Years ago, I spent several years working for a prestigious commercial real estate firm while researching for my Dummies book. What I discovered is that commercial real estate agents are a different breed. They’re a different breed of people. They’re highly skilled but well-respected. Getting to know how they work and function in their jobs is critical in choosing the right one to work with. Don’t you agree?
Choosing the Right Commercial Real Estate Broker
Two Things I Learned About Commercial Real Estate Agents
They are Regular People.
They are no different than the guys at my gym, at my church, and the guys that I ride my bike with on Saturdays. They are regular people with the typical issues of life. They worry about their jobs, their wife and their kids, their health, their finances, and many of them have told me, “Peter, I need to do what you do. I need to have investments so I don’t have to rely so much on closing a deal to pay my bills.” You see, they are jut like normal people. The lesson here is don’t be intimidated.
There’s a Big Difference between Commercial Real Estate Agents & Residential Real Estate Agents.
Here’s the difference, a commercial real estate agent is business-focused. He’s business. He’s focused on business. A residential real estate agent, their job revolves around the wants and needs of a homeowner and his or her family. You want to know what that means? That means that commercial real estate agents rely less on emotions than residential agents do. They rely more on facts and figures than school districts and cozy streets. You must really understand that if you don’t already.
What You Want From Commercial Real Estate Brokers
First figure out what type of commercial real estate proeprties you want to invest in. It makes sense to first understand what your investing goals are. Why are you looking for a commercial real estate agent, and what do you want from him or her? That’s the questions you as investors should be asking your self and providing answers. Here is an example of want most investors want from commercial real estate brokers to help them achieve their investment goals.
Here are sample commercial investing goals and what most investors might want.
1 – You want pocket listings or off-market deals.
That’s what we ultimately want. There’s deals all over LoopNet and CoStar and other things online. We want the deals that are not online, that are not on an MLS, that are not on LoopNet. We want their pocket deals because those are the best deals. Those deals are going to make you the most money. Those deals don’t have the competition that you have with deals that are online. Let’s face it, the deals that are online, they’ve been picked over, and those are basically the left-overs. You want the pocket listings, the off-market deals.
2 – We want them to return our calls.
The number one complaint I get from my students is that the agents don’t return their calls. We want to work with someone that will return our calls.
3 – We want them to provide us information on the current listings.
4 – We want enough market data concerning whatever asset type you’re looking for, whatever commercial type you’re looking for, to make buy and sell decisions.
We rely on them to get us that data. It could be sales comparables, rent comps, demographics information, all of the above. We rely on them to get that information to us.
5 – We want to have a sound and professional business relationship.
That’s what we want, and that’s what they want as well.
6 – We want referrals from them to key personnel in the industry, such as property managers, lenders, attorneys, inspectors, surveyors, other investors, things like that.
It’s really important because they are in the industry, and the best source of a property manager, lender, attorney, and inspector is by referral. We want to work with someone who is happy with theirs. What you want, pocket listings, returned phone calls, providing information on current listings, enough market data to make buy and sell decisions, sound and professional relationships, and key personnel referrals.
How to Find a Commercial Real Estate Broker
There are really just two simple ways to choose and find a commercial real estate brokers. They are:
Here’s what I want you to do. Find someone who is happy with their broker, their commercial broker, and ask them these questions about their broker:
“What were their broker’s strong points?”
“What were the broker’s weak points?”
“Would you use the same broker again?”
After you gain the strong points and weak points from the person who’s going to give you a referral, ask the question, “Would you use the same broker again?” If their answer is yes, then proceed to working with them. If not, move on. That simple. Okay, so that was method number one, by referral.
Below you will find links to the top three online resources for finding commercial real estate brokers.
Commercial Broker’s Area of Expertise
Now, here’s something that applies to both referrals and online resources. The question is, is the broker’s area of focus the same as yours. What I mean by that is most brokers focus on an asset type. For example, I work with an awesome team of commercial real estate brokers here in my area, and if I’m acquiring multi-family apartments, I go to Brian. If I’m acquiring an office building, I go to Bill. Their expertise are in their niches. Brian’s is with multi-family, and Bill’s is with office buildings. You need to work with an expert. The best thing to do with that is if you are looking for an office building, then you need to focus and ask questions about the person’s ability and understanding of office buildings.
Something That’s Not Important When Finding Brokers
The thing that’s not important is the size of their office. Some of the best firms I work with are called boutique firms. There are 3 guys in the office, and they are the best in that area of the country, 3 guys in the office, and they rule. They rule that city. Just because the firm has 100 brokers or has this amazing marketing and software system, doesn’t mean that they’re good or they’re going to work for you. This is an individual business. It’s all about the individual broker. This is a relationship business.
The 5 Qualifications You Need From a Commercial Real Estate Broker
Q1: The first qualification is you want them to be experts in their niche, in their asset type, and in their location.
Q2: Excellent communication.
Again, you want to know the biggest complaint I get from my clients and students concerning an agent: “The agent doesn’t return phone calls.”
Q3: You need them to be well-connected in their market so they can connect you with other valuable industry professionals.
I can’t tell you how many times that I had a great relationship with a broker and he connected me to other sellers, so I can produce commission, he connected me with other investors so I can do more deals, he connected me with lenders that were having problems with their properties I can go and buy. You want someone that’s well-connected in his or her market.
Q4: You want your broker to be full time employed in the business of commercial real estate brokerage.
We want no part timers. We want full-time employment in commercial real estate brokerage. Not in single families but in commercial real estate brokerage.
Q5: They need to understand your needs
The fifth qualification is really important. I want you to see if they ask you any questions because if a commercial advisor does not understand your needs and objectives first, then it may not be a good fit. I don’t know what’s more important, having an expertise in a niche and location, or this one, to see if they understand what you need first. Okay, it’s a toss-up between the two.
I will conclude “Choose the Right Commercial Real Estate Broker P2” real estate investing training artilce in my next installment. Look forward to me covering next:
- Next, how to start working with one, where to begin.
- Why would a commercial real estate broker choose to work with you?
- The two no-nos when working with commercial real estate brokers.
My wish is for all investors to be successful with commercial real estate investing and selecting and working with the right broker is a big part of that success equation.