Commercial Real Estate

Is Having a Commercial Real Estate Broker Necessary to Close a Deal?

An important question is how much technology will be able to replace the human players within commercial real estate deals. That said, most experts agree that it is highly unlikely that it will ever be possible for brokers and agents to be fully automated, this despite an increase in things such as QR codes. However, a question that does come up is whether or not it is truly necessary to have a broker present during every deal.

Understanding the Roles in Commercial Real Estate

There are many different players in every commercial real estate deal. It doesn’t matter whether people have an existing space and wish to renew their lease, whether they want to start a brand new lease, or whether they wish to purchase a piece of commercial real estate. There are always two specific sides to the story. First, there is the agent who represents the tenant or buyer and negotiates on their behalf. Second, there is the individual who represents the building’s owner. It is possible in certain states for someone to represent both, and California is one of those states. This is why Orange County is also home to a number of dual agencies, although they do have to adhere to some regulations.

To help both tenant and landlord feel the transaction is fair and transparent, according to Kadosh, brokers may come up with certain caveats in deal structures, word agreements in certain ways or have parties provide tax returns, sales returns and other data, especially with large institutional clients.

The Importance of a Good Broker

Both sides of the deal, however, even in a dual agency, have a specific purpose. The owner’s agent, for instance, is responsible for finding a buyer or a tenant for a commercial property. They do this in a variety of ways, including marketing to prospects. Agents are very good at advertising properties, using signs and online advertisements for properties and finding inquiries and interest in them. At this point, however, they often find themselves quite overwhelmed with the elements within a negotiation. It is vital, therefore, to have a good broker on board.

Such arrangements will work just fine when your broker is showing you properties represented by brokers in other offices. However, the situation gets cloudy if your broker’s own office has taken listings for spaces that you want to see. This puts your broker in an awkward position. The broker is duty-bound to find you the best space, regardless of who has the listing, but is also committed to contribute to the success of the office.

The Role of the Procuring Agent

Meanwhile, there is the procuring agent who wants to find a space for the would-be tenant. Should there be a simple list that shows all available buildings, and should this list be easily accessible, then there would be far less need for a broker, although this role would not be eliminated in full. This is seen, for instance, in residential properties because of the fact that these are listed on a variety of different websites. Commercial real estate agents do not have this luxury, however, relying mostly on Loopnet. Unfortunately, this isn’t properly governed, nor is it overly accountable, which means that it can’t truly be depended on.

Perhaps a good analogy of the broker is that of the flight attendant. Many believe that the role of the flight attendant is to serve drinks and make people have an enjoyable time. In reality, their role is to help individuals should things go wrong. Yet, it is very rare for things to actually go wrong, which is why they actually have the time to serve drinks and food as well. They can never be fully replaced or fully automated, however, no matter how good a self-serve system they may be able to implement.

You may also like
Commercial Tenants In Orange County Could Be Facing A 40% Rent Increase
Orange County Commercial Real Estate Remains a Difficult and Competitive Market
Orange County Commercial Real Estate Remains Bullish

Leave Your Comment

Your Comment*

Your Name*
Your Webpage