What is flow of money?
A landlord will certainly engage a renting agent to secure a hire deal; in return, the agent will be compensated a commission-based fee. This is called the flow of money (or flow of commission). The tenant, meanwhile, is going to be required to deal with the actual leasing agent to be able to obtain the lease.
Does the flow of money favour the landlord or the leasee?
The question regarding whether a rental agent is ultimately behaving in the best interest from the leasee or landlord is a complex and hypersensitive one. Understandably, the type of the lease or even engagement with the landlord will affect the character of the proceedings.
For instance, if a commercial tenant is seeking long-term surety for his or her business, they may take part in a lease phrase of 3, 5 or 10 years. For the leasing realtor, this means any potential income arising from the particular transaction will only occur at these fairly long intervals. This may impact any profit the agent stands to gain from the transaction, particularly when this is the only house they are representing because of this landlord.
On the other hand, if your leasing agent is symbolizing a landlord across multiple properties, there is the potential to gain numerous fees within the exact same period. This increased incentive could potentially affect the actions of the broker, who may work strategically in order to increase their earnings.
While most agents will provide neutral information in order to facilitate a fair deal for all events, the fact remains that the information an agent discloses to some potential leasee is up to their particular discretion. This officially means that the renter or landlord could end up being disadvantaged if the pull associated with commission swings the particular favour in the other direction.
Brokers vs CRES - who do they favour and who pays?
It’s additionally worth considering the role regarding broker commissions and company real estate services (CRES), which may work in the prefer of either the landlord or the property occupier.
Brokers act upon behalf of the property owner. They are paid any commission when they are shown to be the “effective cause” of the hire transaction, e.gary. by providing an approved offer you and a signed rent. The broker’s commission is added to the cost of the tenant’s lease rental and also amortised over the cost of the actual lease - so essentially, the actuel pays the fee.
CRES providers represent the particular interests of the occupier with the properties (the tenant or the owner-occupier). Their knowledge of commercial property can benefit customers by helping them save money upon rental and property expenses, and minimising risk through helping with strategic property decisions. CRES providers are usually paid by the party whose interests these people represent and are not generally paid from the home funds.
How can neutral Property Reviewed help level out the game?
As discussed above, the current flow of money system creates a ‘loophole’ which means, in some instances, a potential tenant might not receive the complete picture in regards to a commercial property, along with certain pieces of information remaining undisclosed. This leaves the leasee at a distinct downside when making a decision on a commercial property.
By providing an online platform in which lets former as well as current tenants depart unbiased reviews with regards to a property, we try to close this gap and bring much-needed transparency for the commercial property business.
Future tenants benefit from clear and open information about the property, although property owners and supervisors gain access to valuable house analytics and informative feedback about their area.