Traditionally, commercial property brokers do not like to split the commissions they get which is a common practice among residential real estate firms. One commercial property agency will try to change that and apply commission splitting and other methods used in residential property business.
Commission splitting is considered a big taboo in the business of selling commercial properties. According to the Financial Post, this practice of sharing commissions is pretty much a standard in the residential real estate market and one Canadian commercial broker has decided to take this strategy and see if it works in his segment of the marketplace. Rock Advisors Inc. founder Derek Lobo revealed that he plans to offer a deal for the exclusive rights to the Sperry Van Ness International Corp. (SVN) brand that operates in Canada.
SVN has 190 offices scattered all over America and is the sixth biggest brokerage firm in the United States. The company has been thinking of ways to effectively apply the idea of operating alongside other brokerages. Lobo said, "The problem with the commercial industry is it's fragmented and dysfunctional."
It was also mentioned in the same report that the Rock Advisors Inc. founder will have his new company carry the colors of SVN Canada Inc. that will offer commercial property in different classes of assets like buildings for office use, apartments and industrial land. Lobo outlined how the current model of the commercial property market works. He said that most brokers will usually offer a property to their own clients. He further elaborated that the challenge for this kind of strategy is the lower chance of getting the best price possible with only one firm's profit at the line. With this new scheme thought of Lobo, the incentive to raise the price is increased by introducing more competition. It is one of the oldest tricks in the book of residential property brokers.