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.