7 Great Questions to Interview A Broker

Not long ago, after selecting a broker to list a property, a mentor shared his insight into how real estate brokerage is parochial, and his best steps for choosing a broker who was a part of the right community for each assignment.

Occasionally, a lease or sale of a building will stall unnecessarily, because of a mismatch in a principal’s needs and the specializations of their representatives. In my first year of brokerage, a GSA lease was dropped in front of me to review. Being completely unaware that such a long and complex lease existed, I certainly did not know where to start dissecting it, because neither I nor anyone I knew had been through one before. I was not in the right community of those who dealt in GSA affairs regularly.

As in my example, a “community” often times will be more than a simple geographic area. It could be any combination of building type, investment type, knowledge base or personal network. As an investor and broker, I have experienced how millions of dollars of additional value can be realized by considering the question of, “what is the right community, and who is the correct person within it for each assignment?”

Choosing Your Broker (lease or sale)

In the world of “new-school” electronic connectivity & big data versus “old-school” eyes, ears & intuition, it can be challenging to get all stakeholders comfortable with the right criteria for choosing a broker. Whatever one’s comfort level may be, here are a few considerations to contemplate before making any major decisions.

Define Your Property Type

While it may seem rudimentary, it is worth acknowledging that today’s real estate market has many different property types, investor types and investment preferences. An initial consideration to think through is what type of property you have, what it could become, and if a change to its use would be beneficial or not. This is known as determining the highest and best use, and will help in narrowing the field of potential brokers to consider.

Some commercial property categories are:

  • Industrial

  • Multifamily

  • Office

  • Retail

  • Land

  • Medical

  • Hospitality

  • Value Add

  • Net Lease Properties

 Define Your Likely Investor Type or Buyer Pool

Certain brokers may be more in tune with one investor type or buyer pool versus another due to recent transactions that built relationships and furthered an understanding of those buyers’ preferences, including but not limited to:

  • Funding & Returns – Cash, Leveraged, IRR, Stabilized

  • Market Concentration – Geographic, Type, Revenue

  • Psychographic Focus- Age, Income, Lifestyle, Values

  • Buyer Type – Institutional, Private, Joint Ventures, Active, Passive

Just as it would be a mismatch to ask a podiatrist to complete dental work, it would be a mismatch to ask a broker who focuses on agricultural land to list a vacant office condo. A suitable broker for the assignment will likely have existing relationships with potential buyers and will know how to communicate the positives of the property in a way that matches the associated investment preferences.

 7 Great Questions

Finally, the same mentor of mine suggested that by focusing in on certain questions and the rationale supporting their answers, a client and a broker can discuss and determine if they can achieve the expected results on a particular assignment.

  1. What have you sold that is similar to this recently?

  2. What price would you list this property at?

  3. How, and to whom will you market the property?

  4. What price will this property likely sell at?

  5. What is the timeline of events from listing to close?

  6. Who will pay for the marketing?

  7. What will the total commissions be?

After discussing property type, highest and best use, potential buyer type, and the 7 questions; the best next steps should emerge and lead towards a successful transaction which meets the clearly defined goals.

If I can ever be of any help in discussing thoughts and ideas, or recommending some exemplary and successful brokers in Minneapolis or Naples, please don’t hesitate to reach out at chad.commers@gmail.com.

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