Are You Getting Your "Broker's Worth?
Q. What does the broker REALLY do to earn his/her commission on a commercial transaction?
ANS. Exactly what do you expect him/her to do?
Aren't we really going around in circles here, answering a question with another question? (even the response is in the form of a question) Well, the reality of it is if you don't know what to expect from a commercial broker, you either get what you expected (which is little more than a tour) or get the unexpected (which usually shows up AFTER the lease is signed or escrow closes)
Confused yet? Most tenants are by this time. After all, just what does that broker do to deserve all that commission?
To most tenants, a broker's job is to find the best property or space and negotiate the best market deal so you can brag to all your friends at the country club what a great deal you got.
Well, if you want a tour guide, we can direct you to Universal City. If you want someone to negotiate, try my daughter who was the best at negotiating things like curfews and allowances. Why not leases and purchases? This may sound crude, but it reflects the low expectations most all tenants have of their brokers.
On the other hand, a good broker is like an extension of your management team.
Here's a few question to ask about a broker before choosing someone to represent you. A little care could end up saving you thousands of dollars and hours of wasted time:
Does the broker understand my business?
THAT'S THE MOST IMPORTANT QUESTION BEFORE YOU CHOOSE A BROKER
ONLY by completely understanding your business, where you are...where you are going...and
how you plan to get there, Can the broker REALLY help you with your facility planning? Having the best market knowledge is important but not nearly as important as most brokers make it out to be.
Think about this!!!!
Let's say you are the president of a growing computer hardware company. You've just been introduced to super potential client. After your initial introductions, what is the first question you ask? Is it "How big a computer do you want?" or is it something a little more rational like, "Tell me why your firm is looking into a new computer system."
· Do you help your new client look at just immediate needs or do you help him address long term growth?
· Do you install your base system then modify it as you see fit or do you custom develop the system to meet their needs in the most economical manner?
· After the computer is installed, are you there to help them if a problem comes up or adjustments are needed or do you simply sit back and wait until the computer is rendered unusable and show up to sell them the next greatest system all over again?
Get the picture?
"So Mr. Smith, I see from my tracking this property that your lease is up in three months and from the looks of it, you're out growing the 8,458 square feet your presently in. I've got a great deal in one of the buildings I represent that's about 10,000 square feet. That should give you some good "breathing” room and since I know the landlord REAL WELL, I can get you a GREAT deal. Why don't you and I go see the space tomorrow to start the ball rolling?"
Sound familiar? Well here's a simple check list of some issues maybe your broker should address:
1. Review firm business, marketing, financial plans
2. Define Goals and Objectives of your firm as it relates to real estate
3. Establish priorities such as image, location, control, economics
4. Work with management to project growth or expansion needs
5. Chart people counts and common use areas to help establish base size requirements
6. Discuss staff adjacencies
7. Formulate facility needs as it may relate to potential requests for Proposals or Intents to Lease/Purchase
All this is done BEFORE the broker even does a property search or walk out the door with you (yes your broker should survey the entire market).
Just as you plan your business, your broker should help to plan your real estate. After all, it is the largest non-revenue producing line item on your budget. Don’t just look at rent as a necessary evil!!!!
There should be no additional charge for any of this work. That's part of what you pay that commission for.
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