Hiring a Commercial Real Estate Broker? 7 Questions to Ask
Small business owners know that the first major commitment you will make, and can’t afford to mess up, is taking out a lease for your business’ office or store headquarters. If you can land a great commercial real estate broker, you might free up even more capital in those critical first months of your company’s inception.
Here are seven questions that you must ask before hiring a commercial real estate broker that has your best interest at heart, not just one that is focused on their commissions.
What is the most recent deal they are proud of closing?
Open up with an easy question, but one that will require some substance for the real estate professional to talk about. This gives you some insight into how they structure deals and the level of negotiating they are willing to partake in.
You want someone who will fight in your corner, not take the easy way out. Some of the best agents out there can work magic on things you may not even realize were possible.
Are there any potential conflicts of interest?
You wouldn’t be asking them outright, but more of a question to see if there are any other clients who are looking in the same commercial real estate market, to the tune of competing for the same property type.
A competent real estate broker would know this almost immediately, but it’s good to be clear that there aren’t any conflicts of interest that can interfere with your deal.
How many clients do they currently represent?
You want a commercial broker who doesn’t have a problem finding work, but you also don’t want to be sitting at the bottom of a very long list of clients. Generally, you want to avoid someone who is desperate for work, so if they do appear busy, ask them about their schedule.
Do they outsource any parts of the job?
Don’t expect every commercial real estate broker to be the negotiator, marketer, and the background-checker for all of their deals. In fact, the most successful ones will have a marketing partner or allow the firm to do it for them, it’s very time-consuming.
It’s good to know what aspects of their job are handled personally to avoid feeling distant.
Is there a fee, if yes, is it negotiable?
Firstly, you’ll want to know what, if any, fees will apply to you as some brokers charge a fee to the buyers whereas most of the commercial real estate brokers offer their services for free to the buyers/ tenants as they get their commission from the sellers.
In case any fees apply to you ask what the commission rate is and be sure that you believe it is fair and standard in the market.
Negotiate with the broker while comparing his brokerage with competition in the market. Beware, that lowest commissions don’t necessarily have the best outcome.
What is a realistic scenario?
Can they give you an estimate on where and what you might possibly be able to afford? If the agent is confident in their own negotiating skills, they should be able to give you some kind of prediction of what they might be able to land.
This is a good question to ask if you’re interviewing multiple brokers over the phone.
Any additional business experience that might help?
Having a well-rounded commercial real estate broker certainly helps when negotiating deals in the business world. Look for a broker that will try hard to meet deadlines and financial goalposts that are crucial to the success of your business.
Commercial real estate should never be approached the same way as residential real estate for sale, as it is a more complicated deal to structure. So if they primarily do residential then it’s best to move on to the next applicant.
It’s also a good idea to find real estate professionals who are members of crea. This helps to validate the skills of the potential broker.
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