In this article, weâ€™re exploring the role from the â€˜flow of moneyâ€™ and thinking about whether the landlordâ€™s or the leaseeâ€™s desires are put first as a result.
In a commercial property circumstance, the â€˜flow of moneyâ€™ refers to the payment of a leasing agent by a property manager for securing any lease. While this is frequent practice in the property sector, this raises the question regarding whether this inducement (the commission) contributes to the actions of the realtor unduly favouring either the landlord or the leasee.
What is the flow of money?
A landlord will engage a rental agent to secure a rent deal; in return, the agent will be paid out a commission-based fee. This is whats called the flow of money (or even flow of commission). The tenant, meanwhile, will probably be required to deal with the leasing agent so that you can obtain the lease.
Does the flow of money favour the landlord or the leasee?
The question regarding whether a leasing agent is ultimately behaving in the best interest from the leasee or landlord can be a complex and sensitive one. Understandably, the type of the lease or engagement with the landlord will affect the characteristics of the proceedings.
As an example, if a commercial actuel is seeking long-term surety for business, they may engage in a lease term of 3, 5 or 10 years. For the leasing realtor, this means any prospective income arising from the particular transaction will only take place at these fairly long intervals. This can impact any benefit the agent stands to gain from the transaction, particularly if this is the only house they are representing with this landlord.
On the other hand, if a leasing agent is symbolizing a landlord across multiple properties, you have the potential to gain numerous fees within the same period. This increased incentive could potentially impact the actions of the realtor, who may work strategically in order to free up their earnings.
While many agents will provide unbiased information in order to facilitate a fair deal for all parties, the fact remains that the information an agent discloses to a potential leasee is up to their discretion. This technically means that the actuel or landlord could end up being deprived if the pull associated with commission swings the favour in the other direction.
Brokers vs CRES - that they favour as well as who pays?
Itâ€™s also worth considering the role associated with broker commissions and corporate real estate services (CRES), which may work in the favour of either the owner or the property occupier.
Brokers act on behalf of the property manager. They are paid any commission when they are proved to be the â€œeffective causeâ€ of the hire transaction, e.g. by providing an approved offer and a signed hire. The brokerâ€™s commission is added to the cost of the particular tenantâ€™s lease rental and also amortised over the cost of the particular lease - thus essentially, the tenant pays the commission.
CRES providers represent the particular interests of the occupier with the properties (the tenant or the owner-occupier). Their knowledge of commercial property will benefit customers by supporting them save money upon rental and home expenses, and minimising risk through assisting with strategic house decisions. CRES providers are generally paid by the get together whose interests these people represent and are not typically paid from the home funds.
How can unbiased Property Reviewed aid level out the arena?
As discussed above, the current flow of money method creates a â€˜loopholeâ€™ which means, in some instances, a potential tenant may not receive the complete picture with regards to a commercial property, with certain pieces of information leftover undisclosed. This leaves the particular leasee at a distinct disadvantage when making a decision over a commercial property.
By providing an online platform which lets former and also current tenants abandon unbiased reviews about a property, we aim to close this gap and bring much-needed transparency towards the commercial property business.
Future tenants reap the benefits of clear and available information about the property, whilst property owners and administrators gain access to valuable house analytics and informative feedback about their space.