Why would a potential customer hire a commercial real estate broker? The answer is simple. These transactions take knowledge, up-to-date information, networks of contacts and very good negotiating skills to complete the project. A layperson would not normally have all of these attributes, which are needed to pull off the deal.
An example would be a property that has been on the market for an extended period of time. There has to be a reason the property has not sold or been rented. Maybe the terms are out of line. A commercial real estate broker would know this and use that knowledge to drive for a better deal for his client. The client on the other hand may not know the specifics of this piece of property. His ignorance could be very expensive.
Zoning laws vary in business districts and industrial parks. Again, a commercial broker would know this and fit the properties to the client’s needs. The broker’s expertise is a time saver and a guard against getting involved with the wrong property.
Farms and ranches are another special area of commercial real estate. These properties have requirements that are not the same as a commercial building. An example would be the need to continue a certain number of acres as wetlands. This could make or break the deal if the new owner has plans to use all of the land for his project.
Heavy chemical use in an industrial plant may require special handling and treatment as part of OSHA or local codes. Would the property being considered qualify for this type of manufacturing? A commercial real estate broker should know the answer or at least know where to find the answer. Oil refineries and fireworks makers have special situations, which would be important to know. Not all commercial property would fit their needs.
As you can see, commercial real estate is a large and complicated part of the real estate market. In order to make good deals for a client, the broker on both sides must be knowledgeable and a problem solver.
In addition, we haven’t even touched on trading property for tax-advantaged transactions or facilitating an IRS Code Section 1031 tax deferred exchange.
Businesses with special requirements need expert advice and information. This need is paramount as it must be met or the deal will fall through. Knowing the law, the zoning codes, and special local rules are only the beginning when dealing in commercial real estate. There is also the art of deal making to consider. Not all brokers are great dealmakers. Experience will help, but some brokers just have a knack for putting deals together. It may come down to the fact that a good commercial real estate broker also has to have a very good imagination. Knowing all the technical information is needed, but putting it all together takes talent and the ability sometimes to think outside the box.
Good thinking and puzzle management in commercial real estate is a premium asset.
One of the most important decisions you’ll make is the Broker you select.
