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Professional services are expensive! In many cases, hundreds of dollars an hour.
Generally, the level of experience is coupled with a high hourly fee structure. I am talking about consulting, tax, legal, banking, and wealth advice.
The more experienced your service provider is, the more you pay for her services – except with commercial real estate services.
Your commercial real estate service provider could have five minutes or fifty years of experience and you pay the same percentage of a sale or a lease if you hire him to sell or lease your building.
So aside from her experience, what are the overlooked reasons for hiring a commercial real estate broker?
The value of his network. Need a contractor to bid a tenant improvement – check! How about a consultant who will walk you through the maze of city requirements – check! What about a lender that can look past a couple of minor credit blemishes and get your loan done to purchase that building – check! Your commercial real estate professional can be a treasure trove of referrals for folks that can solve your problem.
His knowledge of the market. Two buildings of the same size appear in the comparable sale or lease set. One took five months to sell and the other was sold in thirty days. What was the difference? This is the type of market knowledge that can help you get your building leased or sold quickly.
Transactional expertise. Want to take your equity and accomplish a tax deferred exchange through chapter 1031 of the IRS code? How would you structure a lease with an option to purchase so that you are protected? If you award free rent to a prospective tenant, are you better served calling that concession “free” or “abated” rent? A professional can guide you through all of these variables and/or put you in touch with the professional service providers who can – see The Value of His Network.
Relationship with other commercial real estate professionals. Are you getting the true scoop on the interested parties that tour your building? How is your broker’s reputation with his competition? Is your guy cooperative with his fellow brokers? Roughly 75% of all commercial real estate transactions are concluded with an owner rep AND an occupant rep. Make sure that your representative plays nicely with others.
Problem solving ability. Potential environmental contamination, city compliance issues, a building sprinkler system that is insufficient, seismic studies for your racking, building permits for new offices, a use of your building that requires a conditional use permit from the city, Americans with Disabilities Act conformance. ALL of these hurdles can stop a deal in its tracks if your professional is ill equipped to help you navigate the rapids. Make sure your provider is experienced in real problem solutions.