Commercial Real Estate Brokerage – Why You Should Stay Away from Toxic Clients

In commercial real estate brokerage you will strike some clients and some listings that are absolutely toxic and time wasting.  The message is ‘Don’t get involved’.   Look for the problems in a listing and with your potential clients before you accept and take on a property challenge.  If you are not happy with the listing or the information that the client is giving you, it is preferable that you check out things fully and do your research before going further.

If you are not happy with a listing then you will not be servicing it well and that creates issues with clients.  Don’t be ‘desperate’ to take on every listing that comes your way.  Choose your listing stock.

Get all the facts

Only list the properties that you believe in, and work with the clients that are honest and direct.  Take the time to understand the client in their property activities and challenges before you sign off on and accept the listing activity.

Example of client toxicity

Recently I was asked to look at a residential apartment property that had the potential for redevelopment and rezoning into something that was ‘commercial’.  The client was pushing (to the point of being irritating) for a meeting.  I decided to ask plenty of questions first and as part of the initial property inspection.

So the client wanted to change the property use.  Ultimately that could have meant a change in tenant mix and potentially an improvement in rental.  So I decided to inspect the property with the client and form my own opinion as to whether it was worthwhile listing the property as a project or not.    The first impressions were not good and I tend to ‘run with my first impressions’ with most listings.  If things look ‘bad’ then they usually are.

So what was wrong?  The client was visually ‘strange’ in a number of ways (body language, clothes, and a few other things), and yet I could not put my finger on one single upsetting issue.  You know how you look at someone and see questions more than answers?  That is what it was like for me.  To add to the confusion, the property was old and poorly maintained. I could feel that this client was ultimately going to be a great waste of time.

These were the findings and choices that I made:

  1. POOR PRESENTATION: Certainly the property had the potential for rezoning and thereby a change of tenancy mix and escalation in income. When inspecting the property it was very evident that the client had deliberately avoided spending any money on the property for some 15 years.  The property was in poor condition and the tenants were frustrated with a lack of response from the landlord.  So the first warning sign to me was that the landlord was not of a high quality and thereby potentially time wasting.
  2. LOTS OF MONEY TO SPEND: The required property remodelling and renovation that I could see would have been extensive and costly. The landlord and their representatives were indicating only small levels of expenditure, and a cosmetic upgrade to reposition the property into a new market of tenants.  Clearly that would not lift the property to the required level of presentation to attract new tenants.
  3. MANIPULATED FINANCIALS: The landlord client was looking for a feasibility study into the cost of property upgrade works verses the return on investment over time. In many ordinary situations I would have been happy to provide that information as part of my property inspection and listing preparation.  In this case I could see that the client was unrealistic when it came to the levels of expenditure, property knowledge, and property upgrade strategies.  All the warning signs were showing me that I should not spend any more time with this client and certainly not spend any time on providing any feasibility study.

The message was quite clear to me that the client was a gross waste of time simply seeking local property market information and a feasibility study to bolster some personal hidden agenda.  It was very unlikely that the property would have converted to an exclusive listing anyway, given that I also suspected that the client was probably talking to three or four other agents.  I don’t do open listings!

Some clients you simply cannot trust and in this case I believe this client was not worth the time or the effort in any respect.  I walked away from the listing opportunity.  As it turned out some low grade agent took on the listing on an ‘open’ basis.  What a waste of time for them!

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