Whether you are buying, selling, or leasing, a great broker can make your life easier… and make you more money. A great broker that knows the market and the asset class can negotiate a better price and terms for you – the client. Many of us have worked with a bad broker, and they feel like dead weight – like you, as the client, have to bring the broker along for the ride. Consider these four areas in order to get a broker that’s right for you.
Knowledge
Particularly true if you are entering a new market, submarket or asset class, having a broker with in-depth knowledge can be key to your success. Knowing the market means the broker has knowledge on the path of progress, traffic patterns and major employers coming to or leaving town. Even better, knowing the asset class within a market means the broker has insight into vacancy rates, demand, and amenities that tenants desire. For example, if I am looking to make offers on A class medical office space, I would expect that my broker would be able to tell me the current supply available for lease, how much demand there is for this product, and how long it takes for this type of space to get leased.
Experience
We know that everyone has to get experience somewhere, but it is generally not a good idea to allow a new broker to get that experience with you. I’d consider making an exception to this if I plan on making multiple offers in a market that are unlikely to be accepted or even considered. Experienced brokers often don’t want to spend time writing up LOIs or contracts for a low ball offer, but it could offer an inexperienced broker an opportunity to learn. If an investor goes that route, the investor must be very confident of the offer and escrow process, because the broker might not have a lot of value to provide, outside of the ability to submit offers to brokers.
On the other hand, in the most cases whether I am buying or selling, I want to have a broker that has done a ton of these types of deals. An experienced broker will know the market intimately, anticipate objections from the other side, know fair cap rates, and be a savvy negotiator to achieve the best outcome on your behalf.
Reputation and Relationships
Part of the value a great broker bring is who they know, who knows them, and their image in the market. If you are using a broker who has a reputation of being sleazy or simply has no reputation at all because of a lack of experience, there’s a good chance that your deal will not go smoothly. True, deals can go sideways even with an experienced broker. A broker with solid local relationships will be able to tap into his or her network to get problems solved, gather information, and achieve a successful outcome for the client. Whether it’s challenges in due diligence, finding contractors and tradespeople, help with lending, or with working with local jurisdictions a great broker will use their solid reputation and extensive relationships to get great outcomes.