Purchasing a commercial property has distinct differences compared to buying a residential property. Therefore, it is vital to work with a well-versed commercial broker who can advise and inform you when making such a financial commitment. To do this, we want to discuss how to choose the right commercial real estate broker.
Buying, selling, and leasing commercial real estate can be much more complex than doing so with traditional residential real estate. Even for a seasoned residential property investor, there are considerable differences between residential and commercial properties.
Working with an experienced and strategic commercial real estate broker is a tried and tested path to avoiding the common pitfalls when investing in commercial properties, and allowing you to make the best-informed decisions.
The property market has no shortage of commercial real estate brokers, so finding one with plenty of demonstrable experience, who will also consider your circumstances and help to tailor the best strategy and investments for you, is crucial.
What Should I Look For in a Commercial Real Estate Broker?
#1 Proactive Deal Sourcing
A commercial real estate broker should easily be able to identify commercial properties, but does it suit your objectives, financial requirements, and timeframes?
A great commercial real estate broker will be able to identify your needs, whether through researching your current portfolio or taking the time to discuss your circumstances and helping you to build a strategy around that.
A proactive commercial real estate broker will be able to identify off-market deals and present them to you to start the wheels in motion before the property hits the open market.
#2 Communication is Key
Finding a commercial real estate broker is not a complex task, but finding an attentive one requires attention to detail. Part of being a proactive broker is being able to communicate with you based on your preferences, as well as in a timely manner during purchase negotiations or identifying off-market opportunities.
#3 Demonstrable Experience
Having a commercial real estate broker with a proven track record of commercial transactions is one of the most important factors when considering who to partner with. Having an experienced broker will minimize the risk when making significant financial investments and give you insight into what types of commercial real estate assets work and aren’t as effective.
#4 Market Knowledge
As with residential real estate brokers, any trustworthy commercial broker will have a complex understanding of the local market, the types of properties, and the rates you can achieve the best returns on.
#5 Industry Connections
A great commercial real estate broker will be well connected in the property industry. This includes having partnered with or being able to refer individuals such as project managers, lenders, inspectors, surveyors, and other investors (should you wish to explore joint venture investments).
Not only is this useful for building connections and a great team to help you carry out commercial real estate investments, but it is also a great way to recognize how respected they are as a commercial real estate broker. Working with brokers who have minimal connections or a negative reputation within the industry can mean missing out on prospective deals or being ripped off.
#6 Marketing Prowess
In addition to being able to help you identify and purchase commercial real estate, they should also be able to assist in marketing, leasing, or selling the property. Listing a commercial space has more components than simply placing it onto a property portal.
A tech-savvy commercial real estate broker can help identify the niches that may be interested in purchasing or renting your assets, and actively seek to reach out to them as opposed to waiting for potential clients to approach you regarding a transaction.
What Questions Should I Ask a Commercial Real Estate Broker?
As with property, you should carry out due diligence with each and every commercial real estate broker you speak with before signing any agreements.
Take your time to research them, find out about their experience, and don’t be afraid to ask the following questions:
-How long have you been selling and leasing commercial real estate?
-What areas of commercial property do you specialize in? (Such as office spaces, shop storefronts, etc).
-Can you provide a portfolio of commercial properties you have previously sold or leased?
In addition to these questions, you should also look to uncover their knowledge of the commercial property market with questions such as:
-How long do certain commercial properties take to sell and for what prices in certain areas?
-What are the price ranges and square footage for those types of commercial properties?
-Who were the buyers of these types of properties? (It is important to understand your buyers’ needs just as much as it is for a commercial real estate broker to understand yours).
-How is the broker able to identify and source off-market deals that meet your specifications?
You should also seek to understand their marketing strategy, in addition to any contingency plans they may have should your commercial property not attain the asking price or sell in a timely manner. You should look to ask:
-What are your contingency plans?
-Can you provide examples of challenging transactions, the difficulties faced and how any obstacles were overcome?
-Are you able to provide any case studies/references (that can ideally be contacted) of previous commercial property transactions you have been involved in?
The ability and willingness demonstrated by a commercial real estate broker are the fundamental pillars from which you can identify who is the right broker for you. You should look to take the time to thoroughly carry out the due diligence required and ask as many questions as you can in order to find the right commercial real estate broker.