SmithREServices - Sacramento Commercial Real Estate & Investors Guide

01.27.2007

Bonding It takes a considerable amount of work to get a client. Once we get one, we want to keep them. In fact, many agents appear to believe they have “ownership rights” to a client that they have worked with in the past.

At the very first meeting between agent and prospect there is a “sizing up” period. Once the prospect selects the agent, that prospect becomes a client to that agent. Over the course of a transaction, a trust on the part of the client is often formed. That trust often extends beyond the initial transaction. How careful is that agent with that trust?

We have only to look at the definition of fiduciary, which is “held or holding in trust”. If you are in San Diego and you have a client who asks you to list their property in Sacramento, you have the license to do it. Yes, it is outside of the area in which you have knowledge. But, the business is a little slow and you really want to help your client, (and earn a fee) so you agree. Are you keeping your fiduciary responsibility to your client?

Our job as real estate agents and brokers is to represent our CLIENTS best interests, in fact, before our own. If the agent has little or no knowledge of the area of the property, how effective will they be with this task?

When an agent elects to take that listing, the fiduciary responsibility of that agent would appear to be secondary to their need for a commission. Meanwhile the client believes their trust is wisely placed.

I use the example of a geographic distance as it is very easy to see. However this type of breach occurs all the time when a residential agent agrees to represent a client in a transaction for a commercial property. Commercial and residential real estate are worlds apart. To use our fiduciary responsibility toward our clients means putting their interests ahead of our need for a commission.

How do we bridge this breach while taking care of our valued clients? Here are a few suggestions:

1. Create relationships with a trusted commercial real estate agent/broker in your area, before you have a client to refer. You need time to build up trust with them before you are willing to “hand over” a trusted client.

2. On any referral you give to a commercial agent, get the commission agreement you have with them in writing BEFORE you give them the client information.

3. Learn about commercial real estate so that you more fully understand why a referral is often in the best interest of your client. Take our Intro to Commercial Real Estate course to learn more about our industry.

For additional information about commercial real estate, read my post on 10 Things. When you have buyers or sellers of commercial or investment real estate in the Sacramento, CA area, please contact me. I look forward to bringing our “customer-centric” approach to your clients.