This week's installment of the Landlord and Tenant Tips we will cover the steps to cover when Hiring a Commercial Real Estate Broker. First you RECOGNIZE you need a professional. It may hit you like a ton of bricks or it may have taken you years with no results to arrive at this decision. You may be a Landlord who needs to lease vacant space or sell a property, or a Tenant interested in a new location or a renewal of a current one. The good news is you've completed the hardest part! Doesn't matter how you got here, it only matters that you have (or almost have). Check that off your list and move to the easy part. Second step is to determine what your requirement is. What, SPECIFICALLY, do you have questions or need help with? Do you need an anchor retail leasing specialist? A vacant fast food restaurant or someone skilled in single tenant net leased sales? Office building or Industrial warehouse space? This is a critical decision that will shape your experience. A heart surgeon may be brilliant with a wonderful personality, but you wouldn’t go see her for your hip replacement surgery would you? Of course not. That’s silly you say. The good doctor is trained in heart surgery. Surely theres an orthapedic specialist with more expertise and experience. The point here is to match the tool to the job. Hire an expert who specializes in your product type. If you’re selling your house hire a residential broker. For your retail space hire a retail broker. Office space hire an office broker. For your industrial space hire a broker experienced in dealing with warehouses on rail lines. Beware the RESIMERCIAL Broker. This is my pet name for the person who "sells houses most of the time” and “is getting into commercial” or “dabbles in commercial” when they have a chance. These people are the worst of the breed. The first to be eliminated according the law of natural selection. They are eliminated because they can’t provide value anywhere. They should stick to the home sales and become good at it, or commit like those of us in the commercial specialties who are experts. Please do yourself and me a favor and avoid these commercial real estate posers! Now, there is as always an exception. The exception is in the smaller markets where the professionals cannot be a retail specialist or they would starve due to the limited number of transactions. In this case begin choose someone with the letters. What is your level of experience or expertise? Now that you know WHAT you need, its time for the who. So, how do I find a good Commercial broker skilled in the speciality I need? The first place to look is for the letters at the end of their name. These are designations (listed below) earned from a combination of master’s degree level continuing education AND historic work experience. That’s right you can’t just take a class - you must earn them. The education sets these people apart from their peers. Look for a TEAM instead of an individual person. That is the most productive way to leverage your results. Thats two people with two different levels of expertise who can contact twice as many prospects. Do you need a big international brokerage house like our Colliers International or CBRE? Maybe. The big firms have much broader reach and resources than the local people - that's why they're the big firms. Please understand that you are hiring the person - not the firm. It is the person who will be responsible and accountable, not the whole company. You won't get a call from someone in Seattle checking to see if John Orr is doing a good job. After you've selected a few TEAMS, pick up the phone. Now that you've chosen two or three teams it's interview time. These aren’t the only designations, but these are the most relevant to commercial brokerage. Interview professionals like you interview any other job candidate or service provider. I recommend you do NOT hire a friend unless they are truly the most qualified people. Case in point. I spoke with a property owner today who hired a long time friend who is in commercial real estate to lease their 3 properties. The broker is a really nice person, goes to church every week and seems honest and skilled. The friend is more involved in the investment sales area - and NOT a leasing specialist. Now the personal relationship is being stressed because they both choose poorly. The Landlord chose the wrong broker, probably because they didn't know there are specialists who lease these type properties. The bigger problem is the broker took the assignment in the full knowledge they are NOT the best person for the job. Hire someone you can hold accountable and not feel uncomfortable requiring results. Make sure your agreement allows for, if they don’t perform, the ability to fire them! ASK for specifics during the interview. Ask about the most challenging transaction ever and why? Ask if they have a competitive property, where? Couple points of view on this landlords: either you think there are economies of multiple properties in one trade area or you as a Landlord don't want the competition. Neither is wrong, just different, but you must decide. Tenants, one thing to be cautious of is to hire a Tenant representative who has a client that competes with you. For example if you serve burgers don't call the guy who represents McDonald's in the hopes he will drop them and give you all the benefit of his expertise. Ask about their process and how they would market your property. Have they been successful in the past. How long did it take. Require examples. Ask pointed questions about the length of the listing term. Fees, what do they Charge? Oh, talk about money? You bet, it's so important that it gets its own blog post so read it next week. Here's your Checklist
- RECOGNIZE you need a professional
- What SPECIFICALLY do you need a broker to do?
- Avoid RESIMERCIAL brokers
- Select TEAMS to meet.
- INTERVIEW professionals
- ASK for details
- Talk about MONEY
- Extra points for COFFEE drinkers
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