Finding The Right Commercial Real Estate Broker

By | May 21, 2023

To find a commercial real estate broker, you could look in the yellow pages under the heading of “real estate”, you’ll see the all the familiar ‘big’ national names and national franchise names. However, if you’re looking to do the commercial real estate investment business like we do then you don’t want to head in their direction.

Instead, seek out the smaller local private commercial brokerages. Instead of 100 agents, they usually have 10 or less. Of those 10, although they can all handle any type of commercial deal, they each often specialize in one commercial area like apartments or the office sector that’s their particular specialty.

If you are thinking about entering this marketplace, make some calls to these private commercial brokerages. Ask who specializes in the commercial area in which you will be investing. Take that agent to lunch and pay for it. What are you doing? You are buying an education. Don’t forget to ask them for packages on current properties they are representing.

Most of the time in the commercial area, when agents or commercial brokers have listings, they put together a lengthy comprehensive package, which includes the usual listing information, traffic counts, zoning, profit and loss analysis, best-use information, and perhaps a current appraisal of the property. In addition to the standard information on the land and the location, they usually include the area demographics, in an effort to convince you that their listing is in a great location.

If you were investing in the residential marketplace, they would have information regarding the school districts in the area. However, since you’re in the commercial field, the demographics they’ll put into your package will help you determine if this would be a wise commercial investment for you. So, they’ll include information about other businesses that are already in the area, or what kind of profit margin they’re currently reaping.

NOTE: They’ll have profit and loss statements in there, too. Now, many times, you’re going to see what they call Pro Formas. This type of financial statement is purely theoretical. It projects what your assets/liabilities or income/expenses might look like in the future for a particular enterprise- if it were a perfect world. It might even demonstrate projected earnings for this business if you merged with another company. This information is pre-set, but you need the actual figures. Some agents may not give you actual information until you have a contract. But, that’s all part of your due diligence- you want to look at the actual operating statements on these kinds of properties. That’s what justifies your purchase price.