Should I Use a Commercial Real Estate Broker
The Pros and Cons of Using a Commercial Real Estate Broker
Everyone wants to save a dollar. If you work hard, you can knock a few thousand off the cost of a real estate deal and many of us are inclined to go it alone. But is it worth your time to sift through many online listings and try to negotiate without using a commercial real estate broker? This article examines the pros and cons of finding your own office space versus using a commercial agent’s guidance.
Is their Potential Cost Savings?
Unwillingness to pay the commercial real estate broker commission is one of the top reasons that companies choose to forego using a tenant agent. Yet businesses seldom have to pay out-of-pocket for this commission. The landlord budgets a commission for the listing agent, which is split with the tenant broker upon completion of the lease. In general, the broker’s commission costs the company nothing. One notable exception, if your broker is asking for above-market fees.
A commercial real estate broker can gain cost savings for a company through the broker’s market knowledge, access to privileged information, and skill and experience at negotiations. A business owner could successfully navigate the lease or purchase process, but might miss important market information a broker could supply that would maximize profits as the business expands. He or she might not recognize potential negotiation items that would save them hundreds or thousands of dollars over the course of the lease. Having an agent that represents your interests could translate into money in your company’s pocket.
Who is Working for You?
Commercial Real Estate Listing agents are always working for the landlord, as they are duty-bound to protect the landlord’s interests. If company managers only works with listing agents, they must rely on their own wits to protect the company’s interests. This creates a decided disadvantage at the negotiations table, as only the landlord is represented by professionals familiar with the process.
A fiduciary bound tenant agent will work for your company’s interests at every stage of the process. They can more disinterestedly search for properties listed with all other brokerages and can take into account your company’s situation and needs, rather than working to fill a building at the best price for the landlord.
Save Time & Money!
Without a commercial real estate broker, narrowing down the list of properties available online can be overwhelming. Our brokers bring experience and a solid understanding of Minneapolis/St Paul area, and can help remove spaces that are not ideal for what you do.
In addition to avoiding the heavy investment of time just to find the property, time savings can be realized as the deal progresses, in organizing inspections, negotiating and re-negotiating terms, completing plenty of paperwork, and making offers. Because the broker has experience and connections, the search for a property, as well as the completion of all the contingent steps to signing the lease can be streamlined.
There is a con to the time element of using a commercial real estate broker. Your agent does not get paid until the deal is signed. This may motivate him or her to rush the process along, without giving full consideration to your company’s needs. Tenants will need to be aware of this fact in order to insist on moving the deal along at the speed that is best for their businesses. Our agents have flexibility in how we structure our fees to avoid this potential problem!
Should You Hire a Tenant Commercial Real Estate Broker?
Having an experienced advocate working for you can only be in a company’s favor. However, tenants must be aware of and vigilant about the inherent conflicts of interests in the process.
We avoid conflict with how we work and how we structure our fees. These negative incentives can be moderated in your contract with the broker. Depending on the project, we have flexibility on how we structure fees. Rather than having the landlord pay a commission, the company can offer a flat fee for the broker’s efforts, whether or not a space is found; or an hourly fee credited toward a success bonus if a lease is signed.
CONTACT AN AGENT TODAY!