You probably wouldn’t choose an accountant, attorney, financial adviser or babysitter without going through at least a couple interviews. So, why do buyers, sellers, landlords and tenants forgo this essential process when it comes to choosing a commercial real estate broker?
Commercial real estate transactions involve hundreds of thousands, sometimes millions, of dollars. It’s your money that is being invested and it’s important.
These deals likely require specialized knowledge to guide the represented party through market analysis, selection matrix, letter of intent, study (due diligence) period and contractual terms to name a few.
These are the basic components of market knowledge and practical experience your broker should provide.
But beyond these core competencies, what else should your broker provide and how do you know whom to select?
When you’re choosing a broker, keep these five key considerations in mind:
-Experience — not simply judged by how long a broker’s been working in the field of commercial real estate. Rather, think of experience in terms of both depth and breadth of transactions and knowledge; in what area has the broker accumulated a volume of experience?
-Expertise — seek out a broker who specializes in your property sector. Look at the broker’s portfolio.
The Shenandoah Valley is a smaller market that doesn’t permit full specialization in one sector, but brokers do tend to gravitate (or be sought out) for their knowledge of one or more. Different sectors require different sets of skills and tools, as well as access to timely information — not all commercial real estate transactions are the same.
-Trust — when it comes to interests, remember that your broker should represent yours. You always want to be well informed and aggressively advocated — don’t be afraid to ask for examples of past projects, current projects and client referrals to decipher if this has been the experience of others. The process will be much smoother if you believe you can trust your broker’s opinion.
-Market Knowledge — Without timely and comprehensive market knowledge, you are at a significant disadvantage.
-Personality Fit — it’s important to find a broker with a compatible personality. Ideally, both you and the broker will treat the relationship as a long-term proposition. You don’t have to go on vacation together, but this should be someone you don’t dread a phone call from.
The vetting process doesn’t end at the interview. Once you’ve selected a broker, work with them to develop milestones to evaluate progress.
Tim Reamer specializes in investment real estate and general ecommerical representation for Cottonwood Commerical. Visit timreamer.com.