Why “Good” Isn’t Good Enough When Partnering With A CRE Broker
Working With A Top-notch Broker Can Be A Game Changer In Creating Value And Enjoying Your Financial Freedom
People often hear that buying a house is one of the biggest personal financial decisions you’ll ever make. Investing in income-producing commercial real estate is equally – if not even more – daunting.
The process can be long, difficult, complex, and even defeating if you don’t have an experienced broker on your side to help guide you. In fact, a savvy broker is often the most indispensable member of your Commercial Real Estate A-team, because they can provide needed expertise to navigate market opportunities, negotiate key terms and lead the process on a successful acquisition from start to finish.
At the same time, it’s important to recognize that all brokers are not cut from the same cloth. No one wants a mediocre doctor to perform their open-heart surgery, and the same is true when it comes to selecting a commercial real estate broker to represent your financial interests. Real estate investments are not a “sure thing”. There is an element of risk, and no one wants to make a bad investment that will cause them to lose money. It’s important to partner with a seasoned, experienced, knowledgeable broker that is 100% committed to your investment success. Partnering with a top broker can help to add value in a number of key areas that include:
Deal Sourcing & Reach: According to Costar, there were 45,800+ commercial real estate transactions priced between $1M - $10M in the U.S. that were completed in the past quarter alone. That gives you an idea of the overwhelming volume of investment opportunities that exist in the commercial real estate investment market today. It can be a little like drinking from a fire house. To maximize your exposure to buying opportunities, you need to access timely, accurate data, and also filter those opportunities to meet your specific needs, requirements and investment objectives.
When you partner with a seasoned broker, that broker makes a point to understand you, your requirements, what you like, what you don’t like, etc. Top broker’s also leverage their expertise, vast trusted network and modern tools to put you in a position to effectively identify and compete for the best buying opportunities. Qualities to look for when hiring a broker include:
Deep knowledge of the real estate market, including expertise in a particular sector such as office, industrial or net lease properties, to synthesize information, extract the key nuggets, and curate the best deals for you.
The ability to leverage modern tools, systems and methodologies to quickly filter out the “noise” of deals that don’t fit your investment criteria so that you can hone in on those that do.
A vast network of industry contacts, often resulting from years of cultivating a proprietary list of contacts, including investors, landlords and tenants, to source off-market deals. This is key as off-market deals can be some of the best buying opportunities, and ultimately, make you the most money.
Deal Expertise (The 10,000 Hour Rule)
In sports, repetition is the key to sharpening skills and achieving success. In business, that repetition comes in the form of years of hands-on experience and constant learning on every deal. Research studies have shown that it takes about 10,000 hours of practice, or up to 10 years, to be an expert in a chosen professional field. Experience matters when dealing with complex or unique situations. For example, unforeseen environmental and title issues that pop up during contract due diligence could stall or derail the transaction if the broker doesn’t handle it appropriately. Whatever the situation, you want your broker to possess the know-how to navigate complexities, have the domain expertise to foresee potential deal issues, past experience with creative problem solving and persistence to advance the deal through each critical phase of the deal – sourcing, negotiation and due diligence through closing.
Deal Commitment (To Your Success)
Regardless of whether you are doing one deal or a dozen there is an innate time value of money when it comes to failing to meet real estate goals and objectives. Thus, there are significant cost savings and upside to realize by having an experienced commercial real estate broker orchestrate the deals and deliver results. Most brokers are very transaction oriented. They like to do a deal – even if it isn’t quite the right fit – collect their commission check and move on to the next deal. It is important to find a broker that will act as a true partner, even if it means telling you the hard truth about a property that you may not want to hear. One adage that has served me well over the years with clients is “your money is my money”. By incessantly focusing on the customer’s goals and navigating deals with high integrity, creativity, persistence and enthusiasm I’ve generated outstanding results for clients, earned their trust, praise and repeat businesses.
Choosing a broker is a weighty decision. That choice can help to drive added benefits and value, such as saving you headaches, optimizing opportunity costs and navigating complexities to cross the finish line and close your deal. In short, a top broker helps to position you for investment success. Equally as important, a top broker helps to minimize downside risks, such as costly mistakes or missteps that can result in making a bad deal that results in a financial loss.
What’s not all that important to consider when hiring a broker? The size of the office or a big corporate name on the door. Just because a firm has 100 brokers doesn't mean that they're the best in the business, and it certainly doesn’t mean that they will all be working on your behalf. That big brokerage “team” may mean that your business lands on the desk of the most junior member. The best advice for investors is to recognize that commercial real estate is a relationship business, and it is the individual broker you hire that matters.
If you are interested in learning more about triple net lease assets and whether NNN aligns with your investment objectives and lifestyle goals, contact Andrew Vu at 415-539-1120 for a free, no-obligation NNN consultation.