Does Your Client Know Your Commission? -- II

Disclose, Disclose, Disclose... Wow, last week's Dispatch, Does Your Client Know Your Commission? (Oct 13), got my inbox jumping.

Larry Ilfeld with Sperry Van Ness in Albuquerque, NM, likes his typical tenant representation language: "Client acknowledges understanding the fact that Broker may attempt to negotiate with any property owner or landlord a brokerage fee equal to (but not greater than) the Broker’s standard fee charged when representing landlords or sellers.”

Ken Cantor with Qualico in Edmonton, Alberta, Canada, is skeptical of the process. "In almost all cases, it would be a safe bet that the tenant/client is not aware of the general range of 'market fees' (and by this I mean the actual dollars involved in any given potential transaction) -- never mind the difference in fees between buildings. Most have likely been told that 'it is a cost to the landlord that is already built into the rate.' This completely ignores the fact that a fee is a real cost to any transaction that is no different than asking for higher allowances, additional improvements or longer rental abatement periods for the tenant -- all of which the broker is prepared to negotiate on behalf of the tenant in order to secure his business."

Norm Marquardson with Coldwell Banker Commercial NRT in Salt Lake City, UT, adds an interesting twist. "In a tenant-rep agreement we also include a commitment from the tenant to take reasonable steps to help us collect our fee from the landlord or landlord-broker, or pay it themselves. In that case, disclosure is even more important."

Geoffrey Kasselman with Op2mize in Chicago wants to avoid an awkward conversation with his client. "It seems to me that failing to disclose the math could be more uncomfortable to a practitioner working with a sophisticated, creditworthy customer (is there a good reason to work with any other type?) than the conversation that ensues when the client figures it out later, especially when the resulting deal fee could equate to more than the client's annual salary."

-- Peter Pike