rent income, lowering expenses, better occupancy, and rising tenant obligations. A broker who has a listing on an office building has a fiduciary responsibility to the landlord, whose primary goal is to get an above-market lease out of the office tenant.

How is dual agency still legal in California?

Dual agency is a hot-button issue in commercial real estate. Office tenants are better served when they have their own representation. Several states have banned dual agency, however, it’s legal in California. The pitfall with dual agency is that the listing broker may be unethically influenced by the double commission. Since the dual agent receives a commission on both sides of the deal, he/she may become over-incentivized to close the deal at any cost. In this scenario, the interests of the tenant are not met. Furthermore, it is possible that a dual agent may be tempted to not disclose something relevant because he/she will lose out on the double commission.

The listing broker’s primary obligation is to negotiate the highest rent

Based on general business principles dual agency is not a sound practice because a conflict of interest is inherent. A few questions can be answered satisfactorily by both parties. This can help address conflict, however, it does not alleviate the problem. Success in a transaction is gauged by the tenant’s level of confidence with the dollars and terms that are met. The dual agent cannot focus on negotiating for the lowest price and for the highest price at the same time. 

California lawmakers attempted to place limitations on dual agents which states that a dual agent “may not disclose what the other party is willing to settle for, without written consent by the seller” and vice versa. However, nothing except the price was addressed, and the ruling on confidential information remained ambiguous.

Using a tenant rep specialist is the way to go

In closing, equal allegiance is unlikely, and the leasing agent can be unfairly influenced by a lucrative long-standing relationship. It’s due to the many prior transactions. In residential sales, it’s easier to contain it, but with office buildings, the listing agent may have done the leasing for 10 to 30 other tenants. Again, sound business principles would dictate that an office tenant representation broker is the way to go.

If you find yourself in an office lease transaction in Southern California and you are wanting to be represented fairly, give one of our office tenant representation specialists a call today for a free consultation at 562-362-6500.


Missed Opportunity

  • November 6, 2019/
  • Posted By : dandeleon/
  • 0 comments /
  • Under : Dual Agency, Tenant Representation

Negotiation efforts to lower the rate by a nickel or dime per rentable square foot per month can fail which leaves other areas to reduce costs.   Without an expert on your side, these are missed.  Dedicated representation looks at all factors that affect cost, risk and tenant obligations.   Motivations and the landlord’s accounting methods are examples. A tenant rep who is a 100% on your side  can help you navigate. The Long Beach market commissions are paid whether you use their guy or have your own.


Search
Recent Posts
  • Dual Agency: Why it creates a harmful conflict of interest
  • Missed Opportunity
  • Divided Loyalty & Dual-Agency
  • Welcome to the 2nd generation of Creative Office
  • Avoid Dual Agency Pitfalls – Hire a Tenant Representation Broker
Categories
  • Creative Office Space
  • Dual Agency
  • Tenant Representation
ABOUT PARKER ADVISORS

From Torrance, Long Beach to North Orange County, Parker Advisors only serves office tenants. Whether it’s on the market or off-market, we find the best office space available and negotiate the best deal.  

Recent Posts
  • Dual Agency: Why it creates a harmful conflict of interest
  • Missed Opportunity
  • Divided Loyalty & Dual-Agency
FIND US AT

  • 5150 E. Pacific Coast Highway, # 200
    Long Beach, CA 90804
  • 562-304-0614
  • Scott@ParkerAdvisorsLLC.com
Developed by StellarMetrix

Free Custom Office Listing