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Author: Ken Silberling This post originally appeared on Ken’s Trends and is republished with permission. Find out how to blog with us on theBrokerList.

One of the most controversial issues in tenant representation is conflict of interest. It is ok to represent both landlords and tenants in the same market and even on the same transaction? I have faced that question and I believe you can. Still, many brokers exclusively represent landlords while others work only with tenants. There are brokerages like CRESA, Savills and Mohr Partners that are tenant-only or “occupier-centric” houses and they promote themselves on the premise of no conflicts.

Occupier-Centric Brokerages

I spent 13 years of my career as an in-house leasing and acquisitions agent for a regional investor/developer. I later spent two years with an online commercial marketplace exclusively representing tenants. In my current position, I am doing about 2/3 tenant and 1/3 landlord representation. I am comfortable working either side of a transaction and by understanding the needs of both sides, I believe I am more effective in whichever role I play.

I don’t deny that a conflict exists, but as long as it is disclosed to landlord and the tenant, it will generally not stand in the way of a fair transaction. It is a matter of transparency and it is also a matter of integrity. Whether you are the landlord or the tenant, it is a question of whether you trust your broker. In my 30+ years in the market, I have worked with hundreds of brokers. Most of us who have been in the industry for a long time are here for a reason. We are professionals, we generally value our long-term relationships with both landlords and tenants and we will not take any shortcuts for short term gain that can damage our reputation over the long haul.

One additional key point – whether your broker represents the tenant or landlord side of a transaction, it is industry practice for brokers on both sides to be paid by the landlord. So even when you hire a tenant-only broker, there is an inherent conflict of interest. Even though they represent the tenant, their check is coming from the landlord.

Win-Win negotiation – create a larger pie

I am not recommending against hiring a tenant-only broker. There are many excellent brokers exclusively representing occupiers and the same is true on the landlord side. In my case, I have worked both sides and I understand the needs of both landlords and tenants. I work to represent the interest of my client while developing win-win solutions that benefit both sides. It is often not a matter of splitting up the pie, it’s a matter of creating a larger pie.

 

So when selecting a tenant representation broker, my advice is to be less concerned with whether my broker is “tenant only” and more on the broker’s overall reputation and experience. It’s not necessarily a matter of who your broker represents, it’s a matter of integrity, market knowledge, and the ability to identify and resolve problems. I understand there are strong opinions on both sides of this issue and I welcome your comments.