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6 Essential Players In A Commercial Real Estate Investment

ethical behavior in the commercial real estate investment

In 47 years of dealing with tenants, other commercial real estate brokers, attorneys, CPA’s, sellers and buyers, many (not all) have one thing in common: worry more about your own pocketbook instead of treating the other participants in the transaction properly, respectfully and honorably.

Let’s break down the groups and see what can happen in a commercial real estate investment.

Tenants after signing a lease need to abide by the rules of the lease and not complain or use excuses to not pay the landlord rent.

When leaving the premises, not use the security deposit as rent (prohibited) and leave the unit in a mess. Not paying rent on time, complaining the landlord did not act promptly enough providing some service as the excuse. Making noise breaking rules expecting everyone else to tolerate your rude behavior.

Landlord responsibility, to provide a nice clean functional unit for tenants with proper services if something goes wrong. Not becoming a slum landlord out to collect rent without providing the proper conditions for the tenant.

Correct disturbances in your commercial real estate investment and make sure the conditions like a roof, HVAC, plumbing and electric are working and in good repair. Treating your tenants with respect and dignity while collecting their rent and not overcharging for their units. Simply live up to the lease and be glad you have the tenants.

Sellers, when hiring a professional real estate broker to represent you in a commercial real estate investment process or 1031 trade, don’t try to cut their fees after providing you a great service whether a buyer, a tenant, a 1031 trade replacement property or simply professional advice through hard work and effort. The buyer negotiates the best price for themselves and supplies the seller through the real estate broker the offer.

commercial real estate investment offer

If the seller decides to take the offer don’t try to take advantage of the real estate broker who brought the offer and ask them to take less of a commission, for your offer was less than the asking price after willing to accept. Don’t try to go around brokers with buyers after they were introduced to you through the broker in the first place.

Purchasers that are presented in commercial real estate investments through a broker that has a relationship with a seller, should never try to negotiate directly with the seller without the broker either knowing or participating in a fee, paid either paid by the buyer or seller if a deal is consummated.

Purchasers are entitled to make whatever offer they want and sellers accept what they want but eliminating the party that introduced them is an unethical and improper method of operating and cannot be tolerated.

Attorneys that deal in commercial real estate investment should stick to their own job not get involved in values, pricing and deal-making between the buyer, the seller, and their broker.

The contract or the lease along with due diligence of title, survey, and closing papers is their role not interfering with price negotiation and who the buyer and seller want to represent them in other commercial real estate investments.

Using stalling techniques to rack up extra wasteful legal hours and overcomplicated contracts filled with unnecessary provisions for a straightforward lease or sale is not proper or ethical.

 deal makers in commercial real estate investment

Real estate lawyers should be positive deal makers, not deal breakers

CPA’s again need to stick to tax ramifications, like capital gains, 1031 issues and negative or positive tax issues that can help or hurt an investor or seller when completing the real estate transaction. They need to stay out of the other professional roles and not tell the client, who to use or what to pay since most have no clue of the current market value of the sale.

The bottom line is that all pros and participants have a role to play in commercial real estate investments and the leading one needs to be satisfied with a proper fee and not be greedy and not unethical to your fellow participant, trying to shortchange them or demean them to better your own bottom line.

Remember this is one deal that can lead to many more or lead yourself down a path of poor reputation and fewer deals completed in the end, the choice is yours.

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Tags: 1031 trade, commercial real estate, commercial real estate transaction, professional real estate broker, real estate brokers, Real estate lawyers