You probably never thought of having your own agent. It sounds like an extra expense, and you’re going to need all your money to get started in your new location. You know how do read. What benefit would you get from them anyway? Don’t they just work for the landlords? What could they do that you can’t? Doesn’t that just complicate things?
The most important thing you can do is to hire a commercial real estate agent to help you find and negotiate the lease for your business. This is your lawyer telling you to use them, not a real estate agent trying to get your business. Ask around, and you’ll find out.
Nobody works for free, including your real estate agent. However, you don’t pay them because your future landlord does, indirectly. Your future landlord pays a commission to his own leasing agent, who splits that commission with your agent. That’s why it’s free to you. Now that the cost thing is out of the way, here are five major reasons WHY you should hire your own agent.
The Search : For finding available space for lease, you can’t beat it. On your own, you may hear about spaces opening up. Driving around , you may see some signs. However, your agent specializes in knowing what’s available, and knowing the neighborhood. They have their computer links to subscriber-only multiple listing services that show everything for lease and permit immediate comparison of size, price, features, and location. You’re on the Net, and probably do comparison shopping in the same way. They have been doing it for a decade. Most choices = better choices.
What You Don’t Know: Your own agent will find you the best space and conditions for your business. He or she will show you more than what they have at their firm. They know what would affect your business in a given location, which you could have overlooked. For example:
a. They know the problem buildings and some of the problem landlords to avoid.
b. The place might have structural defects, a bad layout, or be subject to flooding.
c. The building might not have been built to Code, causing delays and/or expenses.
d. The premises may need asbestos removal, or handicapped access bathrooms.
e. There may be a lot of crime in that neighborhood, or a deterrent police presence.
f. There may be a type of business nearby that would bother you or your customers.
g. There may be a new development coming that is compatible with yours, or not so.
h. Another competitor may be planning to move nearby, thereby dividing your local market.
i. The location may have repeatedly been proven bad for your type of business.
j. The local city government may be targeting your business for special restrictions.
k. The zoning may prohibit your type of business. [When would you have learned that?!]
l. The locality may have sign ordinances, curfews, or noise restrictions affecting business.
Obviously, these things could drastically affect your success at the given location. The list is by no means exhaustive. How would you ever have known of them, until it was too late? Your agent knows these things (or can find out) and will tell you about them. Your agent is loyal to you.
If the landlord is aware of the presence of “toxic mold”, new Health and Safety Code 26141 requires the landlord to tell prospective tenants about it [as well as existing tenants], and give new tenants a booklet about it [H&S Section 26148] when that booklet gets published by the State. It is a factor to consider with tenant improvements and readiness of the unit, particularly in moist areas of the State. Toxic mold can cause serious lung infections and is no joke, despite the hoaky name.
Signing the Lease
This is it
Unlike residential tenants, who have special protections under the law to repair and deduct or withhold rent, or move out mid-lease, commercial tenants have essentially only what their contract provides. If it’s not there, you can’t do it. This is it.
The success of your entire business depends on your business premises. You may be betting your whole life savings and the welfare of your family on what the lease says. After a problem arises, it’s too late to renegotiate a better term: you are stuck. You could be driven into bankruptcy just because of your lease terms.
Most of our commercial tenant clients did not take reading the lease seriously. They assumed that it permitted what they had in mind, and that if a problem arose, the landlord would handle it in a reasonable fashion. It didn’t happen that way. Now, they have to hire a attorney to help undo the mess. Learn from them. Avoid the problems.
The terms of the lease are another important reason for having your own real estate agent. Just like problems with the building or location, your own agent will tell you whether the price, terms, conditions, or special clauses are dangerous, disadvantageous, standard, or outrageous. You would have no way of knowing, because this decision requires specialized knowledge. Your lawyer would have no such information, although many people want a lawyer to look over a potential lease. Lawyers could only evaluate whether the terms are enforceable or inconsistent with each other or with your goals.
“Key money”, the common term for a lump sum you must pay up front just to get the lease, is now required to be specified in the lease, itself. [Civil Code 1950.8] The amount is not limited if the contract includes it, but if the lease does not specify it, the charge is void and illegal, and the tenant is entitled to sue the landlord for 3 times the amount!