Is it typical to have a potential client sign a commission agreement prior to showing them a property?

I have a potential client that I am showing some lease space to. I am concerned that the owner of the property will try and keep the lease terms short with options additonal options in order to cut down on the commission paid. How do I handle this problem? Do I need to have my client sign a form that they will be responsible for commissions not paid or should I not even show my client the property till I get this hammered out?
In Leasing Property - Asked by Commercial P. - Apr 29, 2012
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Answer(s)

Alex B.
Broker/Agent
Miami, FL

I prefer to air out all commission issues from the start with my potential client. If he/she is not willing to sign a Buyer's Broker Agreement or brokerage fee agreement from the start, after a clear explanation that there will be some properties where the brokerage fees may not be sufficient to pay for my service, I prefer not to work with them. If you explain that not signing the agreement will limit the number of potential properties they could see with you and they still refuse to show their commitment, why would you invest your time on them? You must get your clients written commitment to you (loyalty) to insure them that you will devote your time to find what they need and that they will remain loyal to you during the time it takes to find a suitable property, despite of the different commission structures that are offered by the different listing companies.

Apr 30, 2012
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Alla S.
Broker/Agent
Monticello, NY

Protect yourself by signing with your client exclusive agreement, then you will be protected.

Apr 30, 2012
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Leasing C.
Property/Asset Manager
Venice, CA

Why don't you ask the owner if he/she is paying a commission, and clarify terms Before you notify your client? Or you can ask the owner to sign a one-party exclusive in the event that your client is the successful applicant.

Apr 30, 2012
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Rafael M R.
Owner/Investor
Miami, FL

Never show a property if Don't have an agriment support weith the owner.

Apr 30, 2012
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Horace B.
Broker/Agent
Brooklyn, NY

I say yes, right after you let him sign the disclosure form.

May 1, 2012
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Joshua L.
Broker/Agent
Mokena, IL

I represent the owner on space for lease property and have seen it done a few different ways from the potential tenants realtor, but agree with Leasing C. that you should find out if the owner will be paying a commission, then clarify the terms before showing the space. After that, you can show the space and get something in writing before you present an offer if your client likes what they have. Also, an exclusive agreement is good to have, to cover you in case you run into that potential tenant that hops from realtor to realtor and doesn't respect your time. Typically, it is easier to get this signed when the potential tenant knows that they will not be paying the commission and that the owner will be.

May 1, 2012
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joe d.
Broker/Agent
Mason, OH

I don't like the idea of not showing your client properties where you will have a commission issue. This seems dishonest and not in your client's best interest. In my opinion, the better way to handle this is to discuss your compensation with your client in the beginning of your relationship. Indicate that in most situations the landlord will pay for this, and as the tenant they can insist that they do as part of their offer. If you wind up in a situation where a landlord refuses to do so, they would be responsible. After they agree to this in writing, you can indicate this to the potential landlord. If the landlord still refuses, then you can let the client know they will be responsible for the commission on this transaction if they choose that location because the landlord will not pay it. They can then choose if it is worth it to go after this location or not. If your client refuses to protect your compensation for your time, knowledge and expertise, then maybe you you'd do better not to work with them.

May 1, 2012
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Chris R.
Broker/Agent
Denton, TX

You should enter into a tenant rep agreement with your prospective client and then certainly seek compensation from the landlord where possible. It is a wise practice to have an understanding of compensation from the landlord (or through the landlord's agent) so you will know that you will be able to be paid for negotiating a deal.

May 3, 2012
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Jessica M G.
Broker/Agent
Bethel, CT

In Connecticut you are required by law to have an agency agreement to show properties that your broker does not have listed. Also, without an agency agreement, you do not have a client, you have a customer, therefore,if you do not have the listing, the Lessor is not legally obligated to pay you. You are working without protection,.and in Ct.,illegally. Never reveal a lead to anyone without having an exclusive agency in place.

May 8, 2012
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Jessica M G.
Broker/Agent
Bethel, CT

In Connecticut you are required by law to have an agency agreement to show properties that your broker does not have listed. Also, without an agency agreement, you do not have a client, you have a customer, therefore,if you do not have the listing, the Lessor is not legally obligated to pay you. You are working without protection,.and in Ct.,illegally. Never reveal a lead to anyone without having an exclusive agency in place.

May 8, 2012
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