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Posted by REMAX on May 9, 2019
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Tips When Selecting a Commercial Real Estate Broker

Written By Mark Hulsey, Managing Broker

Many people planning to sell or lease their commercial building don’t know where to start when selecting a commercial real estate (CRE) broker. Trying to find a qualified CRE pro to properly handle the sale or leasing of an office, retail, industrial, or commercial investment property in the Minneapolis/St. Paul metro can be challenging. Once you find good brokers to interview, Sellers and Landlords need to know what to ask them to see if they are a good fit for the assignment.

Let’s cover the most critical criteria to use for picking the best commercial broker to sell or lease your building.

1. Track Record
2. Property Valuation
3. Marketing Expertise
4. Industry Resources
5. The Broker Team

1. Track Record

Nothing can replace experience. A CRE broker’s track record is the first thing that should be understood. If the broker does not have a long resume of successful transactions like the subject property, keep looking. Commercial brokerage is complicated, and it takes many years to truly understand the game. Each product category, including office, retail, and industrial have their own unique market data, trends, and asset nuances that can only be understood by taking on those transactional challenges daily.

CRE industry experience does not only garner ‘know-how,’ but it also opens doors to the commercial broker community. In other words, industry pros prefer to work with fellow industry pros. The Seller of a commercial property should engage a broker that is deeply integrated and respected within their marketplace. Sellers need brokers that can work together to solve problems and get the deal done.

2. Property Valuation

Mastering property valuation is the cornerstone of the CRE industry. If an agent or broker cannot provide comprehensive market and income analysis, they don’t belong in the business. A CRE broker needs to ‘underwrite’ an asset just like a lender. You can put whatever price you want on a building, but if the numbers don’t work, it won’t sell. Period. If a broker can’t price it, they shouldn’t sell or lease it.

CRE market data is expensive. Without the data, it becomes a guessing game. When hiring a CRE broker, a Seller or Landlord should require their broker to have the data & financial analysis prowess to do the deal. If your CRE broker cannot speak to NOI, cap rate, PSF trading rates, pro-formas, or discounted cash flow, keep looking.

3. Marketing Expertise

Maximum market exposure is required when selling commercial property. It’s tough to maximize a Seller’s equity potential in their property if it’s not getting out to the right audience; the most potential buyers. However, the CRE industry does not make this easy for brokers and sellers. It’s not like selling a house where the MLS is the single critical property marketing platform for residential real estate. Comprehensive CRE marketing takes time and money to do it right. CRE brokers must spend thousands of dollars each year to properly market their client’s properties on the key CRE national marketing databases.

There are no shortcuts to best-in-class CRE property marketing. Offering Memorandums, websites & social media, signage, direct mail, and database marketing are just a few of the required marketing activities to maximize asset exposure. If your CRE broker is not willing to spend the time and money for best-in-class property marketing, keep looking.

4. Industry Resources

Just like in life, it’s about who you know. Successfully transacting commercial deals needs many resources to work cooperatively to get to closing & funding. An established CRE broker should have industry connections that greatly benefit their clients. Commercial brokers work together every day with lenders, real property attorneys, title companies, due diligence firms, municipality zoning & planning, developers, and accredited investors. The CRE broker is responsible for putting the puzzle pieces together on behalf of their client. If your CRE broker is not connected to the key industry resources to get transactions closed, keep looking.

5. The Broker Team

Finally, among the key criteria on what to look for when hiring a commercial broker is the Broker Team. This includes the brokers working on the assignment, the company behind the brokers and their administrative support staff. In today’s CRE market, rarely will a lone broker be able to provide the level of service that a well-staffed, focused group or team can deliver. Having depth within the personnel handling the CRE assignment is essential in today’s market. A CRE broker and their team must be hyper-responsive to deal-critical issues.

A Seller or Landlord needs to know they can have an effective relationship with their broker and support staff. While a client and broker don’t need to become best friends, they need to have mutual respect as they work toward the same goal. If your CRE broker does not have the personality, motivation, or knowledge to get the deal done, keep looking.

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