What is flow of money?

Do you know the flow of money?

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

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

The question regarding whether a leasing agent is ultimately acting in the best interest with the leasee or landlord can be a complex and delicate one. Understandably, the nature of the lease or perhaps engagement with the property manager will affect the dynamics of the proceedings.

As an example, if a commercial tenant is seeking long-term surety for his or her business, they may engage in a lease phrase of 3, 5 or 10 years. For the leasing realtor, this means any potential income arising from the actual transaction will only take place at these comparatively long intervals. This will impact any benefit the agent stands to achieve from the transaction, particularly when this is the only house they are representing because of this landlord.

On the other hand, if a leasing agent is symbolizing a landlord across multiple properties, there is a potential to gain several fees within the same period. This improved incentive could potentially influence the actions of the broker, who may behave strategically in order to increase their earnings.

While most agents will provide neutral information in order to facilitate a fair deal for all events, the fact remains that the details an agent discloses to a potential leasee is up to their discretion. This theoretically means that the actuel or landlord could finish up being deprived if the pull regarding commission swings the particular favour in the other.

Brokers vs CRES - that they favour and who pays?

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

Brokers respond to behalf of the property manager. They are paid the commission when they are shown to be the “effective cause” of the hire transaction, e.grams. by providing an approved offer and a signed rent. The broker’s commission will be added to the cost of the actual tenant’s lease rental and amortised over the cost of the particular lease - so essentially, the renter pays the commission.

CRES providers represent the actual interests of the occupier with the properties (the tenant or the owner-occupier). Their knowledge of commercial property will benefit customers by helping them save money upon rental and home expenses, and minimising risk through helping with strategic house decisions. CRES providers are typically paid by the party whose interests they represent and are not usually paid from the property funds.

How can unbiased Property Reviewed aid level out the game?

As discussed previously mentioned, the current flow of money method creates a ‘loophole’ which means, in some instances, a potential tenant might not receive the complete picture in regards to a commercial property, with certain pieces of information staying undisclosed. This leaves the actual leasee at a distinct disadvantage when making a decision over a commercial property.

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

Future tenants reap the benefits of clear and open information about the property, whilst property owners and administrators gain access to valuable house analytics and useful feedback about their space.

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