Commercial Real Estate Brokers: Shhh! Don't Tell Your Tenants How Much Commission You'll Make!

An Open Letter to Commercial Real Estate Brokers

Hey, commercial real estate brokers?  Keep your compensation a secret, even from your own clients. They don't know how much you make, they're too dumb to figure it out, and if you don't bring it up they won't think about it.  NOW, REALLY!

In most commercial real estate leasing transactions, commercial brokers representing tenants receive their compensation in the form of commissions paid by landlords.  Yep, that sure sounds like a conflict-of-interest to me!  But, unfortunately, that's the way the industry works.

Guess what?

• Your clients can figure out your compensation...and, they will!
• Why withhold information from your own client?
• When your role is to protect your client's interests, withholding information that they can easily figure out on their own makes you look stupid and dishonest
• Are you obligated to disclose your compensation to your clients? While you may not have any legal obligation to do so, from a moral and ethical perspective, I'm pretty sure the answer is "Yes!"

Whether or not you should disclose your compensation to your clients also begs other questions:

• Why would you want to be transparent?
• Are you concerned that someone might view your situation as your being over compensated somehow?
• Did compensation discussions take place that may have negatively affected your client?
• Is something negative going on?
• Did you have to do any favors or compromise your position (or that of your client) to secure your compensation?
• Were those favors at the expense of your client?  Did you disclose them to your client?
• What might your client have lost in exchange for the compensation you secured?
• Have you compromised your client in any way?
• Do any conflicts-of-interest now exist or did they previously exist?

If all you're doing is getting paid, fairly and adequately, why wouldn't you disclose your compensation to your client...the one who is the very reason for which you're able to generate compensation?

Copyright Real Estate Strategies Corporation 2011.  All Rights Reserved.

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