This Company Wants To Shake Up Real Estate’s Archaic Fee Structure

The way real estate investors and owners pay fees could be reducing the value of their buildings. Not the level of the fees they pay brokers, asset managers and fund managers, but the very structure of the way fees are charged. 

Real estate has changed enormously in the past two decades, and that pace of change is increasing seemingly every week. So why has the way fees are paid to brokers and asset managers not changed as well?

That is the question being asked by UK company APAM, which has called out the “archaic” and “misaligned” way real estate service providers are paid. It said that current fee structures incentivise short-term thinking and encourage brokers, in particular, to get a deal done as quickly as possible in order to move on to the next transaction, rather than thinking about the long-term benefits for their clients.

Although the way brokerages are structured in the UK and U.S. is different, the charge can be levelled at advisors in both countries: short-term thinking creating short-term gain for advisors but long-term pain for owners. APAM is an asset manager that owns assets and manages them for third parties,…

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