Having exclusive listings to sell and lease commercial properties was not always the norm for commercial agents. Fortunately for me during my career, I worked in the industrial sector of Downtown Los Angeles, an area dominated by the AIR Commercial Real Estate Association (formerly known as the American Industrial Real Estate Association). This commercial real estate trade Association, which I became President of in 1994, is unlike any other commercial real estate Association in the United States, and maybe even in the world.
We've had state-of-the-art forms and addenda for every kind of commercial real estate transaction now for decades. We created, which was to our knowledge, the first ever DOS-based commercial real estate multiple listing service in existence. And when Windows was released, we created again to our knowledge the first ever Windows-based commercial real estate MLS. Back then Windows was so new that our only real option was to have Microsoft themselves write the MLS program for us, and they told us that no other real estate organization, residential or commercial, had ever created a Windows-based MLS at that time.
My, how so much has changed since then!
In talking with the commercial brokers who had been in the industry long before I began, including highly respected industry veteran and acclaimed "Master of Industrial Brokerage" (MIB) Al Rose, it was interesting to learn what life was like as a commercial broker before the AIR created its original industrial property MLS back in the 1960s.
"Exclusive listings were rare," Al told me. "What you would see is industrial buildings with sometimes 6-8 brokerage company signs on them, indicating that the buildings were available. And brokers would try to get from the owners what was then called 'exclusive sign rights,' meaning that the property was still not listed, but your company now was the only company authorized to have it's sign on it. But this all changed once the multiple listing service came along and became the norm."
And changed in a big way, too. This is because building owners wanted the exposure that the MLS offered their buildings, but in order to get their buildings in the MLS they had to sign an exclusive listing agreement with one brokerage company. So in a very short period of time, signing an exclusive listing went from being something undesirable in the minds of many owners, to something very desirable for them indeed.
But here we are now decades later, and exclusive representation for buyers and tenants has still not become the norm in our industry. The most successful brokers in the business are very good at getting prospective buyers and lessees to work with them exclusively, but there are a lot of commercial brokers out there running around with companies on a nonexclusive basis. The problem here is there is so much time being wasted by many commercial brokers in their businesses because of this.
Think about it for a moment.
If four agents are working for four different brokerage companies, each one trying to locate a 50,000 square-foot building for a particular company to buy, in the end three of the four agents will have completely wasted all their time and energy. This represents a huge amount of agent-hours continually being wasted every year for agents who continue to work this way. And maximizing the amount of money an agent makes for every hour they work will completely determine the amount of money that agent makes throughout the year.
So what's the answer for solving this dilemma? Well, here are a couple of suggestions:
- Agents must be trained better on how much time they're wasting out of their productive lives by working with prospects on a non-exclusive basis. And they also need to be trained better on how to make great presentations that have prospects say, "Yes" to them whenever they ask for an exclusive representation agreement.
- In learning from what I've written above about how much the introduction of the MLS transformed the industrial real estate brokerage business in L.A. in the 1960s, and how much owners began wanting to list their properties exclusively because of this, perhaps now is the time to offer the same kind of exposure for exclusive representation of prospective tenants and buyers in the MLS, too.
Let's face it, most transactions are done with one broker representing the owner, while another broker normally represents the buyer or lessee. What about creating a MLS feature that gives the same kind of exposure currently given to exclusive building listings, to exclusive agreements signed between agents and prospective buyers and lessees?
If this is done correctly and marketed with the right approach, it could be a genuine incentive for companies to sign more exclusive representation agreements. And agents who know of properties that may fit the potential buyer's or lessee's requirements as posted in the MLS, can contact the agent representing the company directly. You just never know when an agent may know of a property you don't that could fit perfectly for the client you're running with.
And if we can make exclusive representation the norm when representing buyers and lessees, imagine how many wasted hours we'll be saving within the industry that can now be directed towards activities that agents will actually get paid on! And in the process, the brokerage companies will make more money, too.
In all honestly, there are far too many hours being wasted in our industry by agents working with buyers and lessees on a nonexclusive basis. As I mentioned earlier, only one agent will get paid in all of these situations, while the other agents working with these prospects will waste hours, days, and weeks of their time.
It's time we finally did something about this so agents spend more of their time working productively, instead of hoping they'll reach the finish line running with their prospects before their competition does.
