Lazy Backwards Brokerage - RFP's Have No Place For Smaller Deals

April 20, 2010 1:26 PM


I really didn’t want to write an article “dissing” my fellow commercial brokers. Everyone
has a right to make a living in their own way. But a certain brokerage practice is gaining
prevalence in today’s market and it’s starting to get under my skin. Maybe I’m just too
traditional but the use of an RFP (Request for Proposal) has become a practice that seems
like the “lazy broker’s” approach to initiating a deal. The use of RFP’s has been around
for a long time. Some brokers are using them for small deals (under 10000 sf) and this is
a waste of everybody’s time.
Here’s how it works: the broker has a leasing client that needs space, let’s say 5,000 sf of
office space. The broker may or may not actually take his client through some 5000 sf
properties currently on the market for lease. From the safety and comfort of the broker’s
office, he shoots out multiple RFP’s to anyone who has a listing remotely close to his
client’s requirement. He wants the listing brokers to go to their respective clients and
coax them to commit in writing to the best deal they can offer…the bottom price, the
sexiest concessions, the longest period of free rent, the highest commission, etc. Instead
of picking one or two top candidates and making a legitimate approach or proposal, they
want the property owner to negotiate against himself, cut to his bottom number, and take
any “fluff” or profit out of his side of the deal. By telling him that he is competing with
several others who have been handed the EXACT SAME RFP, the property owner is
supposed to “sharpen his pencil” and come up with the best possible deal. The theory is
you have property owners fighting over the lone tenant prospect for the privilege of
giving their property away for a song. Using this” backwards” brokerage procedure, they
hope to uncover the most desperate property owner and secure the best deal for the
tenant/client. If I am working for a property owner, I have a hard time allowing my client
to negotiate against himself. Not to mention the false expectations this process engenders
with the property owners being put thru this gauntlet.
I say hogwash! Get off your duff and do the work. The property owner is paying your
fee…go EARN IT! Find a property that will meet the client’s specifications and make a
legitimate proposal. Tell us what you need or what you want and how much you are
willing to pay for it. And then wait for a response. Negotiate a “win-win” deal (remember
those?) If that doesn’t work, go on to your second choice. I don’t know where this
practice started, but if it were up to me, I’d put an end to it. Especially on the smaller
deals. If I get an RFP from another broker, I’m likely to ask him if he has an exclusive
agreement to procure property with his client which authorizes the submittal of RFP’s. If
he doesn’t have such an agreement, I’m counseling my client to take a pass.