This certainly hit home for me when I unexpectedly found myself in a situation, taking an action as a real estate broker that clearly placed me in a conflict of interest.
We had a property listed in a secondary market for sale (it has since sold) which was owned by a national bank. I happen to possess a one-third ownership in a similar-sized office building located four blocks away which was vacant at the time and had appointed one of our salespeople as listing agent. To complicate things, the office leasing market was slow.
The two other out-of-province investors, friends of mine, were relying on us to fill this vacancy. The bank did not have an interest in leasing the property, but we had more than one qualified investor willing to purchase the building if we found a quality tenant.
I found myself in a very uncomfortable situation every time I found we qualified a tenant for this category of the market. In each case I did end up presenting both options but found myself second-guessing almost every word I spoke.
Was I presenting both properties in the very best light without showing favour to my own business interests?
I find it very difficult to provide an impartial answer to that question.
ICR’s unique selling proposition
We at ICR Commercial Real Estate have made a commitment to our clients that we will not buy, lease or develop commercial real estate within the primary market in which we live and work.
Many of our clients have either been personally involved in, or observed commercial transactions where the broker has been in conflict.
I came away from my own experience with a better understanding of just how difficult it can be to represent the best interests of my client when I am competing with them.
The investing I have done in commercial real estate has been done outside of my primary market, which is Saskatoon. I am in a better position to represent my clients as a result of those investment experiences.
When my client asks the question: “What would you do if you were in my shoes,” I can answer that question from first-hand knowledge.
I walked away from the situation I shared here with greater clarity of the challenges that arise from owning assets in the same market as my clients. I now understand there are shortfalls in our current non-compete commitment. This has impacted my personal policy if I find myself in this situation again.
Dual agency is another topic that often comes up in conflict of interest discussions. It is a much broader topic I will save for another day.
Any conflict of interest experiences you would like to share?