The commercial real estate (CRE) world is often fast-paced and complex. Finding a trustworthy advisor is often the difference between securing the perfect property for your business and maximizing the return on your investment (ROI).
Unfortunately, some CRE professionals may prioritize their own gain over your success. Here’s what you need to know to avoid unethical practices and experience a smooth, successful transaction.
Red flags
There’s nothing worse than being scammed by a shady CRE pro. It leaves you feeling emotionally and financially drained, legally entangled, and frustrated by the disruption to your business plans. Keep a proactive eye alert for these potential red flags.
Misleading information
Question brokers who paint an unrealistic picture of a property. Misrepresenting a property’s condition constitutes a serious ethical violation. Plus, property defects can pose significant safety risks — and huge expenses — down the road. Unscrupulous brokers might:
- Exaggerate a building’s features
- Overpromise on market value or inflate potential ROI on an investment property
- Minimize occupancy rates or operating expenses
- Cherry-pick comparable properties or present inaccurate data on comparable properties in the area
- Misrepresent lease terms
- Downplay existing problems
These brokers use these tactics to pressure sellers to accept lower offers or convince buyers to pay more than market value. Always double-check information before signing any agreements. Schedule thorough inspections with qualified professionals to uncover hidden issues. Find, vet, and hire your own inspector, when possible, especially if you have any niggling suspicion that something doesn’t feel “right.” Always trust your instincts!
Understand disclaimers like Buyer Agent to Verify All Information (BATVAI) or Information Deemed Reliable But Not Guaranteed (IDRBNG), which shift responsibility for the listing information’s accuracy to you (the buyer) and your broker.
High-pressure pitches
A good broker acts as your advisor and advocate — not a used car salesperson. Unethical brokers may pressure you into making quick decisions that benefit them more than you. They might try steering you away from certain areas or pushing sales through quickly without giving you time to weigh all your options. Some create artificial time constraints, use emotional manipulation, or respond dismissively to your questions and concerns. Seek multiple perspectives from different brokers, and don’t fear walking away from a situation that feels uncomfortable or rushed.
Undisclosed commissions
Professional relationships rely on transparency. Shady brokers might receive kickbacks or referral commissions from other service providers and not disclose this information to you. A trustworthy broker will tell you upfront about fees associated with the transaction and any referral relationships they have. If a broker seems evasive about their fees, consider it a red flag and seek representation elsewhere.
Dual agency deception
In some cases, a broker might propose acting as a “dual broker,” representing the buyer and seller in the same transaction. While legal in some circumstances, this scenario can create a conflict of interest. The broker must negotiate the best deal for both parties, but it’s hard — maybe impossible — to achieve parity and fairness when the broker plays both sides of the field. Know the agency relationship before proceeding. If you opt to work with a dual broker, understand the limitations and potential drawbacks beforehand.
Misleading marketing
Deceptive photos or descriptions in listings create an unrealistic picture of a property. While some minor enhancements are expected—like adjusting the lighting in images—blatant manipulation is a huge red flag. Sellers should carefully review listings to accurately reflect their property’s condition. Buyers should use online photos and descriptions as a starting point but always schedule a thorough inspection with a qualified professional before making an offer.
Playing favorites
Brokers have a legal and ethical obligation to present all written offers to the seller, regardless of the buyer’s agent or offer’s perceived strength. Failing to do so could result in disciplinary action. Again, transparency is key. Sellers deserve to know about all potential buyers, and buyers deserve a fair shot at having their offers considered.
The Fallout: Picking up the pieces
What happens if you find yourself on the losing end of a bad deal? Perhaps you’ve overpaid for a lease or property or been barraged by hidden fees, undisclosed operating expenses, or unexpected repair costs. Maybe you’ve lost business opportunities because you caved under pressure and purchased or leased a building in a poor location.
Whatever the situation, you can take action, pick up the pieces, and move on — though it may take time, patience, and a little creativity.
Taking action
- Gather evidence. Collect all documentation related to your interactions, including emails, texts, voicemails, contracts, and marketing materials.
- Consult an attorney. A lawyer specializing in commercial real estate transactions can assess the situation, advise you on your legal options, and help you navigate potential lawsuits or disputes with the broker, landlord, or other CRE pro who has acted unethically.
- Consider mediation or arbitration. In some cases, mediation or arbitration is a more cost-effective way to resolve disputes. Check with your attorney.
- Report the offending party. File a complaint with the Better Business Bureau or the National Association of Realtors. If you are dealing with a bad property manager, check out this resource for options.
- Leave reviews. Share your experience on online platforms to warn others about the unethical CRE professional.
Moving forward
Don’t beat yourself up if you find yourself in a position where you’re handling the fallout of a poor CRE deal. Consider it a learning opportunity — and as you look ahead, continue to educate yourself. The more you know about CRE transactions, especially if you’re a newer investor, the better you’ll equip yourself to avoid scams in the future.
Seek multiple perspectives, getting quotes and advice from different trusted CRE professionals before you make a decision. Look for professionals with a proven track record, positive reviews, and a strong commitment to ethical practices. Never be afraid to walk away. Trust your instinct if something feels off about a deal or a CRE pro. You’ll have other opportunities.
Dealing with a shady CRE professional can be a setback, but it doesn’t have to define your CRE journey. Taking proactive steps and learning from the experience empowers you to protect yourself financially and legally in the future.
The commercial real estate (CRE) world is often fast-paced and complex. Finding a trustworthy advisor is often the difference between securing the perfect property for your business and maximizing the return on your investment (ROI).
Unfortunately, some CRE professionals may prioritize their own gain over your success. Here’s what you need to know to avoid unethical practices and experience a smooth, successful transaction.
Red flags
There’s nothing worse than being scammed by a shady CRE pro. It leaves you feeling emotionally and financially drained, legally entangled, and frustrated by the disruption to your business plans. Keep a proactive eye alert for these potential red flags.
Misleading information
Question brokers who paint an unrealistic picture of a property. Misrepresenting a property’s condition constitutes a serious ethical violation. Plus, property defects can pose significant safety risks — and huge expenses — down the road. Unscrupulous brokers might:
- Exaggerate a building’s features
- Overpromise on market value or inflate potential ROI on an investment property
- Minimize occupancy rates or operating expenses
- Cherry-pick comparable properties or present inaccurate data on comparable properties in the area
- Misrepresent lease terms
- Downplay existing problems
These brokers use these tactics to pressure sellers to accept lower offers or convince buyers to pay more than market value. Always double-check information before signing any agreements. Schedule thorough inspections with qualified professionals to uncover hidden issues. Find, vet, and hire your own inspector, when possible, especially if you have any niggling suspicion that something doesn’t feel “right.” Always trust your instincts!
Understand disclaimers like Buyer Agent to Verify All Information (BATVAI) or Information Deemed Reliable But Not Guaranteed (IDRBNG), which shift responsibility for the listing information’s accuracy to you (the buyer) and your broker.
High-pressure pitches
A good broker acts as your advisor and advocate — not a used car salesperson. Unethical brokers may pressure you into making quick decisions that benefit them more than you. They might try steering you away from certain areas or pushing sales through quickly without giving you time to weigh all your options. Some create artificial time constraints, use emotional manipulation, or respond dismissively to your questions and concerns. Seek multiple perspectives from different brokers, and don’t fear walking away from a situation that feels uncomfortable or rushed.
Undisclosed commissions
Professional relationships rely on transparency. Shady brokers might receive kickbacks or referral commissions from other service providers and not disclose this information to you. A trustworthy broker will tell you upfront about fees associated with the transaction and any referral relationships they have. If a broker seems evasive about their fees, consider it a red flag and seek representation elsewhere.
Dual agency deception
In some cases, a broker might propose acting as a “dual broker,” representing the buyer and seller in the same transaction. While legal in some circumstances, this scenario can create a conflict of interest. The broker must negotiate the best deal for both parties, but it’s hard — maybe impossible — to achieve parity and fairness when the broker plays both sides of the field. Know the agency relationship before proceeding. If you opt to work with a dual broker, understand the limitations and potential drawbacks beforehand.
Misleading marketing
Deceptive photos or descriptions in listings create an unrealistic picture of a property. While some minor enhancements are expected—like adjusting the lighting in images—blatant manipulation is a huge red flag. Sellers should carefully review listings to accurately reflect their property’s condition. Buyers should use online photos and descriptions as a starting point but always schedule a thorough inspection with a qualified professional before making an offer.
Playing favorites
Brokers have a legal and ethical obligation to present all written offers to the seller, regardless of the buyer’s agent or offer’s perceived strength. Failing to do so could result in disciplinary action. Again, transparency is key. Sellers deserve to know about all potential buyers, and buyers deserve a fair shot at having their offers considered.
The Fallout: Picking up the pieces
What happens if you find yourself on the losing end of a bad deal? Perhaps you’ve overpaid for a lease or property or been barraged by hidden fees, undisclosed operating expenses, or unexpected repair costs. Maybe you’ve lost business opportunities because you caved under pressure and purchased or leased a building in a poor location.
Whatever the situation, you can take action, pick up the pieces, and move on — though it may take time, patience, and a little creativity.
Taking action
- Gather evidence. Collect all documentation related to your interactions, including emails, texts, voicemails, contracts, and marketing materials.
- Consult an attorney. A lawyer specializing in commercial real estate transactions can assess the situation, advise you on your legal options, and help you navigate potential lawsuits or disputes with the broker, landlord, or other CRE pro who has acted unethically.
- Consider mediation or arbitration. In some cases, mediation or arbitration is a more cost-effective way to resolve disputes. Check with your attorney.
- Report the offending party. File a complaint with the Better Business Bureau or the National Association of Realtors. If you are dealing with a bad property manager, check out this resource for options.
- Leave reviews. Share your experience on online platforms to warn others about the unethical CRE professional.
Moving forward
Don’t beat yourself up if you find yourself in a position where you’re handling the fallout of a poor CRE deal. Consider it a learning opportunity — and as you look ahead, continue to educate yourself. The more you know about CRE transactions, especially if you’re a newer investor, the better you’ll equip yourself to avoid scams in the future.
Seek multiple perspectives, getting quotes and advice from different trusted CRE professionals before you make a decision. Look for professionals with a proven track record, positive reviews, and a strong commitment to ethical practices. Never be afraid to walk away. Trust your instinct if something feels off about a deal or a CRE pro. You’ll have other opportunities.
Dealing with a shady CRE professional can be a setback, but it doesn’t have to define your CRE journey. Taking proactive steps and learning from the experience empowers you to protect yourself financially and legally in the future.
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Are you a commercial real estate investor or looking for a specific property to meet your company’s needs? We invite you to talk to the professionals at CREA United, an organization of CRE professionals from 92 firms representing all disciplines within the CRE industry, from brokers to subcontractors, financial services to security systems, interior designers to architects, movers to IT, and more.
