For some time now, I have been planning to take the real estate plunge by renting my own office space. With passable knowledge about how this sector works, I obviously needed a reliable real estate broker to guide me through the transactions and ensure a good deal. To my surprise, finding a good broker is not just about sifting through phone contacts or browsing online. This is where my in-depth search for a reliable corporate real estate broker began, in the process of teaching me a lot about it.
So, how would you select the right corporate real estate broker? Choose your corporate real estate broker depending upon:
1. Experience in the field.
2. Having proper licenses and registration.
3. How much commission they charge.
4. How they keep clients informed.
5. References.
6. Familiarity with the area.
7. Whether they are working full time
A lot rides on how wisely one chooses a corporate or commercial real estate broker, as they are commonly known. To chart one’s path safely and securely through the complications and risks of real estate transactions and coming up tops is not always easy. Thorough knowledge of the workings and what one may expect is required. Read on to know what my own research in this field helped me come up with. (Check out our list of active brokers on Open Sourced Workplace)
How Does You Choose the Right Corporate Real Estate Broker?
It is very important to choose the right real estate broker if you are planning to buy, sell or rent a property for commercial purposes. A competent real estate agent will skillfully guide you through the whole process. We will take a detailed look at various aspects of choosing the perfect real estate broker, the pitfalls to be aware of, and how to turn out a winner.
How experienced is your broker?
One of the most important deciding factors in this business is the experience. This is not solely in terms of how many years a broker has been in the industry. What they bring to the table for the client is what definitively defines the experience. How much knowledge they have of local realities, how good their pricing is, and how they fare in terms of helping clients find or sell off office space
is what ultimately matters. Credentials of association with big corporations in keeping with industry laws help in finalizing a broker.
How big is their client base?
It is the general consensus that brokers with large numbers of clients are a better bet, given their varied experience. This is true for most real estate firms handling commercial sectors. The more clients they are handling, the better will be their experience and market presence. It follows by logic that because they are good at their job, they have a larger number of corporate clients. Even trainee commercial real estate licensees gain more experience with more cases to handle. There is a small percentage of people, however, who believe in working with firms with manageable client bases. They feel they can get more focused attention on each client in such cases. This is a call that has to be taken depending upon personal preference.
Do they have a valid license?
In your own interest, it is necessary to check valid documentation and certification of brokers. After all, you are going to entrust one of them with your savings and trust. You are well within your rights as a buyer to ask for their certification and testimonials. Checking for the validity of their license will go some way in ensuring you are in reliable hands. This can be done online through the state real estate regulatory board. The real estate broker’s name should be found listed here if they have a current license. In the same way, one can easily check for any complaints or adverse comments on a particular agent in an area.
What is their commission rate?
Most brokers in the USA go by the standard commission rate of 4% (please note that rates vary by country, state, and city and is usually market-driven). Note this is divided between the sales agent and the buyer’s agent. Knowing the commission rate helps you decide your expenses and how to negotiate within your own budget. Also, know who pays the commission. In some markets, the landlord/seller pays brokers directly, and in other markets, it is the client who pays commission directly to their respective broker. This is important to know in order to estimate budget and timing of expenses. Also, if commission will be factored into rental rates.
What modes of communication do they use?
This business of real estate and concluding a satisfactory deal means having constant communication with the client as well as others in the industry. The business is such that it is a constantly evolving situation. As the interested party, you need to be in the know at all times. Find out from the broker what exactly are the forms of communication they intend to utilize and on what frequency basis to keep you informed. You must share your phone number, e-mail ID and any other form of a communication platform that you feel comfortable with in order to have a smooth and ready flow of information.
Do they have solid references?
References are important for every kind of brokerage, especially in the field of corporate real estate. It is up to you to find out real references from the broker and follow up on them to get an idea of what kind of service you might expect from them. Verifying for yourself by getting in touch with available references is the best way to judge the abilities of a broker and test their abilities on the ground. How well or otherwise a said broker has handled the case for a real person is very important when you finalize someone to take care of your real estate issues.
How well does the broker listen?
Each client is different and each deal is a new transaction. This means that each case presents unique facets. Whether buying or selling, what kinds of requirements the client brings in will vary from case to case. Is the broker open and receptive to your needs? Do you get the feeling that your concerns are being heard with attention? This is very important in gaining trust and selecting the right real estate broker. After all, it is a question of entrusting one’s savings into their hands. Trusting one’s gut feeling is important when finalizing a broker.
How familiar is the broker with your locality?
Each locality has its own challenges as well as patterns in real estate circuits. What kinds of properties are in demand, which factors expedite or hinder sales, and what drives the market- these will be much better known to a local person than an outsider. There are ways to gauge, like word of mouth from local people you know as well as what kinds of vibes you get when you interact and interview brokers to finalize the best person for your case.
What does your own research say?
You are in the process of choosing a corporate real estate broker. Do not hurry on this aspect. One should take as much time as possible before fixing someone. Doing a lot of research locally, constantly asking around to find out ones with the best reputation and doing an Open Sourced Workplace search are some ways to find the best one for your case. Google searches throw up the most popular results in the locality. These come with reviews that one should go through and analyze thoroughly before taking the call. One problem with online searches is that there is an overflow of information all the time, and not everything is trustworthy. Getting the basic information is all one needs to do to get started. Ratification of online reviews is part of the detailed research that one needs to do in order to find the best real estate broker to suit one’s purpose.
Is the broker updated on changing industry guidelines?
Commercial real estate comes with its own set of challenges. The nature of the industry and its requirements do change over time with the advent of new technology. These changes can be so sweeping at times as to require entire different setups as opposed to earlier. A competent real estate broker dealing in this industry will have updated information about this fluid market and suggest accordingly. The extent of industry knowledge, technology shifts, accounting changes, education, and the use of analytic tools can set apart one from another markedly.
Is your broker working full time at this?
This factor is something that says a lot about how committed a broker is towards his job. There are many who take up this job as a side business or something to pursue during their off time. And then there are the full-fledged professionals who are completely into this job. Not taking anything away from those who pursue this as part-time interest or casting any aspersions on their effectiveness, it is kind of logical that a person who is on this as a dedicated full time professional will have more to offer to a client and will have better results to show. They tend to be available at all hours and this flexibility helps their clients in more ways than one.
Are your questions answered?
You are well within your rights to ask as many questions as you deem right. In fact, one should ideally interview multiple real estate brokers before settling on a particular person/firm. Probing questions on the antecedents of the broker, the kind of experience, the kind of results, time periods involved, and how well you hit off in terms of vibes – these are all important factors to decide upon the final person. Prepare a set of questions depending upon your own research as well as from experiences of other real people. Ask the potential broker these and other questions and judge how comfortable they are in answering your queries.
Conduct multiple interviews
One interview is never enough to decide what works best for you. Each person has their own particular requirements and a budget to work within. And a real estate broker needs to be able to deliver success within your constraints. Normally thorough research will lead to short-listing some options. Allow each of them to do a presentation. This way one may gauge what each is bringing to the table – in terms of their experience, abilities, cooperation, professionalism, support team, and communication. This will help you decide on one over another.
Do they deal with your kind of industry?
Not every commercial real estate broker will deal with all types of industries. Like homes, each industry is different from the next and so are its real estate requirements. A different set of industry laws regulate every aspect of office space transactions, depending upon your field. A retail outlet will have entirely different needs as opposed to industry or office setups. Finding out a corporate broker’s niche area is a must before one can go ahead to finalize a contract with them.
What is their online presence like?
People go all out to create their websites and build a robust online presence nowadays. Most clients check credentials and testimonials online before committing to a broker. Ask for their website details when interviewing a broker. You can then go online and check out in detail including reviews. While reviews are subjective and personal and ideally should be taken as such, a lot of questionable reviews are certainly a red flag for a particular broker. How regularly the website is updated and maintained also says a lot about the financial health (and hence success) of the firm or individual broker that you have decided upon.
Questions To Ask Past Clients
Getting in touch with clients that a real estate broker has worked with previously is one of the best ways to finalize a broker. Along with the obvious questions about their experience and success of settling a deal, one may also want to know:
1. What was the difference between asking price and selling price? This gives a clear indication of how effective the agent was for a buyer or a seller. The difference tells how accurately the agent was able to gauge market rates and stick to the quoted price.
2. Talk to different clients suggested as a reference by a particular real estate broker. This will give you a wider spectrum of experiences to choose from. How polite the agent was, how approachable and communicative, all of this can be found out from past clients.
3. Ask them how your kind of industry can affect real estate rates in the current scenario. Similar industries will present a more realistic picture to a prospective real estate investor.
Check Your Commercial Real Estate Contract
Once you are done with the selection process, the next step is to finalize a deal and work out details. This is done by mutual agreement and both parties go on to sign a binding contract. Before one does so, however, it is necessary to read and check the contract minutely for any discrepancies or loopholes. It should cover all areas that have been discussed with the real estate broker during the period of negotiations.
The commission for the real estate industry is traditionally 4-8% of the sale/rental price of the property. This rate is negotiable to a certain extent although not much. The time period of the contract is also important. The optimum time frame should be less than six months according to NAR. If your property has not been settled during this timeframe, you are no longer legally bound by the contract and can move on to another agent. On the other hand, if you feel there is scope for a deal in some time, you have the choice of renewing the contract as well. A broker who offers shorter-term contracts is ideally the best bet for a buyer/seller.
It is not uncommon for clients to terminate a contract before expiry if dissatisfied with how things are going. This normally comes at a price to the client, which is something to consider when terminating a contract prematurely. Sometimes though, the bigger picture dictates doing so.
Factors to Know When You Buy/Sell an Office Space
1. Get a professional appraisal. An office appraisal is one of the key aspects of going ahead with a real estate transaction of any kind. You may be a buyer or a seller or changing the terms of your current mortgage, a professional appraisal helps ascertain the exact ‘value’ of the property concerned. This helps establish the real value of a real estate property in the current scenario, the office condition, the mortgage situation, and much more. Especially true for refinancing properties, an appraisal is a must-have document for any real estate transaction.
2. Do a commercial inspection. An action that is essential for an office real estate transaction is a commercial inspection. What this means is essentially an evaluation of the concerned real estate. Required to be carried out by a qualified property inspector, such an inspection assesses the heating, roof, heating, cooling, electrical connection, plumbing, sewage, and fire safety aspects of a property. The office inspector needs to be qualified under state laws to be authorized to do the inspection and prepare a report. The prepared assessment document is something that a potential office owner will demand in order to know the condition of the space they are buying.
3. Seller disclosures. This clause is important for sellers of property. There are specific state laws to this effect and these laws vary a little from state to state and industry as well. It is important to be very clear about what the law in your state warrants as seller disclosure. Suppression of information, wilfully or otherwise, is liable to punishment under the law. As stated earlier, requirements vary state to state but some general information is common, specifically any deaths in the premises, hazards, repairs, missing things, water damage, and any others deemed fit in your particular case.
4. Ensure a clear title. This is a very important piece of documentation for any property buyer. This title clearly establishes ownership for the buyer in a real estate transaction. A ‘clear title’ or a ‘clean title’ as it is often called, means exactly that – a clean chit of ownership to the property with no scope for ambiguity or disputed ownership. In the case of commercial property, there are much larger sums at stake that makes clear title a must to make the future transaction smoother.
5. Check the commercial warranty. A commercial warranty is a contract for office owners and buyers to cover appliances for a period of time. This is especially applicable to buyers. Furnished office spaces come with appliances and services of all sorts, most of which have been previously used. Normally one has no inkling how well maintained these have been by the previous owners. Depending upon what facilities the concerned office has and all that can go wrong, one must get an expert opinion on how well the existing warranty plan covers it all. This will give you a fair idea of what to expect cost-wise when you buy a commercial space.
6. Restrictive covenants. Prospective buyers must take a penetrative look into an agreement document known as a restrictive covenant. This details the actions a buyer can take or abstain from. These are legal obligations that can bind the buyer, from something as simple as what paint they can use to the kind of roof that can be used. Non-adherence to these can invite penalties too. It is better to do a thorough study of these before you go ahead. There is a redeeming factor in that one can buy out these covenants from the seller.
7. Recent trends in the market. Whoever is going in for a major real estate transaction needs to evaluate and investigate the market thoroughly. There are many ways to do this, both for the buyer as well as the seller of a property. Market realities make a big difference in rates. Real estate rates are dependent on market sentiments and this can affect your decision to buy or sell at a given time. Other things like local factors, location, accessibility, neighborhood facilities, transportation, and the kind of industry also play a big role in determining commercial real estate deals. Make a detailed study of these before taking the plunge.
Related Questions
Who is a listing agent? A listing agent works for the seller and not the buyer. It is important to make this distinction before going ahead with selecting one. A listing agent has a completely different profile as compared to a buying agent and in most instances cannot work as the other to avoid conflict of interest.
How does industry type influence real estate deals? Real estate needs vary by industry. A manufacturing company will have different real estate needs than a software development company. The differences are not only in size but structure of real estate transactions. A manufacturer may want to purchase their real estate while a software development company may desire longterm flexibility and want a short term lease with an option for future expansion.
How to plan a corporate budget? Renting office space is just the first step. Commissions, legal fees, construction, project management fees, operating expenses, and ongoing maintenance are other costs that need to be considered when determining the corporate real estate budget.
