What You Need to Know About Working with a Broker
Whether you are looking to buy or sell commercial real estate, an experienced commercial real estate broker can assist you with the transaction.
Who is a broker?
A commercial real estate broker is an independent contractor who will have an intimate knowledge of your local commercial real estate market. These experts are typically licensed. Since commercial real estate transactions involve legal documents, many commercial real estate brokers are lawyers.
A commercial real estate broker will research properties and market conditions for prospective buyers and sellers and handle the process from due diligence to closing. They will work with lenders, attorneys, appraisers, and inspectors to negotiate the best deal for you.
Here are the pros and cons to consider when trying to decide to use a broker or to go it alone.
Pros: Brokers have access to a network of proprietary reports and resources on market data regarding commercial sales and leasing. They also have a wealth of industry contacts.
On the investment side, brokers will have available property lists to help you find a profitable location and space that meets your commercial needs. A broker can get your existing property in front of the right buyers on the sale side. A knowledgeable broker can advise you on the valuation process and what is the highest and lowest price you should accept when buying, leasing, or selling.
Brokers would also be familiar with the zoning and restrictions you need to be aware of and can help you identify the right properties and locations in the areas you are interested in.
Pros: Structuring leases or purchase terms on commercial properties can involve complex legal and financial documents. Allowing an expert to handle those details for you can make the process less confusing and help you get a better outcome. A commercial real estate broker can interpret and negotiate clauses and contracts, appraisals, inspections, tax laws, loans, cap rates, titles, and other financing and legal specifics.
Cons: If your broker is not a good negotiator, it might diminish your possibilities of getting the best price possible.
Pros: Hiring a broker will help you avoid a heavy time investment that you would otherwise need to be able to search, negotiate, and close a deal. A broker can sort through the necessary paperwork and the fine print. A broker deals with negotiations for a living and will navigate the process and negotiate the best deal, so you don’t have to. For example, a seller with no broker who puts his property up for sale will be expected to show the property himself.
Cons: The broker’s timeline may not be the same as yours as he may have, at any given time, a good number of clients to take care of. When researching a commercial real estate broker, find out how much time the broker has available to dedicate to your sale or purchase.
The bottom line
Buying and selling commercial real estate can be a complicated process. While some people are qualified to buy and sell property on their own, hiring an experienced professional who can manage, the process will likely offset the cost. You will also have peace of mind. When you consider these benefits, hiring a professional commercial real estate broker could be the right choice for you.