I am a newbie commerial RE investor and want to establish working relationships with a number of RE agents. First one I came across asked me to sign an exclusive agreement. Is this customary? If so, what is the recourse if I am not happy with my agents?
Unless you want to limit yourself to just one broker for all of your deals, I would not advise an exclusive contract. When I use exclusive contracts I do it on a deal by deal basis. Many of my clients have multiple brokers for a wide variety of projects.
For example. One of my clients has an exclusive contract with me for his Oynx Mine Tracks. This means anything to do with these tracks goes through me. Otherwise I have no interest in his other investments, even in the same industry.
In your situation I would advise working with a number of brokers. Only sign exclusive contracts with a broker that limits them to a single project at a time rather than for all your commercial real estate investments in general. After you have worked with a variety of different brokers you may find that you like working with some over others. After that kind of trust is established you could consider a single broker for all your deals.
Good Luck! :beer
Thanks for the advice. She said the exclusivity allows me to search properties on their own website, etc. etc.
How does one find good commercial RE agents, short of calling every major agencies and ask to speak to their top producers?
It can be tough. The commercial industry is full of vultures. Personally, I skip the Realtor all together when dealing in Commercial Real Estate. Commercial Mortgage Brokers are more knowledgeable and will save you money. You can get the same and more services from a Commercial Mortgage Broker as you can from a Commercial Realtor. A Broker can provide you with all the services of a Commercial Realtor plus handle the finance side of the deal charging only their Brokers fee. This saves me the Realtor commissions, which in commercial are VERY HIGH! The only time I ever deal with a Commercial Realtor is when I find a property I’m interested in (or one of my clients is interested in) that is listed by a Realtor.
There are several ways to find commercial property for sale without using a Realtor. loopnet.com is one of the best, most Realtors list commercial property there as do Brokers and the property owners themselves. Costar.com is another one. I usually search for the type of property I want through the county auditor, then I’ll contact the owner and ask them if they are interested in selling. The best commercial deals I find are those that are not listed. I try to catch those who are thinking about selling but haven’t done anything about it yet.
Good Luck! :beer
They will often ask, but it’s not usually in your interest to sign an exclusive agreement. They will understand.
Don’t be afraid to say that you will not sign an exclusive agreement but you still want to see her listings anyway. It would be strange if she said no. After all, her goal is to sell properties, not collect exclusive agreements. As Chateau Commercial said, most of her commercial deals are likely shown publicly on some combination of Loopnet and Costar, anyway.
I’m very clear with all brokers:
- If they find a property for me, I will use them.
- If someone else finds a property for me, I will use that person.
- If I find a property myself, I will choose who I use.
It get’s sticky when someone brings you a deal you like, but you are not comfortable with the person (i.e. one of the “vultures” Chateau Commercial referred to). Over time, you’ll tend to gravitate toward those you like and trust. At first however, it’s hard to know.
Chateau Commercial/Equity:
You guys are unbelievable!! Thank you so much!!!
Chateau:
So I should meet up and have lunch with local commercial mortgage brokers since they just may have sales leads? Are you a commercial mortgage broker and if so do you work in MD and the general vicinity? Otherwise any referrals would be appreciated. I am looking at multifamilies from $1 to 4 millions.
Also I can just ring up my county auditor and ask to look through their commercial property lists? Do you then research the properties and mail a letter to the owner of properties that fit your criteria? This is a great approach.
Equity:
I spoke to the agency’s top dog - a regional VP for Commercial - and he told me Loopnet is crap, etc. etc. He said they get their listings way before they hit these sites. Seems to make sense to me. Judging from you guys’ comments, I shouldn’t expect them to actively hunt for deals for me. They will pass on to me whatever come across their desks.
While there seems to be a general disdain for Loopnet, it’s a way to find deals and to make contact with brokers who might have other deals. It’s also a great way to get a sense of what’s out there, at what prices, and from whom. Are they the best deals? Probably not. Finding owners yourself is obviously the way to go. Next would be to have brokers call you with deals before they list them, as the VP you mention said.
It’s important you get your name around and at the top of the brokers’ phone list. I don’t know what you read into our words, but their job is to actively hunt for you. To completely state the obvious, they will pass on to you anything they think you will buy. You must market yourself as a serious, decisive, well qualified buyer, with clear goals.
It’s most important that you clearly define what you are looking for (your investment criteria). If you are vague, and constantly turn down deals because of undefined subtle nuances, they will eventually quit calling. Too broad, and you won’t be able to make up your mind. Too narrow, and you won’t receive any phone calls. It’s a fine line. Good luck.
Well said Equity, well said. :bobble
Thanks again guys. I am quite clear now what the realtors stand. Any more tips on how to find sellers would be appreciated. Will start with my county auditor today.
Matt,
I tried two different emails and still couldn’t register - tells me they are used which is pretty impossible.
Like I said, I am a newbie commercial investor. Spoke to another agent yesterday. Told her my investment criteria, including that the property must cash flow. She acted as if I was from another planet and said oh…most don’t want properties that cash flow… I said to myself is she out of her mind or something. Why would anyone invest so not to make any money?? Just wondering if a lot of investors just go for the tax shelter and appreciation? Who are we really competing against???
Great thread everyone.
Does anyone have any advice on locating a good (and preferably local) commercial mortgage broker? I haven’t had the best experience with the few I’ve used and have begun to spend more time/energy trying to develop relationships directly with local banks and private lenders - both of which I think are important.
However, I know that good comm. mort. brokers are definitely very knowledgeable about the market and could be a great resource in finding properties that fit my criteria.
I’m sure personal references/recommendations are a good way to find brokers, but does anyone have any other suggestions? Is there a list of “certified” brokers by state? Also,most of the big brokerages seem to deal mostly/exclusively in office buildings, etc. - while I’m looking more for smaller apt. buildings.
Thanks for any help.
Are you trying to buy real estate or a realtor???
You don't make investments based on a realtor only on the real estate and the financing. Never sign an agreement like that. When you do use realtor's you must watch them closely and be sure YOU control the deal never anyone else.
Welcome to the club. I suggest you define what you mean by a “good” commercial broker. The big dogs at the major firms, who, for example, do large skyscrapers, are very good and very sophisticated. They don’t touch small apartment buildings though. Your local housewife-just-turned-realtor has access to the MLS and small apartment building listings. Would she be “good” for you? Do you want someone with deals, someone to zealously represent and protect you in a transaction, someone to help you with your investment criteria, or maybe even someone to advise you with your due diligence? Do you want a mentor or a facilitator?
If you found a deal on your own, would you know how to close on it? Are you comfortable working with a seller’s agent representing you in a transaction with his or her client? What do you need? What do you want? What is “good” for you? When you can answer some of these questions, you’ll know what to ask when you find a broker. If your expectations of the broker are not clear at the beginning, your relationship is doomed. Finding a broker is fairly easy.
My best advice is to do a search on Loopnet for the type of building you want in your area and see which brokers tend to pop up the most. These are the people you’ll be dealing with over time. Then email or mail them your investment criteria. Do this to just a few at first and ask them if your criteria makes sense or not. Is it something they can work with? After you’ve had a few conversations and refined your criteria, do a mass mailing by sending your criteria to all the Loopnet brokers you identified. About 80% will start sending you everything they have and 20% will respect your criteria and just send deals that match. It really doesn’t matter. You’re marketing yourself and getting your name around. Begin calling those with promising deals. After a while they’ll begin calling you and you’ll develop relationships with those you’re comfortable with. You might want to have one of these represent you in a deal with another. Others you might not like, but love their deals. Then it’s up to you to decide who you want to bring in on your side to help.
Join a local real estate investment club or preferably an apartment owners association. This is such a competitive business you’ll find most multi-unit owners don’t share much, but you be associating with like-minded individuals. Brokers attend these too. I know this is vague, but something will rub off.
The local high school in my area offers adult education classes which occasionally include courses on both commercial and residential real estate investing. These are taught by local realtor/investors who specializes in multi-unit buildings of the size I buy. Take classes to meet the realtors.
Several of the local SFR brokerages in my area have an arm that does some commercial. These are the small time operators you want. Call them.
I’ve gone to SFR open houses and asked the realtor du jour who in her firm does commercial. They always say they do. Stay away from these.
Work hard. Good luck.
I think it is a poor statement that real estate brokers are not worth the commission they receive. Receiving purchasing advise from a banker is not in my business plan. How to put a loan package together is a different story. Getting DCR’s and other guideline advise is fine as well. A real estate broker can save you time and money. You “MUST” seek a real estate broker who is qualified in the commercial arena. There are very few that truly understand the game. The word “Realtor” means nothing except that they pay dues to a local MLS and they can use the Realtor logo and some ethics requirements. I would look for a CCIM or SIOR and they may also be a Realtor but, look for the CCIM and SIOR first. Commercial commissions are not any higher than a typical transaction except the deals are typically a higher dollar amount. Not to mention all commissions are negotiable. You don’t get anything if you don’t ask the question.
Good Luck
Thanks guys for your advice.
I have been a somewhat reluctant SFH landlord for over 20 years and only recently became a commercial RE investor wannabe. The 2 so-called commercial brokers I’ve worked with so far know far less about the game than I do, after some home schooling myself on the subject matter.
These two websites look great. I will try to develop a working relationship with some of these agents. Will try same with mortgage brokers.
I think the point is to tap your network for what it’s worth. Have an open mind and some of these mortgage brokers and commercial agents may be able to help in some way.