Make confident, intelligent corporate real estate decisions

Working with Brokers

Reprinted with permission from the publisher, Nolo, Copyright 2003. (Nolo Press) The following sections contain completely unabridged advice to Office Tenants for choosing and working with commercial real estate brokers.

Many small business owners have easily found space on their own and negotiated the terms of the lease with the landlord. Many others, however, have preferred to get help from a professional real estate broker. You may decide to work with a broker in any of the following situations:

You’ve searched long and hard but failed to turn up great space at an affordable price.

You have limited time available to look for space and would find it convenient to have someone else help narrow the field for you.

You’ve had no prior experience in searching for space or dealing with real estate matters and you feel a bit intimidated by the prospect of doing it all by yourself.

You’re worried that you’ll encounter experts working to protect the landlord’s best interests-but no one will be looking out for you.

Well here’s good news: It’s almost always feasible to hire a real estate professional in the form of a broker who will represent your interests. And there’s even better news: Often it will cost you little or nothing to get the benefit of the real estate pro’s services. In this section and those that follow, we’ll explain: what brokers do, broker licensing, how to find and choose a broker, how to work with a broker, and how to deal with problems with a broker.

Working with a Real Estate Broker
Who can be a Broker?
Brokers who work for Landlords
Brokers who work exclusively for Tenants
Brokers who work for Landlord and Tenants
Brokers who are Dual Agents

Who Can Be a Broker?

To act as a real estate broker, a person needs to get a license. The requirements vary from state to state, but usually involve passing an exam, taking continuing education courses and adhering to strict rules issued by the state legislature or an administrative com-mission.

Real estate brokers often employ or contract with (and supervise) state-licensed salespeople. The requirements for becoming a salesperson are less rigorous than those for a broker. In this chapter, we use the term “broker” generically to cover both brokers and salespeople. The term “agent” is also widely used to cover both types of real estate professionals.
Brokers Who Work for Landlords

In a traditional commercial leasing situation, the landlord lists available space with a broker who then goes out looking for tenants. If a lease gets signed, the landlord pays the broker a commission-typically 3% or so of the rent paid over the life of the lease (excluding any extensions or renewals). The broker with whom the landlord lists the property is called the listing broker. If another broker (a non-listing broker) brings in a tenant and a lease gets signed, the two brokers usually split the commission.

Under this traditional way of doing business, the listing broker is the landlord’s agent-someone whose primary duty is to look after the landlord’s interests. This means that the broker is duty bound to work out a lease that’s as favorable as possible to the landlord. You may find yourself working with a broker under these traditional rules if you respond to an ad for space or call a phone number on a sign in a building window. Similarly if you go to a broker’s office and ask about available properties, you’ll he operating under these rules unless you and the broker make other arrangements. Be aware that, legally speaking, even a non-listing broker is the landlord’s agent unless you and that broker work out something different. Obviously, it’s crucial for you to know right from the get-go if the broker you’re dealing with is obligated to look out for your interests. Laws in most states require brokers to tell you who they’re working for. Fortunately, these days you’re not necessarily stuck with the traditional model in which the broker promotes only the land- lord’s interests. More and more brokers are willing to align themselves with tenants.
Brokers Who Work Exclusively for Tenants

Understandably, you may be uncomfortable dealing on your own with a landlord and the landlord’s broker. It’s a bit like being involved in a lawsuit where the other side, hut not you, is represented by a lawyer~ sometimes you can make out OK on your own, hut often not. To even things out, you can engage your own broker, who will represent your interests and only your interests.

The best kind of broker to hire is one who consistently works only for tenants. This professional is likely to have the instincts and loyalties that will serve you well and may he more aggressive and creative than brokers who work with both landlords and tenants. Unfortunately, it may take a while to locate such a broker-and if your business is located in a small community, you may find no one who fits this description. Sections C and D, below, explain the benefits of hiring your own and how to locate a suitable broker.
Brokers Who Work for Landlords and Tenants

The next best thing to engaging a dedicated tenant’s broker is to find a reputable broker who works for landlords or tenants. You’ll have an easier time finding a broker like this to work for you. Such arrangements will work just fine when your broker is showing you properties represented by brokers in other offices; iii this case, you know that your broker’s allegiance will be firmly on your side. However, the situation gets cloudy if your broker’s own office has taken listings for spaces that you want to see. This puts your broker in an awkward position. She is duty-bound to find you the best space regardless of who has the listing, but is also committed to contribute to the success of her office. You may not feel 100% sure about where her 1oyalties lie, Suit, such a relationship can he workable. In Section F, we’ll explain how to address this potential conflict in a written contract with your broker.
Brokers Who Are Dual Agents

There may another way to handle the situation of your broker showing you space represented by one of her office colleagues, hut the solution is not a very satisfying one. The arrangement, allowed in some states, involves asking the broker to step away front his or her role ~s an advocate and instead assume a neutral stance. A broker who works like this is known as a dual agent. The broker’s role is limited to attending to mechanical details and helping to make sure the transaction flows smoothly. For example, a dual agent may check on the zoning classification of the space or shuttle lease proposals back and forth between you and the landlord. A broker might work as a dual agent if:

you and the landlord decide you’d like to use one broker between you, or
your broker shows you space that’s been listed with her office-in this event, your broker and her office associate, who’s been engaged by the landlord, both become dual brokers.

The benefits of using a dual broker are limited. You won’t really get much, if anything, in the way of useful advice or practical guidance since the dual agent can’t be your advocate! In a nutshell, you can be left high and dry when it comes to knowing whether the deal is advantageous or not. The only sure way to get the benefit of professional real estate services is to sign a contract with a broker who agrees to act solely in your behalf.

EXAMPLE: Dual Agent. Tenant Dolores and landlord Andy are using broker George of Tri-County Commercial to put together a lease deal between them. George will be a dual agent. George knows exactly how much Dolores is willing pay for rent and how desperate she is for good space. He also knows how much Andy is willing to accept as rent and how long a lease he’d be willing to grant. Yet, as a neutral agent, George can’t use this information on behalf of either party. The best that George can do is to take Dolores’s proposed terms to Andy and perhaps offer Dolores a list of qualified inspectors and contractors for her to consult regarding the condition of the property and the cost of improvements. Those benefits are minimal as far as Dolores is concerned. She’s a novice in lease matters and really needs much more help to get a good deal. She wisely decides to hire a broker of her own. Meanwhile, Andy has decided to stay with George. If George is a broker with professional integrity, he will not share Dolores’s secrets with Andy even though he no longer works for her.

The Value of Hiring Your Own Broker
Now that you’re familiar with how brokers work, you may want to hire your own– one who owes a legal duty only to you. A broker who works exclusively for you has one main assignment-to get you a good deal-not to help the landlord quickly fill the space or get top dollar rent. Also, your broker will be free to point out problems with the property or the neighborhood it’s in. Beyond that, a good broker can help do the following:

Review your Rental Priorities Worksheet (explained in Chapter 1) and help focus your search. A professional who’s familiar with the market should have some idea whether you’ll he able to find the space of your dreams, If your list of `Essentials’ is totally unrealistic, it’s best to know now and do some rethinking.

Direct your search. Using your realistic Worksheet, your broker can help you hone in on the spaces most likely to meet your needs. Instead of looking at ten spaces, you might wind up just looking at three.

Investigate the details. A broker who knows what’s what and who’s who in the world of commercial leasing can help you line up qualified inspectors, contractors and space planners, as well as check on tax and utility bills if you’re going to sign a net lease. (Net leases are explained in Chapter 9.)

Analyze lease terms. An experienced broker can help you evaluate the financial consequences of the landlord’s lease terms, and can spot hidden charges that translate into higher rent.

Comparison shop. Assuming the broker knows the whole market, you can find out how the rent at one space you’re contemplating stacks up against other spaces th town. It will give you peace of mind to know that you’re not overpaying.

Learn the key lease terms. Before taking you on any field trips to see potential space, your broker can find out the key terms of the lease the landlord expects you to sign. The broker can compare these points with your Rental Priorities Worksheet. If there’s an absolute incompatibility–you must have a five-year lease but the landlord has already given a neigh- boring tenant an option on your space which may be exercised in three years-your broker can cross that property off the list and not waste your time.

Negotiate the lease. The broker who’s acting as your agent can help in lease negotiations-a terrific boon if, like most people, you don’t feel like you’re a natural born negotiator.

Are there any disadvantages to hiring your own broker? As explained below in Section F, if you pay your broker on com- mission, you might have to pay all or a portion of that commission. If your share of the commission is half of 3% of the rent over the life of your lease, you could be looking at a significant amount of money. Arid because the broker doesn’t usually earn any money until a lease is signed, she has an interest in closing a deal sooner rather than later. But here, at (east, you’ll find that market forces will put pressure on a broker ro put her client’s best interests first. A broker who develops a reputation for rushing a deal or not bargaining vigorously on her client’s behalf will soon Find herself without much business.

Remember, too, that even highly qualified brokers have limitations They won’t have the skills to provide you with sound advice on the physical condition of a building-for that, you need to hire an experienced and reputable building contractor to give you an opinion.

How to Find a Real Estate Broker

Finding your own broker isn’t all that different from finding a good doctor, lawyer or dentist. A hefty application of common sense, professional and personal connections and some independent research usually yields a good result. The same method works when looking for a broker.

As suggested in Section C, above, you’ll be best served if you work with a broker who represents tenants exclusively. A good starting point for your search is to find a broker who represents buyers-but not sellers-of real estate. These brokers may act as tenants’ agents in leasing transactions too; or they may he able to direct you to a kindred spirit who represents tenants only. Do your best to work with an established broker- one who has been in the business long enough to know how deals are done and how landlords and their brokers work. In addition, an experienced and successful broker will have the financial stability to enable her to firmly put your best~ interests at the front. Remember, in most situations a broker gets paid when deal is done, according to the size of the rent. A broker who isn’t hungry will be less tempted to rush negotiations or settle for a more expensive result when patience might produce something better for you.

Avoid a broker who does residential, not commercial, leasing. Someone who works primarily with houses condos and apartments is unlikely to know the ins and outs of the commercial market. Make sure the broker you choose is experienced in helping tenants find office, retail and other commercial space. While you shouldn’t use a residential specialist to find a business rental, the broker who helped you buy or sell your house may have suggestions for a commercial easing specialist.

Other commercial tenants in your community may he a fruitful source. Ask them if they have engaged a broker and whom they would recommend. Look for tenants who appear to be running a healthy business (chances are that their good business sense was at work when they chose a broker, too).

You can narrow your field of inquiry by approaching tenants whose businesses are similar to yours, especially if you’re in a large city where brokers may have divided the market into niches, with some specializing in office space, others concentrating on restaurants and food stores and others working mainly with light industry. For example, if you’re intending to open an 2r[ gallery, you’ll want to deal with a broker who’s familiar with the commercial space that is appropriate for a gallery. The owner of a currently operating gallery may have found just the broker.

In some cities, brokers may even concentrate on specific neighborhoods. If you want to locate in a particular area, to take advantage of adjoining businesses, traffic patterns or expected rents, it makes sense to took for brokers who have already done deals in the neighborhood.

Try to get recommendations from several tenants and businesspeople. You may find that the same name or names pop to the top of everyone’s list. These are the people to pursue, testing them by the criteria suggested in Section E1, below.

How to Choose a Broker
Questions to ask people who recommend a particular broker
Questions to ask the broker

After you have whittled down your list to two or three promising names you’re ready to do a bit more research before you choose a broker. You’ll want information both about the broker and from the broker.
Questions to Ask People Who Recommend a Particular Broker

Before singling out one or two brokers with whom you’d like to work, you’ll want to ask your contacts the following questions:

What is the broker’s reputation for honesty, experience, thoroughness and accessibility? The person who has recommended this broker may have the answer. If not, ask other real estate professionals you might know- the agent who sold you your house, for example, or your lender (mortgage lenders work with brokers all the time).
What were the broker’s weak points? In even the best working relationship there are normally a few bumps along the road. Find our what they were. If these problems are likely to upset you- for example, one prospect won’t return calls on Sundays or is al- ways late for appointments, which will drive you nuts- then it’s best to know now.
What were the broker’s strong points? There may be one aspect of the space-hunting game that is of paramount importance to you, and you’ll want to make sure that you find someone who can deliver, For example, if you need space for a specific need such as a gymnastics studio, you’d like a broker with imagination who can think creatively about adapting space to your highly special needs.
Would they use the same broker again? This question appears rather obvious, but in fact its very useful because you’ll typically get information that a specific question might not have elicited. For instance, you’ll often hear a response that starts “Well, yes, because what I really liked was …” The rest of the sentence often recounts a personal trait or professional skill, such as attention to detail or a negotiating savvy, this is important to you.

Questions to Ask the Broker

When you’re ready to speak with a few brokers who have been recommended by others, make an appointment with each one and come equipped with the following questions:

What is the broker’s experience with commercial needs like yours? Hopefully, you already know that the broker is familiar with the needs of businesses like yours. But if you’re not sure-or even if you think you have a specialist- it’s wise to confirm your conclusions. A good starting point is to show the broker your Rental Priorities Worksheet and see if he or she can help with your kinds of needs. Ask the broker for references from small businesses like yours.
What is the size of the real estate office? Sometimes you’ll have a choice between a broker in a large real estate office arid one in a smaller one. If you’re a small business owner with modest space needs, it’s possible to get lost in the shuffle if you go with a large firm that primarily deals with big tenants who need space of 10,000 square feet or more. The result may be that you’ll get stuck with a less- experienced broker.
What are the compensation practices of the broker’s office? Most brokers earn their money by straight commissions-they’re not salaried. (The various ways to pay your broker are explained in Section Fl, below.) This means that there can be tremendous pressure on them to close the deal and move on to the next one. Larger firms, however, may place some brokers on partial salary, reducing their dependence on commissions, which may lessen the pressure to finalize the lease as soon as possible. This translates into a more long-term approach to your space hunt. For example, a broker on salary might caution you to look further or to renew an existing lease instead of relocating.

Don’t be overly impressed by sales skills.
Remember that your broker has probably been a salesperson at some time or other (while working as a landlord’s broker, for instance). But when he or she works for you, sales skills are less important than hard work, patience and connections. And don’t let your assessment of the broker be driven by the brokers self-promotion–a specialized type of sales pitch.

Signing a Contract with Your Broker
Paying your broker
Exclusive and Non-Exclusive Arrangements
Avoiding conflicts of interest with your broker
Clarify the details in writing

If you’re satisfied that the skill level, experience, professional situation and personal style of a broker will suit you, it’s time to sign a written contract to cement the relationship. Doing so will protect you from misunderstandings that commonly arise in working relationships that are only based on a handshake with no written evidence of your agreement.

The broker may produce a pre-printed standard contract which they’ll ask you to sign. If so, proceed with caution. Just as there’s no such thing as a standard lease, there’s no such thing as a standard broker’s contract. It’s all negotiable. In this Section, we’ll look at some issues to consider when you and your broker put together a contract, such as:

how your broker will be paid

whether the broker has an “exclusive” or “non-exclusive” arrangement with you

how your broker will handle any conflicts of interest that may arise, and

the details of the legwork the broker will do for you.

Paying Your Broker

There are no hard-and-fast rules governing how you’ll pay your broker. Here are some common arrangements.

Commission. The broker earns a percent- age of the rent over the life of the lease, Most often, the landlord ends up paying the commission (we explain below how this happens). For example, if you’re leasing 2,000 square feet at $20 a square foot for three years, the total rent is $120,000 (2,000 x $20 x 3). A 3% commission would amount to $3,600. If your contract with your broker provides that she’ll be paid only on commission, she won’t earn anything unless you sign a lease. Sometimes a broker will ask for an advance against the hoped-for commission (called a retainer), which is deducted from the commission once it’s earned. If you don’t sign a lease, the broker must return the retainer.

Flat fee. You pay a fixed amount (such as $2,000) for the broker’s efforts in looking for space for you, regardless of her success at finding suitable space.

Fee based on success. You pay a fixed amount only if the broker’s efforts result in your signing a lease.

Hourly Fee. YOU pay by the hour for the broker’s time.

You and the broker aren’t limited to choosing only one payment method. For example, you might agree to pay an hourly fee that will be credited toward a success fee if you ultimately sign a lease.

Which arrangement is best suited for you? Naturally, you’d like energetic assistance with the minimum of expense-and this usually means choosing some variation on a commission arrangement. Even though you have contracted to pay your broker’s commission, many landlords will pick up that expense instead. Here is how it works:

The space was listed with a landlord’s broker. If you lease space that’s been listed, it’s customary for the landlord to split the commission he owes his broker with your broker.
The space was unlisted. If you lease space that was not listed with a broker, the landlord may still pay your broker’s commission- primarily to build up goodwill in the real estate community. But if the landlord isn’t so inclined, you’ll probably be the one to pay the broker. To protect yourself against having to pay an entire commission if the landlord balks, provide in your contract with the broker that he will instead accept a lesser, fixed fee from you.

Depending on the fee method you agree on, make sure your contract with your broker covers these additional points:

When is the payment due- in installments (if you pay by the hour) or when you’ve signed a lease? If the latter, how much time do you have to pay the fee? Naturally, the longer you have to pay the fee, the better, since you’ll be incurring moving and leasing expenses at a rapid rate.

Do you have to pick up the tab for the broker’s expenses, such as travel and advertising? Obviously, you’d prefer not to.

If you pay a retainer or an hourly rate, will you be entitled to a rebate if your broker receives a commission from the landlord? This understanding is fair, and you’ll want to push for it.

If you pay a retainer or an hourly rate, will it count toward any commission that you may have to pay? It should.

If the landlord pays a commission, will you still have to pay a success fee? You shouldn’t.

Exclusive and Non-Exclusive Arrangements

Your contract with your broker needs to re- solve more than the matter of who pays the broker for her services. The two of you must decide whether the broker has an exclusive relationship with you or a non- exclusive one.

Exclusive. The broker earns a fee whether you sign a lease through the efforts of the broker, or through anyone else or even on your own.
EXAMPLE: Tenant Tom signs an exclusive contract with broker Bob. Tom finds space through a newspaper ad and signs a lease. He owes a fee to Bob.

Non-exclusive. You owe the broker a fee only if you sign a lease through the efforts of the broker. The broker does not earn a fee if you find space on your own.
EXAMPLE: Tenant Tom signs a non- exclusive contract with broker Bob, Tom finds space through a sign in a window. He does not owe a fee to Bob.

Most brokers will prefer, naturally enough, to have an exclusive relationship with you. It will commit you to seriously using their expertise and contacts, since you’ll have to pay them when you lease any space. Working under a non-exclusive arrangement exposes the broker to the disappointing possibility that she will work long and hard for you only to have you secure space on your own. From your prospective, however, you wont want to sign an exclusive contract unless you have high confidence in the brokers ability to deliver a rental, since there’s no incentive for you to seek space on your own.

If you are interested in renting space in a particular building or shopping center, you and the broker can agree that you’ll owe the broker a fee only if she succeeds in delivering space in the property specified in the contract. This arrangement will work welt for you if you’d like to be able to do some space-finding on your own, but want an advocate when it comes to certain properties. For example, there may be one or two large, sophisticated landlords who have properties that might suit your needs. You’ve wisely concluded that you’d like the assistance of a broker when dealing with these owners. On the other hand, you figure you could handle less daunting owners yourself. A contract that limits your broker to pursuing space in the powerhouse properties frees you to pursue other deals on your own.

EXAMPLE: Tenant Tom signs a specific space contract with broker Bob to secure space in either the regional Riverside Mall or the equally large Country Time Plaza. Tom winds up leasing space from a single-rental land- lord on a city Street downtown. He does not owe a fee to Bob.
Avoiding Conflicts of Interest With Your Broker

Although your broker is duty-bound to find you the best space at the best terms, you cant ignore the fact that she or others in her office will represent other tenants along the way-some, perhaps, with space needs similar to yours. And unless she’s a tenant’s broker exclusively, she and her associates may have landlord clients, too- including some who might have space that you will want to see, In either situation, the broker may find herself representing two competing parties (two tenant-clients or one tenant-client and one landlord-client). Or, she’ll realize she’s representing one party (you) while her associate at the next desk is representing the other (the landlord). Your contract with the broker is the place to address these potential conflicts.

Conflicts With Other Tenant-Clients

It’s common for experienced real estate brokers to specialize in certain types of space or neighborhoods; that degree of specialization is generally a plus for you. However, the narrower the broker’s field, the more likely it will be that he will have more than one client who is looking for similar space. Who gets to see the property first? And if both clients are interested whose interests does the broker push?

For instance, let’s say that you’re looking for space for a restaurant and the broker has another tenant-client who’s looking for similar space. What happens if a terrific restaurant space becomes available? There are two common solutions:

The broker bows out. You can specify in the contract that the broker wont represent either one of you but will find other qualified brokers for each of you.

The eager client prevails. A second solution is to say that the broker will represent the first client who expresses serious interest in the space.

Conflicts With Landlord-Clients

If your broker, or anyone in her office, also handles listings for landlords, it’s possible that you’ll become interested in the property owned by the broker’s landlord-client. Your broker cannot effectively represent both of you, since your interests are clearly adverse. Nor can she negotiate against a member of her own office. How should your contract deal with this dilemma? There are two solutions, explained below.

Exclude that particular space. You can specify that space listed by the broker’s office is excluded from the range of proper- ties your broker will show you. This will mean that you won’t be able to ask your broker to show you these properties or represent you in negotiations with the land- lord. But if you really want to pursue a space listed by your broker’s office, you will need the right to terminate the contract so that you can engage another broker. If this is the route you want, be sure that your contract with the broker specifies that you have an option to terminate in this situation if it arises.

Ask the broker to act as a dual agent. The other solution is to ask the broker to act as a dual agent (dual agents are brokers who assume a neutral position in space hunting and lease negotiations, as explained above in Section 84). Here, if the broker’s relation- ship with a landlord-client pre-dates yours, you’ll need the landlord-client’s consent for the broker to work as a dual agent. A land- lord may be willing to give up the benefit of an advocate in exchange for a tepid go- between if he sees you as a desirable tenant who is seriously interested in the space. Conversely, if a landlord approaches your broker (or someone in her office) after you have signed a contract with the broker, the landlord will need your consent before your broker can be transformed from your advocate into a dual broker.

You can probably see already that neither of the above solutions is very satisfactory. You won’t he happy narrowing your range of possibilities if you have to exclude appropriate space. If you terminate your contract and engage a new broker, you’ll find yourself negotiating against someone (your ex~ who may have a lot of important information about you-your needs, financial situation and bargaining intentions And the alternative-reducing your broker to the status of a dual agent-leaves you without a strong advocate. One way to avoid these complications is to look for and hire a broker who works only for tenants, as emphasized several times above.

A trial marriage can mean an easy divorce. See if the broker will agree in the contract that either of you can cancel the contract during the first 15 or 30 days. This will give both of you chance to see if the relationship is working-if it isn’t, you can end it easily. Try to include language entitling you to a refund of any fees you pay up front, except for costs actually incurred by the – broker, such as those for advertising.
Clarify the Details in Writing

Your broker may be willing to perform more services than just showing you space and helping to negotiate a lease. You can expect extra services if you’re hiring the broker yourself as explained in Section C, above, Even if you are not paying the broker directly, you may be able to arrange for some additional services. For example, the broker may be willing to get traffic flow data, utility bill information or zoning details, Brokers can also arrange for inspections and line up contractors to finish, or build out,” the space. And your broker may promise to show you a minimum number of properties within a specified time, or canvass a specific geographic area. If you and your broker come to understandings like these, don’t just rely on the broker’s oral promise. Be sure to list these duties in the contract you sign with the broker.

Handling Problems with Your Broker

Signs of trouble
Resolving problems
Firing your broker

If you’re careful when choosing a broker and spelling out your agreement in a con- tract, you’ll reduce the chances of disputes later- but there’s no guarantee that all will be smooth sailing. The secret, of course, is spotting problems early. This Section lists some common signs of trouble and possible solutions.
Signs of Trouble

If you encounter any of the following difficulties, you know that you need to take action:

Are your questions being answered? If important issues are addressed poorly -or not at all–watch out. In his eagerness to close the deal, your broker may be afraid that candor will get in the way. For example, if the broker blows off questions about environmental hazards on or near the property, or if you can’t get a straight response to your query regarding the anticipated jump in the landlord’s property taxes (you’ll probably end up paying for some of it), get pushy.

Are there available rentals that the broker is not showing you? A broker who steers you toward certain properties (such as those listed with his office or that promise a higher com~ mission) and away from others may have hidden motives for doing so. It’s appropriate to be suspicious. Your broker is supposed to be showing you space that’s most suitable for your needs, no matter where it is.

Are you being rushed? Anxious to dose the deal and earn the commission, a broker may minimize or gloss over problems with a space or a deal or fail to disclose key information. For instance, you may not be told that the anchor tenant in the shopping center you’re considering is about to move out. if you’re the last to learn about important details like this, be advised: You aren’t getting the full, undivided attention of your broker.

Is the broker disclosing key information about you? Your broker may not share important information about you- such as your need to move immediately or your key negotiating points -with the landlord or the landlord’s broker. True, this information may speed up the bargaining, but it may also make it harder for you to strike the best possible deal, If you learn that your secrets are being shared, it may he due to the broker’s eagerness to close a deal- any deal- irrespective of what’s best for you.

Resolving Problems

If you’ve kept the lines of communication open with your broker, a face-to-face airing of your grievances may suffice to get things hack on the right track. Sometimes, however, depending on the nature of the problem, you need to consider more drastic action, such as:

Complaining to the broker’s boss, if there is one. To preserve goodwill, the boss may either take steps to correct the problem or agree to terminate the brokerage contract.

Filing a grievance with the local real estate board-or even with the state licensing authorities. A broker may quickly make peace with you rather than face an embarrassing disciplinary hearing.

Agreeing with the broker to arbitrate or mediate your dispute. The local real estate board may have a procedure in place to handle disagreements.

Contact the state agency that regulates real estate brokers for information on real estate laws and regulations and complaint procedures. Many state agencies have websites. Find yours by looking at your state’s home page for the real estate department or commission. To get started, see U.S. State Resources on Findlaw at

Firing Your Broker

If communications have totally stalled or broken down, or your best efforts to improve your brokers performance yield no results, it may he time to end the relationship, as explained below.

There are two common legal grounds for firing a broker. If you can prove them, you’re unlikely to be second-guessed by a judge or mediator should your ex-broker file a legal action against you. They are:

Breach of contract. Your written contract should state what your brokers duties are. For example, your contract may say that the broker will show you at least four appropriate spaces within 45 days. If the broker is a slacker and shows you only one space, that’s a breach of contract and you probably have the legal right to end the contract.

Breach of fiduciary duty. Even if your contract doesn’t specifically say so, you have 4 right to your broker’s undivided loyalty. For example, your broker can’t disclose to the landlord or other brokers that you’re under extreme pressure to move into new space within 60 days and are prepared to pay top dollar to meet that deadline. Leaking this information without your permission can, of course, undermine your bargaining position-and it’s a serious breach of your brokers fiduciary duty. This usually would give you the legal right to fire the broker.

Seek legal advice before you fire your broker. Firing a broker when you don’t have a valid legal reason to do so can have serious consequences. For example, if you dismissed your broker improperly but go onto sign a lease on your own or with another broker, you may be liable for the first broker’s commission or you may owe other fees under your contract. Since analyzing your ability to fire your broker without repercussions can be daunting, your best bet is to seek advice from an experienced real estate lawyer. A precipitous or unwise decision could come back to haunt you in the form of legal hassles and commission expenses.