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The Difference Between Commercial Sales and Leasing Agents

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An agent will decide early in his career whether to be a sales or commercial leasing agent. While both types of specialists work hard to secure favorable transaction terms for their clients, there are clear differences between selling a 150,000-square-foot office building and securing a tenant to rent 10,000 of those square feet for 10 years.

Both specializations can be lucrative depending on your ambitions and work style. Remember, too, that there are opportunities beyond owner and landlord representation. Many agents specialize in buyers and tenants. Some even represent buyers and sellers or tenants and landlords, though this can create sources of conflict.

What a Seller’s Agent Does
A disposition specialist secures the highest purchase price for a client. He does this by capitalizing on a building’s strengths, such as a prime location, high-end fixtures and recent renovations, and negotiating on any weaknesses, such as problems with the heating, ventilation or plumbing systems.
A seller’s agent must know his client’s lowest acceptable offer, and how to negotiate so that the discussion never gets to that number. You can make the negotiation process easier by providing the seller with as much information as possible about similar properties on the market, trends in acquisitions and the latest news on the lending market.

What a Buyer’s Agent Does
An acquisition specialist works with the same individuals, companies and institutional investors as a sales agent, but he helps them secure space based on their needs, specifications and budget. It’s essential to understand a client’s priorities as a building owner, landlord and possible resident. Listening to your client and reviewing his business plans, real estate portfolio and any documents related to past lesser-lessee relationships can help you find the right building for his needs.
Some clients also have building or structural requirements. These may include anything from seismic retrofitting to flexible office space, or even green-building features like solar roofing or HVAC (heating, ventilation and air-conditioning) systems that reduce utility bills and save energy. Knowing what’s on the market and how much these features and amenities cost can give your client a realistic understanding of what he can get for his money.

How Sales Agents Get Paid
When one agent works with another agent to bring a seller and buyer to the table, the two agents typically split the 4% to 6% commission because both had a hand in closing the deal. Both agents are paid after escrow closes, and most must split their share of the commission with whichever broker they hang their license under.

What a Leasing (or Owner’s) Agent Does
Agents who represent landlords still represent building owners, except these owners aren’t looking to sell their space, they simply want to rent it out. Most leasing agents are on retainer with the landlord for either one property or an entire portfolio, and are called to action when vacancies arise.
In many ways, a leasing agent’s job requires significantly more legwork than a sales agent, as leases become broken, expired and signed frequently. A successful leasing agent always knows which companies are in the market for new space, which leases are expiring soon, and which buildings offer comparable space for more or less money.
The leasing market can be extremely competitive, and tenants can quickly be lured into a long-term lease with easily won concessions. Agents should know what concessions his client is willing to make to sign a lease. Common concessions include free rent, extra parking spaces, a state-of-the-art security system or a build-out in which the lessee’s space is customized for its needs. An extensive knowledge of ongoing occupancy trends and aggressive marketing tactics will benefit you in this field, especially in a tenant’s market where vacancy rates are high.

What a Tenant’s Agent Does
Tenant representatives secure long-term space for entrepreneurs and businesses big and small. Like a buyer’s agent, a tenant representative must appreciate how much space the tenant needs. You have to also examine how crucial location, parking, pedestrian traffic flow, and the potential for expansion or downsizing are to a client.
Leasing terms, such as the rental rate, leasing period and penalties for ending the lease early must also be discussed, which may involve lawyers and accountants. It is also the agent’s job to fight for the tenant’s needs – both the current needs and perceived needs down the road when the lease is still in effect. You should also keep in touch with your client between the time they sign the lease and occupy the space. This is done to ensure that the client is able to move into the space they were promised, in the condition promised, on the day it was promised, per the lease agreement.

How Leasing Agents Get Paid
The landlord’s representative usually receives one-half of his commission when the lease is signed and the other half when the tenant moves in. Commissions are normally 4% to 6% of the lease’s overall value, which is based on the space’s square footage and the duration of the lease.
Naturally, larger spaces leased for longer terms earn higher commissions, but they can require extensive work by the agent. If a buyer’s representative participates in the leasing negotiations he typically receives one-half of the commission, though he may receive a higher share in a tenant’s market.

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