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. Eventually, I learned how to relate to them, and I prospered. This is the conclusion of my investing training article on how to "Choose the Right Commerical Real Estate Broker (P1)"
How to Start Working With a Commercial Real Estate Broker
1. First define what exactly you want them to send you.
Let’s define that first. I’m going to define it for you. If you are in the apartment business, I’m going to tailor this for the apartment investors out there. Here’s what you want. When you first start working out with a commercial real estate broker, this is the first phone call, and you introduce yourself, and they ask you, “What is it that you’re looking for?” Here’s what you say, “Mr. Broker, I am looking for B and C class commercial properties,” or you can say, “I’m looking for B and C class multi-family or apartments within a price range of $500,000-$2 million, and I want it to be in the downtown market.”
That’s it. You gave them 4 things. You gave them the class, classification of properties, the type of properties, you gave them the price range, and you gave them the location. That’s it. Give them no more information. Don’t talk cap rate or ROI initially because both of those are pretty subjective. I want you to resist talking about cap rate and ROI. If you tell them you’re looking for an 8 cap deal and they’re located in a 5 cap market, guess what they would do. They would never contact you again. Do not talk cap rate or ROI.
2. Jump in.
That’s right, I want you to jump in feet-first. Stop over-analyzing and start analyzing deals. You know who you are. Stop procrastinating. Give the agent feedback after you analyze the deal. That’s how they’re going to get educated from you, is by you giving them feedback in what you like and what you don’t like. How to begin working with them? Make the call, jump in feet-first, and stop over-analyzing. You don’t need to know everything or be the expert.
Why Would a Commercial Real Estate Broker Choose to Work With You
I know that this is about you choosing to work with a broker, but it goes both ways. Why should he or she work with you? That is the real question is! So what I did was I asked one of my broker buddies- who’s one of the best in his market, he’s very successful and does transaction after transaction - to answer the qusetion for me.
Here’s what he told me when I asked him this question, “Hey, could you give me a few attributes that you look for when choosing to work with a client?”
He told me 4 things.
- He said he wants you to be responsive when he calls you.
Aha. Interesting, huh? Interesting that that came out of his mouth first because remember the biggest complaint that we get from brokers is the brokers don’t call back. He’s asking you to be responsive when he calls you. I wonder if those two are connected. That’s the first thing he wants you to do. He wants you to be responsive.
- He wants you to make a commitment to work with him.
If he’s going to put in the work and bust his butt and get in there and fight and bringing you deals, he wants you aboard. He wants you committed to working with him and not just treating him like 1 of 10 brokers.
He wants chemistry, and what he means by that is he wants a productive relationship with you. He wants to work with people he likes, so you need to be enjoyable. You need to say what you do and say what you do, and return his phone call.
- Here’s one thing he didn’t say and it may surprise you. He didn’t say he wants a client with deep pockets and lots of cash
He didn’t say that. He didn’t say he wants a super-wealthy client. In our conversation, that wasn’t even mentioned. What’s most important to him is for you to be responsive, committed, and relationship-focused. That’s why a broker would choose to work with you, being responsive, you committing to him, and being relationship-focused. Got it? All right.
Two No-Nos When Working With Commercial Real Estate Brokers
1. If you are a beginner, and I’m emphasizing beginner, do not sign exclusive representation agreements
Again, I emphasize beginner. These agreements mean that you are signing a piece of paper that’s going to lock you in working with that broker in that area. If you signed a document and the broker is a horrible broker who brings you no deals, you are locked in for that time period. If you buy anything in that market, you have to pay him whether he helped you or not.
Me, as an experienced person, I can sign these all day long because I’m experienced enough to know if I want to jump into this relationship with them. I can get a feel for their track record and the type of transactions they close. Easy for me to also get a quick feel for if we have chemistry because I’ve been doing this a long time, but if you’re a beginner, my advice to you is do not sign any exclusive representation agreement because in my experience as a beginner, it does not work. You’re just going to get trapped in there.
2. Stop Procrastinating.
Call a commercial real estate broker today, right now, right after reading this. Call him. You don’t have to have all your ducks in a row. You don’t have to have all your financing ready to go. You don’t have to have perfect credit. You don’t have to have a down-payment ready to go. No beginner does. Yes, you make mistakes, and that’s okay. You get a second chance.
Conclusion on Choosing the Right Commerical Broker
Today I can thankfully say that I have fantastic working relationships with commercial real estate brokers all across the country. Let me end with this. In the end, we only regret the chances we didn’t take. Isn’t that the truth? Get out there today and get busy created relationships because they have what you want, and choosing the right commercial real estate broker is what it’s all about, choosing the right one.