What Questions You should Ask When Selecting a Commercial Real Estate Agent
Whether you are looking to purchase, lease or sell a commercial property the real estate agent is key to your success in the real estate transaction. You need to take time to assess the ability of the commercial real estate agent to achieve success and to select the right commercial real estate agent for you. Don’t take everything at face value. You need to dig deeper and learn a little about the person who will be handling your important commercial real estate.
Here is some information that is important to ask when considering hiring a commercial real estate agent
- The Real Estate Company and its Focus: Research the company on the internet. Are they specialized in commercial real estate and do they handle your property type. If the company or the agent appear focus in Residential real estate and dabble in Commercial real estate it is not a good omen.
- Agency Relationship. You may be working with the commercial real estate agent or the commercial Realtor® but your legal relationship is with the commercial Broker of the particular firm. Any legal documents that you sign will be signed by you and the Broker. Different categories of agency require different duties from the real estate agent. Ask how they will be representing you? Typically the commercial real estate broker will be functioning as a Transaction Broker. However, you can also have a Single Agency Agreement or a Non Brokerage Agreement. Dual Agency is no longer legal in Florida
- It’s the person, not the company:. Your legal relationship may be with the big prestigious commercial Brokerage firm, but it is the individual commercial Realtor® or commercial real estate agent that you will be working with on your project. In most cases the real estate agent that you work with is not on salary, but is an independent contractor who works on commission and is affiliated with a Broker. It is actually the broker at the real estate firm who will receive the commissions from a sale or lease. The Broker will keep a portion of the commissions and the rest will be given to the real estate agent. According to IRS rules, the real estate brokerage company is limited in how much control they have over the independent contractor. Independent contractors work for themselves and they are treated as if they are running their own business. So spend time with the individual that you are considering hiring as your real estate agent and make sure you are comfortable with him or her. Look past the impressive suits and fancy company offices. You are dealing with an individual and you must be comfortable with this person and believe that he or she can handle your needs.
- Can the Real Estate Agent communicate: While you are interviewing the commercial real estate agent he is in fact selling his services. This gives you a good opportunity to see how well he or she communicates and if he/she will be the right person to sell on your behalf. Other factors you may look at is : Was the real estate agent on time? Does he or she appear to be organized? Is he or she neatly dressed? . Is his presentation hot air or does he or she seem knowledgeable,
These factors all tell you a little bit about the person
- Education: Like selecting a doctor or an attorney it is in your interest to do a little research on the person that you will select as your real estate agent. In Florida, once you have a real estate license a real estate agent can legally sell any type of property, even though he may have very little knowledge about a particular type of real estate. Its not any different in other professions. But you have to ask yourself if would be in your best interest to consult with a dermatologist for your heart condition, even though the dermatologist as a licensed medical practitioner is legally able to treat you. It is your right to ask your prospective agent what advanced education he has in commercial real estate. Designations like CCIM can give you the comfort level that your Real Estate Agent has taken the time to educate himself or herself. Did he/she go to graduate school? Was it a respected school or a certificate mill?
- Experience: Has your real estate agent handled a property like yours in the past. How many years has he/she been involved in commercial real estate. Are they flexible enough to adapt if you have special needs?
- Is the Commercial Real Estate Agent a Commercial Realtor®?: People often use the words Realtor® and Real Estate Agent interchangeably, but they are not the same thing. A Realtor® performs all the same duties in a transaction that a real estate agent does, and has the same licensing requirements and education. A Realtor®, however, is a member of the National Association of Realtors®; “Realtor®” is, in fact, a trademarked name belonging to the National Association of Realtors®. The NAR provides significant benefits to its members in the form of resources, education etc. More importantly for you, The NAR requires its Realtor®® members to adhere to a strict code of ethics and a Realtor® can be strictly penalized for violating the code of ethics. Employees or indpendent contractors of commercial real estate brokerage firms do not belong to NAR and their agents are therefore Real Estate Agents only, not Realtors®. Some real estate agents would like to be Realtors®, but they are not permitted to join NAR if the broker they work for is not a member. You may question if you would be comfortable dealing with a company or a real estate agent that is not bound by the code of ethics and oversight. Simply put, dealing with a Realtor® and is an extra layer of protection for you.
- Ask what marketing Websites the real estate agent or Realtor® belong to? : There is no single information network for commercial real estate. It is very important to access a broad cross section of commercial property networks to achieve success in commercial real estate. If you are Buying commercial Real Estate, you want you real estate agent to have access to all the properties on the market. If you are selling real estate you want your agent to achieve a broad exposure of your property. Ask your Real estate agent for the names of the commercial networks to which he belongs. Write the names down so you can compare with other real estate agents that you may talk to. It is expensive for a real estate professional to belong to the good works but membership makes a hug difference. Ask if he or she is is a paying subscriber of CoStar, Loopnet Premium, Xceligent, MLS and FGCAR. Some of these sites offer free information to agents and the public but the provides information is limited. Serious real estate professionals spend a lot of money to make sure they see the widest universe of information. Many commercial agents will tell you that MLS it is not important for commercial real estate and they do not belong to their local mls and believe it is not necessary, but there are often many gems that are found on mls. Close to 1 million Realtors® belong to mls – that a lot of people posting and looking for properties
- Ask the prospective real estate agent or Realtor® to which Professional Organizations he/she belongs?: A good real estate agent understands the value of belonging to professional organizations and networking with professionals in their market segment. Do they attend property pitch sessions with commercial brokers to pitch their listings or find out about new properties? Even in the age of the internet it is a mistake to overlook the value of personal interaction. Do they attend the educational events at the professional organizations?. You want the person who represents you to be informed. Organization memberships that indicate that the person you are considering is serious about commercial real estate. are FGCAR (Florida Gulf Coast Commercial Association of Brokers), CCIM (Certified Commercial Investment Manager), SIOR (Society of Industrial and Office Realtors)
- Marketing Materials: If you are selling your commercial property or leasing out your commercial space, ask to review the marketing materials of similar properties that the commercial real estate agent has marketed. Read through their brochures. Ask to see a presentation of how they would present your property. Ask to see the activity levels of other commercial properties on commercial web sites. Review their company website. Does the Realtor® appear to specialize in commercial property or is he a residential agent that is dabbling in commercial real estate brokerage? How the real estate agent markets other properties will tell you a lot about how he will act for you. A web site says a lot about a Realtor®. If the site has lots of information it gives you the sense that he has put a lot of time into understanding his market and his business. It will convey a lot about his or her ability as a Realtor®
- Fees: You’ll want to know what, if any, fees there are to you. Some ‘Buyer’s Agents’ charge a fee to the buyer. Most commercial real estate agents offer their services free to Buyers and Tenants because they will receive commission from the Sellers broker. If you are selling your commercial property or leasing it out, you will be required to factor in a real estate commission. Ask what the commission rate is and satisfy yourself that it is fair and standard in the market. Remember that your commercial real estate broker or will also be marketing to other real estate agents so that you get the maximum coverage of your property and he will have to offer a co-brokerage commission to other commercial real estate agents. If there is not enough commission in the deal for for other agents, you will be shortchanging yourself because it is not worth the while of real estate agents to bring their buyers or tenants.
- Engagement Period: If you are selling your commercial property how long a listing period will the real estate agent require. Make sure that you have a termination date on your agreement. In fairness to the real estate agent you need to give him or her enough time for the advertizing to gain traction. Six months is pretty standard. You can evaluate after that date if the property does not sell.