Eight Reasons Why a Tenant Should NEVER Sign an Exclusive Brokerage Agreement!

Eight Reasons Why a Tenant Should Never Sign an Exclusive Brokerage Agreement!

1. There are no benefits to the tenant to signing an exclusive agreement;

2. Exclusives only benefit the broker/brokerage firm.  Real estate firms like exclusive agreements so that the firm can “lock up” the customer and “book” the assignment as recognizable revenue and include it in annual projections;

3. Exclusives require the expense of legal review.  No matter how short the document, an exclusive agreement is a legal contract.  Accordingly, it will be drafted and negotiated by attorneys and will require the expense of an attorney;

4. Exclusives require the time of legal review.  Legal review time can set a business owner’s relocation timeline back by 30-60 days and cause the business to lose “speed to market” and miss space opportunities during that timeframe;

5. Exclusives require written notice to terminate;

6. Termination of an exclusive is never immediate.  Most exclusives have language requiring a notice period to end the agreement.  As with exclusivity itself, a notice period to terminate only benefits one party (the broker).  Why does a broker need thirty days to cease working on behalf of a client?;

7. Termination of an exclusive creates incentives to pursue brokerage claims and/or litigation.  Most brokers use the termination notice period to bolster their cases for commission claims on properties presented before or during the termination period;

8. Exclusives encourage broker complacency.  If a space search has specific challenges or takes longer than expected, many brokers lose their focus and/or motivation to keep working on the tenant’s behalf.