Is your real estate agent qualified to provide the services you need?
In order to provide real estate services to the “Public,” individuals must first take several college level courses then pass a State exam to be a licensed salesperson. Brokers must have years of experience, take additional courses and pass a full day exam.
Here’s the catch. The common view is that a broker is a broker is a broker. Nothing could be further from the truth.
If you had a car accident and needed a lawyer, would you hire a personal injury attorney with a successful track record or an attorney who practices mergers and accusations? Didn’t both pass the same bar and are licensed attorneys? Enough said?
The National Association of Realtors® provides a set of ethics by which agents are expected to follow. Although most commercial agents in California are NOT Realtors® we are all quite familiar with the Code since we are required to take a test every four years which includes a section on that Code. One key point that made is, “do not perform activities that you are not qualified to perform.”
As in the practice of law, real estate has many sub-categories. Each is a specialty. Let’s start with the two largest categories: “Commercial” and “Residential.” Both require the same license but the knowledge to perform within each area are completely different. I have long been an advocate of separate licenses or at least separate certifications for a commercial verse residential arenas.
Neitlich’s Rule number 4, “Never have a residential agent do a commercial transaction.” OK, I know I’m going to get pushback on this one. If you have ever delved into that 52-page lease, you understand. Plus, there is the issue of access to market information. Consumer databases such as Loopnet for commercial and Redfin or Zillow for residential markets only give partial information and may not be as accurate since information is collected by third parties and not necessarily provided by the agents. The professionals know that the proprietary databases such as Co-Star or AIR for commercial or the MLS for residential to which the agents directly provide data is much more accurate and inclusive giving the agents better tools to help them best serve their clients.
Focusing on the commercial side, there are two major sub-segments, agents who represent tenants and those who represent landlords. Since 2015, commercial agents must disclose in writing whether they are representing the tenant, the landlord or acting as a dual agent. The skill sets representing tenants is much different than marketing buildings for landlords. To the latter, would you want the insurance company’s lawyer representing both you AND the insurance company?
Yet, particularly when it comes to tenant lease renewals, landlords often try to exclude
brokers and “handle renewals directly.” If they do, they are required to let you know in writing that they are dual agents and the person you are interfacing with is a properly licensed broker. But would you want the landlord representing you? A topic for a deeper discussion later.
To break it down further, most brokers, particularly tenant brokers, have the solid skills to handle office or industrial transactions. However, medical, retail, investments, land or food service transaction are a bit more complex. With those unique needs (Neitlich Rule #6) we almost always recommend specialty agents to our clients. While uniquely serving as our client’s in-house real estate department we would oversee the transaction (indemnification-always exceptions to the rule #6) but the details would be left to the expert in that area.
As a tenant, before you engage an agent:
Be sure they exclusively represent commercial tenants
Be sure they specialize in the product you will be occupying
Be sure there is no actual or perceived conflict of interest