What should a property owner know before a listing commitment is executed with a land and commercial broker?
Let’s
say you own a piece of land with some potential, or have a commercial building that you want to sell or lease.
How does one go about finding the right commercial real estate broker to make the “earth move” for you … so to speak?
All too often a property owner has a friend, a friend of a friend or met someone at a cocktail party. Before you know it this broker has placed a sign up in front of the property and the waiting game begins.
Now, everything is under control and you are on your way to finding the perfect buyer and/or tenant, right?
For those you have had some experience in the legal side of business, the phrase “caveat emptor” is probably not an unfamiliar one. Translated from Latin as “Let the Buyer Beware,” it is not that often thought of when a property owner (as a seller or a landlord) is seeking commercial real estate services.
In fact real estate sellers and landlords are actually buyers when it comes to contracting for the services of a land and commercial real estate broker.
Business owners and investors who hold a small to medium size real estate portfolio may have had experience in working with and selecting residential Realtors, but when selecting a land and commercial brokers, the qualifying process can take a bit more work.
Consider the following three key questions to ask the next time you are faced with such a choice:
1. What experience does the broker have with moving real estate like yours?
Ask for very specific examples of similar property transactions – the successes and the failures. Find out the specific technicalities of zoning, changes in use, and other governmental regulations that may or may not have impeded a smooth closing for other such transactions. What lessons from those experiences will benefit the marketing of your property?
Does the broker have market and business knowledge of the type of property you own? For example if the property is a multi-tenanted property, does the broker know how to read financials (familiarity of market rents, vacancy rates, realistic expense ratios, etc.) so he/she can speak the same language as the likely buyers for the property?
Will the sale or leasing of the property trigger a “change in use” in such that the local government will require a site plan modification or change in use permit, among many other avenues of red tape?
2. What is the broker’s communication style with his/her clients?
This one cuts both ways and is probably one of the most important.
The hardest question that a property owner has to ask him or herself is can he/she build a relationship with the commercial real estate broker to where both can freely and confidentially share the truth about the real estate market conditions, the value of the real estate and real reason why the property is being placed on the market.
Does the broker have a consultative style, where he/she can appreciate the clients needs … sometimes a good broker can assist the client in finding methods that do not require a sale, when the client thought it was the only way out of a difficult financial situation.
How often will the broker and client communicate each week, month, etc., throughout the term of the commitment? What are the expectations?
Does the broker have a strong support staff that will play a role in keeping the communications channels open?
The land and commercial real estate broker that you select must be someone you can trust (and visa versa). As in the case of lawyer/client and financial adviser/client relationships, real estate transactions often involve a significant portion of one’s assets.
Are you, as a client of the broker, capable of accepting marketing advice that may not align with your hopes and dreams with regard to the anticipated property value, owner improvement requirements, etc?
3. What is the broker’s strategy find the right buyer/tenant within the shortest period of time?
Individual land and commercial real estate properties are very often considered very unique in and of themselves in type and category.
Clearly there are different pools of prospects to fish in when looking for a buyer of a 15 acre tract of general industrial land verses finding a tenant for a 2,000 square foot boutique shop in downtown Frederick.
Some commercial brokers specialize in a very specific class of real estate: mineral mining, big box retail, high rise apartments, etc. Others, as in the case of MacRo, Ltd., provide broader and more varied services to a specific geographic market.
In the case of the latter the advantage should be that the broker is an established member of the community at large and/or knows the ins and outs of all the local government agencies, as well as the mood of the political climate.
Once the path of deciding upon a specific class or at large broker is made, then it is time to consider the core principles of the firm’s approach to marketing as well as what specific market strategies can be merged into that program for the yielding the best results of the subject property.
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There is any number of other qualifying questions that a property owner should ask, but if you’re in the market for land and commercial brokerage listing services, and you dig deep enough in to the depths of these core questions, you will select a very good match!
The author: Rocky Mackintosh, President, MacRo, Ltd., a Land and Commercial Real Estate firm based in Frederick, Maryland. He served as a member of the Frederick County Charter Board from 2010 to 2012. Many of his articles also appear in TheTentacle.com