| Frequently Asked Questions
What
is Tenant Representation? What is Buyer Agency?
Tenant Representation and Buyer Agency are interchangeable terms. They
refer to an arrangement in which a real estate agent works on behalf of
the tenant or buyer to find a property to lease or buy. [TOP]
I
have had agents show me around before. Isn't that the same thing?
No. If a real estate agent doesn't have a written agreement to act as
your representative, then he or she is working on behalf of the landlord
or owner. This means that his or her legal obligation is to get the best
deal for the landlord or owner, not you, the tenant or buyer. Whenever
you work with a real estate agent he or she is required to give you an
Agency Disclosure
Form that shows who the agent is representing. [TOP]
Why
do I need a written agreement?
Wisconsin law states that without any other agreement, real estate agents
work for the landlord or owner. The only way to change this relationship
is by using a state-approved form called a
Tenant
Representation Agreement (or Buyer Agency Agreement). With this form
a tenant or buyer establishes that a real estate agent is working on his
or her behalf, not for the landlord or owner. [TOP]
Why
would I want a tenant representative? Can't anyone show me properties?
While any real estate agent can show you properties, without a tenant
representative relationship the agent cannot offer advice, do comparative
analysis, make recommendations, or negotiate on your behalf since his
or her obligation is to the landlord or owner. By using a tenant representative,
you are assuring that you have someone on your side with the same type
of knowledge about the real estate market, terms, and language that the
landlord or owner has on his or her side. [TOP]
How
much does this cost?
In most circumstances there is no cost to the tenant or buyer. The fee
that the landlord has already agreed to pay to his listing agent is simply
split with the tenant representative. This means that the services are
provided to the tenant or buyer at no additional expense. There are a
couple of instances in which the landlord might not pay a fee, or the
fee may be added to the rent rate or purchase price. [TOP]
Why
would the landlord or owner pay the fee for me to have a tenant representative?
Landlords and owners pay the fee because the tenant representative has
brought them a customer, not because they are providing expertise to you.
You, however, benefit from having the tenant representative's experience
and expertise on your side. [TOP]
Even
though the fee is figured into the price of a listed property, wouldn't
it really be cheaper if the landlord or owner didn't have to pay the fee?
No. When a property is listed, the landlord or owner agrees to pay a set
fee to the listing agent if it is sold or leased. The fee remains the
same no matter how many agents are involved and the price of the property
is not affected. If more than one real estate agent is involved (including
tenant representatives), the fee is shared between the agents. Therefore
using a tenant representative does not cost the landlord or the tenant
any additional money. [TOP]
When
won't a landlord or owner pay the fee?
There are two typical situations where a landlord or owner might not pay
a fee. One is when the tenant or buyer has already contacted the landlord
or owner before engaging the services of a tenant representative. Because
the tenant representative is not responsible for bringing the tenant or
buyer to the property, the landlord or owner has no incentive or obligation
to pay the fee. The other instance is when the property is not a "listed"
property. This is similar to a for-sale-by-owner (FSBO) house. With this
type of property, there is no commission for the real estate agents calculated
in the selling price. Therefore, to cover the tenant representative's
fee, the landlord or owner might add it to the selling price or might
not be willing to pay it at all. [TOP]
Can
I still use a Tenant Representative if the landlord or owner doesn't pay
the fee?
Yes. If the landlord or owner won't pay the fee, you can still use
a tenant representative. You can pay the fee yourself or in some situations
there may be other alternatives. A good tenant representative is well
worth the cost in both time and money savings. [TOP]
When
should I talk to a tenant representative?
You should contact a tenant representative as soon as you begin to consider
the idea of moving to new space. There are several reasons to get a tenant
representative involved early. Foremost, it is important for a tenant
representative to introduce you to potential properties so that the relationship
is established with the landlord and he or she will be willing to pay
the tenant representative's fee. Additionally, the tenant representative
can provide other beneficial services, including assisting with determining
your space needs, preparing a lease vs. buy analysis, identifying properties,
doing comparative property analysis, and much more. Many qualified tenant
representatives will provide these services as part of the fee paid by
the landlord or owner. [TOP]
Are
there other times to consider using a tenant representative?
Yes. Many tenants continue to renew their leases without ever considering
negotiating new terms or obtaining needed improvements. Even though a
tenant may have an option to renew with predefined terms, the tenant is
always able to renegotiate the terms at the time of lease renewal. Often
the marketplace has changed and the terms of your option-to-renew that
looked good five years ago are no longer such a good deal. A tenant representative
can let you know where you can improve the terms of your lease, how they
compare to the marketplace, and even negotiate with the landlord on your
behalf. [TOP]
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