Often people have a misconception that they can manage to purchase and sell properties without the assistance of a professional real estate agent. Even if do have some knowledge in this field, it can be a challenging and daunting task to explore the vast realm of commercial real estate on your own.
When it comes to purchasing or selling commercial properties, contacting a commercial real estate broker is real estate 101. Regardless of the size of your business or investment property, hiring a commercial real estate broker is a wise decision.
Although it might look like an unnecessary cost at first, it is the opposite.
According to Allied Market Research, the increase in urbanization and increasing construction of commercial buildings has led to the growth of the global commercial real estate brokerage market.
It generated $209.90 billion in 2020 and is projected to reach $424.40 billion by 2030 at a CAGR of 7.2%. Region-wise, North America contributed just over two-fifths of the total market share in 2020.
Hiring a commercial real estate broker is beneficial in terms of saving money. Moreover, you can delegate all the heavy lifting to a broker and ensure to get the best results in return.
Today, we will discuss why it is beneficial to hire a commercial real estate broker and how to find one.
To begin with, let’s have an understanding of a broker’s duties.
What is the job of a commercial real estate broker?
You’ve probably seen several ads about commercial properties for sale with the contact information provided. Usually, the contact information belongs to a broker who represents the seller and acts in the best interests.
Commercial real estate brokers or agents are real estate license holders to facilitate your real estate transactions.
But, choosing a commercial property is different from a residential property.
The most important job of a commercial real estate broker is to identify the best properties for you based on your preferences and business needs.
Moreover, a commercial broker has access to MLS and updated information about the market.
Besides finding the right property for you, a broker’s job also includes selling properties, facilitating landlord-tenant interactions, negotiating on your behalf, and closing deals.
Thus, a broker acts as an expert intermediary between tenants and landlords.
All these factors themselves speak to why it is important to hire a commercial real estate broker. However, if you’re still not convinced, here are 8 detailed benefits of hiring a broker.
Benefits of hiring a commercial real estate broker
In general, people have a wrong impression of brokers and tend to avoid hiring a commercial real estate broker at first. This is because brokers and real estate agents are often thought to be expensive.
But, in reality, it is quite the opposite.
Although for tenants or buyers it doesn’t cost them a dime for using a broker. Brokers, however, do take a commission split from investors and property sellers based on the transaction.
Though this might seem off-putting in the long run a small commission will save you much more money. As a real estate professional, a broker knows every ins and out of the market. they can help you spot hidden costs in a potential lease.
Moreover, a real estate investment undergoes a lot of prior work like digging up past property data, deal structuring, and more. Since for business owners, time is money a broker can help you save money and time both by conducting these tasks quickly and efficiently.
But proper due diligence requires a lot of time and even a small mistake could blow up in the investor’s face leading to losses.
Hence, this is where a broker’s CRE industry knowledge and experience can prove helpful to you.
If you decide to search for commercial properties on Google, you will find thousands of options to choose from. This could be a mind baffling task and easily consume a large chunk of your time. Also, the results might not be up to your expectation.
A good broker representing the landlord can help you save time in finding the right tenants.
Based on the type of your investment property, brokers can save you time in finding appropriate tenants who agree with your lease duration. It is also the job of a landlord rep to sell the properties on your behalf.
Whereas a tenant representative broker helps you find the perfect rentals amongst the millions of available commercial properties. Tenants often do not know the market, as a result, they go looking for properties in market areas that may be out of their budget.
Hiring a tenant rep will help you take care of these time-consuming and burdensome tasks. As a result, you can focus on your business while the real estate professional does the job for you.
3. Extensive expertise and knowledge
Although you might have some level of knowledge in the commercial real estate field, nothing can surpass the years of knowledge and expertise of a commercial broker. With the internet in the palm of everybody’s hands, it is easy to search online and look for properties.
However, without the necessary knowledge and expertise in conducting thorough due diligence or market analysis, it’s challenging to crack the perfect deal. Due to their connections and networks, brokers have access to off-market insights, data, and industry-specific resources.
Moreover, a broker or real estate agent knows the market inside out with an extensive understanding of the local market, making them easier to rely on.
4. Access to multiple listing platforms
The main reason for hiring commercial real estate is to identify the right commercial property. Most businesses make the mistake of not giving importance to commercial real estate brokers.
The common misconception is that commercial property listings are not centralized as residential property. Due to their diversified asset classes, commercial properties appear on multiple listing platforms.
Most of these listing platforms are not public and require a subscription to access the listing. A commercial real estate brokerage firm has access to various listing platforms. This increases your chances of finding your desired property quickly or leasing it in the case of landlords/owners.
5. Capability of unearthing property data
Before you settle for a property to invest in, it is important to check the previous property data and records. Things like historical patterns, previous rents, occupancy, and vacancy rates are something you should take into consideration while evaluating a property.
Unearthing these kinds of data requires a lot of due diligence and effort which is quite impossible for investors or business owners to cope with. Brokers, on the other hand, are able to use platforms that can help them analyze markets and find records using the latest technologies like AI and Big Data.
A broker has access to all these necessary tools to make a better and improved decision on behalf of the buyer and seller.
6. Elaborate networks and resources
If you are thinking about marketing your property on your own, then good luck with the expenses and letting your property sit vacant for too long. You can easily find tenants for your property by advertising it with the help of your broker or landlord rep.
Brokers have access to various tools and resources that can help your property gain the highest visibility in the market to reach buyers and tenants.
On top of that, a broker in his long-term career has built a vast network of proprietary connections.
Brokers get inside knowledge of the market which is invaluable.
As a result, they can take advantage of the current market conditions and fulfill your commercial real estate needs at the right time.
Moreover, you might need to enquire about certain things like property sizes, future expansion options, and more. In that case, a broker’s connections with architects, contractors, loan officers, and engineers can come in handy.
7. Excellent negotiation skills
Negotiation is an important part of real estate deals and your deal is as good as your negotiation skills. However, negotiation leaves chances of exploitation by property owners.
Whereas, brokers negotiate efficiently to lock in the best deals for you.
Negotiations are the hardest part of a commercial real estate transaction. Successful negotiations can take a great deal of time and be extremely stressful. When negotiating leases and sales, a broker acts as your advocate, relieving your stress by acting as a buffer.
Moreover, brokers are well aware of the leasing tactics and can sift through pages of lease documents to point out problems and areas that might be a conflict of interest.
8. Structuring lease terms
Brokers can help both tenants and owners with favorable lease terms. In commercial real estate, each property transaction is unique due to the terms of their lease agreements.
Each property is different from one another and each business renting it has different kinds of operations.
Thus, the lease agreements need to be structured in a way that satisfies both parties.
The brokers in this field have a lot of expertise as they know how to understand the business needs to develop favorable lease conditions.
How to hire a commercial real estate broker
In addition to the cost of hiring a broker, another question that pops into your head is how do you find a good one?
To get the best deals and make your investment worthwhile, you ought to have a skillful and professional broker.
Here are some of the ways to hire a good broker:
1. Specify your investment/business needs
Depending on the type of your investment property or your business there are different real estate brokers with different talents.
Each commercial broker handles a different type of commercial asset class.
Make sure to select the right kind of broker that has knowledge and experience in your line of work or the asset class.
Also, there are two types of brokers, one who represents tenants/buyers and the other who represents landlord/investor.
Look for brokers who are dedicated to the commercial real estate market only.
Avoid the kind of brokers who potter around commercial properties and stick to residential real estate most of the time.
If you are going to hire a broker to do most of your heavy lifting for you, we recommend that you interview them to check if they can deliver results.
Details about past deals, transactions, and challenges faced can shed light on their profile. Thus, it helps you make a better decision.
Besides, you should prioritize who you appoint based on who appears to be the most sincere and has the highest trust factor.
Also, check if they are representing similar clients for similar properties which can lead to conflicts of interest in the future.
3. Check if they have the required skillset
Knowledge and skills are the most important qualities that a broker must possess.
Some of the basic requirements are- Network and Resources, expertise, and experience. Additionally, you should look for brokers who are members of commercial real estate networks and organizations and hold industry accreditations.
Affiliate your real estate business with Lilypads
Now, if you want to seek the professional help of Brokers, then joining the Lilypads community is your next stop.
At Lilypads we provide our brokers with a centralized platform where they can gain real-time visibility into listings, acquisitions, and transactions.
Thus, boosting efficiency and increasing performance while extending reach.
All these services and facilities are just to help you find the perfect investment/rental property.