For Beginners: Working With a Commercial Real Estate Broker

Published: 05-10-2022  Category: General CRE

When you set out either to buy or sell your commercial real estate property, you may run into trouble doing so on your own, especially if you’re newer to the scene.

While other types of commercial real estate professionals are out there to assist you, the commercial real estate broker is the most widely used and discussed.

The commercial real estate brokerage industry, as of March 2022, sports a combined annual revenue of about $112 billion.

So how can you, as a beginner, locate a great commercial real estate broker? How do you know you can trust them? What are some good and bad signals to watch out for? What separates the bad, from the good, from the great?

Read on to learn more.

What Is a Commercial Real Estate Broker?

A commercial real estate broker is a highly trained and experienced real estate professional paid via commission who generally specializes in a single geographic area and/or property type.

The broker acts as an intermediary between landlord and tenant, sometimes handling both sides of the transaction at the same time.

The prospective commercial real estate broker is required on a state-by-state basis to have more experience (at least one year as a licensed real estate agent) and training (as low as 30 and as high as 90 hours of prelicensing education on a state-by-state basis) than a real estate agent and must qualify for and pass their state’s broker’s license exam.

From there, the prospective broker completes all final training before applying for their license with their exam results. Once received, the commercial real estate broker is born.

Subtypes of Commercial Real Estate Brokers

A commercial real estate broker who represents tenants is known as a tenant rep; a broker who represents landlords is a listing broker.

A broker who represents both at the same time is referred to as a dual agent. This is not malpractice: Brokers are legally bound to produce the best possible outcome for both parties.

However, as as beginner, it’s best to avoid dual agents and work with a broker who specializes in what you’re looking for specifically.

As long as both parties involved agree to the dual agency and the practice is not restricted in the broker’s state, the transaction can still occur.

Both residential real estate brokers and commercial real estate brokers exist.

How Does a Broker Aid You in Your Property Ventures?

The commercial real estate broker is responsible for demystifying and simplifying the buying and selling of commercial real estate.

Due to their immense training and experience requirements, brokers have exclusive access to their own market data and trends; both tenant reps and listing brokers use this to assist their clients.

Buying Property

On the buying side, the broker is responsible for securing the best possible deal for their client.

This means putting in the hours to look at listing platforms, negotiate prices, analyze and identify investment risks and rewards, and more.

The broker assists their client every step of the way, from locating the best property to finalizing the contract.

Selling Property

On the selling side, the assistance is the same: the commercial real estate broker assists their client every step of the way. This is also known as dispositions.

The broker will leverage their exclusive access to market trends and data to form the best asking price, negotiate with buyers, and market the property itself.

Leasing Property

Finally, brokers also assist clients in leasing and subleasing their commercial real estate space.

Not only will brokers negotiate the best possible lease terms on behalf of their clients, but they may also track down the best possible tenants for their space when working as listing brokers.

As a tenant rep, the broker helps their clients find the most favorable spaces for their businesses.

Signs of a Skilled CRE Broker

Now that you have a solid grasp of what a commercial real estate broker is, let’s take a look at what makes a commercial real estate broker skilled and trustworthy.

  • Communicative. The best commercial real estate brokers are communicative, never leaving their clients in the dark. They’re transparent with their strategies and tactics and open to answering your questions.
  • Reliable. Due to their extra training and experience requirements, you should be able to expect more value from a broker. The broker you choose to work with should deliver on this extra value consistently.
  • Confidence. CRE brokers should exude confidence supported by their unique access to market intelligence, trends, and data.
  • Has their CCIM designation. The CCIM (Certified Commercial Investment Member) designation is not required but is highly preferred for the broker career path. The education requirements are similar to those of a collegiate Master’s Degree.

These four basic components are a great place to start when identifying whether you’re working with a skilled and experienced CRE broker or a poser who’s only interested in collecting commissions.

How to Locate and Vet CRE Brokers

The next question is how to go about actually finding a CRE broker to work with. There are a few obvious ways to do this:

  • Search the internet. This is the simplest, most convenient way to go about finding a broker, but your own inexperience may work against you here. You’re at the mercy of the broker’s marketing materials and persuasion skills when this is your only approach to finding a broker.
  • Contact other CRE investors in your area. This is probably the better approach for a beginner. Not only may other CRE investors who hold properties lead you to a great broker, but they also may join your own personal network of connections.
  • Contact tenants of CRE in your area. Similar to the previous method, tenants in the area who are currently leasing office or other types of business space may forward you to a CRE broker they used.

In this phase of your journey, you want to compile as many options as possible. Never stick with the very first recommendation you get; instead, build a list, go through each one, write down what you like and don’t like about each, and make your decision from there.

Questions to Ask When Vetting a Broker

Some questions you may want to ask your prospective broker may include:

  • How long have you been working as a broker?
  • What’s your property specialty?
  • What’s your geographic specialty?
  • What do you charge?
  • What are your fees?
  • Do you have your CCIM designation?
  • What other certifications and education do you have?
  • What can I expect while working with you?

These tactics and more are a great place to start when looking for and working with a commercial real estate broker.

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