September 13, 2023

What to Look for in a Buyer/Tenant Representation Agreement

A buyer/tenant representation agreement is an important contract, particularly if you are a buyer searching for commercial properties in your local area. Commercial buyer/tenant representation is critical if you invest in local commercial property, as a qualified commercial real estate brokerage will best represent your needs and advocate for you throughout the transaction process.

But what should a buyer/tenant representation agreement include? Here are three crucial things to consider in an exclusive buyer/tenant representation agreement.

An Outline of Expected Services

The focal point of any buyer/tenant representation agreement is the outline of the service(s). This agreement provides detailed information about what you can expect from your buyer’s representative, including the services they will provide and the negotiating they plan to do on your behalf. In addition, a buyer representation agreement should detail both the client’s and the agent’s expectations, including the requirement that you work exclusively with your buyer’s representative during the search for commercial properties. By having an in-depth understanding of the expectations of both parties involved, you can move forward with confidence and clarity as you look for the best available commercial properties in your area.

Commission Rate Details

The buyer/tenant representation agreement will include details about the commission rate that the agent expects to be paid. However, it’s worth noting that the buyer is usually not responsible for those commission fees. The seller of the commercial property typically pays the commission fees for both the listing agent as well as the buyer’s agent. However, it is necessary to have a buyer/tenant representation agreement in place that details their commission rate and how to handle compensation in the event the seller does not pay the buyer’s agent’s commission. This agreement will spell out the fiduciary obligations of your buyer’s agent and will help position you to best achieve your commercial real estate investment objectives.

The Terms of the Agreement

A buyer/tenant representation agreement is an exclusive contract that exists between you – as the buyer or tenant – and the representative commercial real estate brokerage who will serve as your agent. It is worth noting that this agreement will last for a specific amount of time and that terms must be listed in the agreement. By identifying the length of the terms of the contract, you are obligated to work exclusively with that representative for the specified amount of time.

Once you have found a commercial real estate brokerage you want to work with during your search for commercial properties, you should thoroughly review the buyer/tenant representation agreement. An experienced and qualified firm will generate an agreement that is fair and favorable to both parties. This contract allows you to become a valued client and gives you the support and reinforcement you need during your commercial property search.

For more information about what is included in our commercial buyer/tenant representation agreement, contact RakowGroup today.