Property Reviewed is the 1st online review platform for real estate business!

Property Reviewed is the 1st online review platform for real estate business!

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In this article, we’re exploring the role with the ‘flow of money’ and considering whether the landlord’s or the leasee’s needs are put first because of this.
In a commercial property context, the ‘flow of money’ refers back to the payment of a rental agent by a property manager for securing the lease. While this is common practice in the property sector, this raises the question of whether this incentive (the commission) leads to the actions of the agent unduly favouring either the owner or the leasee.

Do you know the flow of money?

A landlord may engage a leasing agent to secure a rent deal; in return, the actual agent will be compensated a commission-based fee. This is called the flow of money (or perhaps flow of commission). The tenant, meanwhile, will probably be required to deal with the actual leasing agent in order to obtain the lease.

Does the flow of money favour the owner or the leasee?

The question of whether a leasing agent is ultimately behaving in the best interest with the leasee or landlord is a complex and sensitive one. Understandably, the character of the lease or engagement with the property owner will affect the characteristics of the proceedings.

For example, if a commercial tenant is seeking long-term surety for their business, they may take part in a lease expression of 3, 5 or 10 years. For the leasing broker, this means any potential income arising from the transaction will only take place at these fairly long intervals. This will impact any help the agent stands to gain from the transaction, particularly if this is the only home they are representing for this landlord.

On the other hand, if your leasing agent is which represents a landlord across multiple properties, there is the potential to gain several fees within the exact same period. This elevated incentive could potentially impact the actions of the broker, who may act strategically in order to maximise their earnings.

While most agents will provide neutral information in order to help a fair deal for all events, the fact remains that the information an agent discloses with a potential leasee is up to their particular discretion. This officially means that the tenant or landlord could finish up being disadvantaged if the pull of commission swings the actual favour in the other.

Brokers vs CRES - that do they favour and also who pays?

It’s also worth considering the role regarding broker commissions and company real estate services (CRES), which could work in the favor of either the owner or the property occupier.

Brokers act on behalf of the property manager. They are paid any commission when they are been shown to be the “effective cause” of the lease transaction, e.g. by providing an approved provide and a signed rent. The broker’s commission is actually added to the cost of the tenant’s lease rental as well as amortised over the cost of the actual lease - therefore essentially, the renter pays the fee.

CRES providers represent the actual interests of the occupier of the properties (the actuel or the owner-occupier). Their understanding commercial property will benefit customers by supporting them save money on rental and property expenses, and reducing risk through assisting with strategic property decisions. CRES providers are generally paid by the celebration whose interests they will represent and are not generally paid from the property funds.

How can impartial Property Reviewed aid level out the playing field?

As discussed above, the current flow of money program creates a ‘loophole’ which means, in some cases, a potential tenant might not receive the complete picture with regards to a commercial property, with certain pieces of information leftover undisclosed. This leaves the actual leasee at a distinct downside when making a decision on a commercial property.

By giving an online platform that lets former as well as current tenants leave unbiased reviews in regards to a property, we try to close this gap and bring much-needed transparency to the commercial property industry.

Future tenants take advantage of clear and open information about the property, while property owners and administrators gain access to valuable home analytics and insightful feedback about their area.

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