5 Ways Commercial Real Estate Agents Earn You Money

As an investor and property owner, I always saw the immense value of working with an agent. But I sometimes come across those folks who feel quite differently. This year I began actively brokering transactions as a commercial real estate agent myself. After years of real estate investing, property management, and consulting, it seemed like the best use of my skill-set and a way to learn more about the business. I'll certainly attest to the fact that not all commercial real estate agents provide the same level of service. And if you're struggling to answer, "Do I need a commercial real estate agent to sell, buy, or lease property?" or "What do commercial real estate agents do?", allow me to share what I have learned.

1. Your Agent Saves You Time

As an investor, property owner, or business owner, we only have 24 hours each day. No matter how many people I ask, it seems like we are each only given the same 24 hours every day or 168 hours per week. Let's be honest... it takes a lot of research and effort to correctly value and sell or lease a commercial property. Especially if you have never done it before. The bulk of that effort goes into gathering information, analyzing comps, marketing the property, following up on inquiries, managing documentation, and providing updates. Good agents have developed processes, purchased tools, and built the necessary relationships to effectively manage the sale. If you have your own occupation or business to run, every hour spent on something else is lost revenue. Keep doing what you do best, and delegate the rest.

2. Your Agent Gets the Best Price

Owners who lease or sell with real estate agents generally receive much higher prices. Buyers who hire real estate agents get lower prices and better terms. When you consider the realities of this business, its not surprising a skilled professional will outperform the layman. Commercial real estate agents sell, buy, and lease property for a living. Day-in and day-out, your commercial real estate agent is pounding the pavement, making cold-calls, and pressing flesh. These are the most well-connected folks in your community. Their livelihood depends on knowing the right person at just the right time to bring a deal together. Commercial agents invest copious time and money into training and tools to optimize the marketing of properties to their database of qualified tenants, buyers, and investors. Their experience in sales and negotiations is invaluable. Commissions for commercial real estate agents often range between 4% to 8%. Hiring a great commercial real estate agent with systems, processes, and a deep network will easily return that commission, and heck, may even net you an additional 30%! Why risk it? This is definitely an area where you don't want to be "penny-wise and pound foolish".

3. Your Agent Works Fast

The real estate sales industry's primary purpose is bringing liquidity to the real estate market. Real estate agents all across the world are working to quickly connect the right seller to the right buyer. A good friend and I were recently discussing my profession. My friend expressed dismay as he told me the story of a commercial agent who listed a $5 million property for sale and then sold it.. the very next day! My friend was upset by the idea that anyone could earn such a big pay-day from, what he deemed, such little effort.

I responded by asking him, "Do you think that deal came together so quickly because of luck?". In truth, the agent likely spent years preparing for that transaction. It can take thousands of hours of cold-calls, coffee meetings, showing appointments, training seminars, declined offers, and failed transactions to form the necessary relationships and hone the necessary skills to close a deal of that caliber. The real estate agent who can sell your property within a single day is truly exceptional, and worth every cent. It's their job!

4. Your Agent Protects You

Selling or buying commercial real estate is not like selling or buying corn, oil, a used couch, or a car. Commercial real estate is sold in high-dollar transactions with a lot at stake for each party involved. Commercial real estate leases can get very lengthy and complicated. Each parcel and it's ownership is unique and can be very complex. Sellers have unique properties, buyers and tenants have unique needs, and other parties like local governments, lenders, appraisers, neighbors, and contractors all have interests. Commercial real estate agents act as conductors using their tools, relationships, training, and experience to establish appropriate price points and bring all of the parties together in a timely fashion. Your commercial agent has a fiduciary responsibility to protect your best interests. The agent will point out common pitfalls and prepare all of the necessary paperwork. A mistake here can quickly cost you as much as the agent's commission.

5. Your Agent is a Skilled Negotiator

For many of the same reasons listed earlier, your commercial real estate agent should be experienced in negotiation. Commercial real estate agents must become skilled negotiators to succeed in their line of work. Agents are able to use their experience and knowledge in the market to ensure their clients are getting the best possible outcome. Information is power in this business and good commercial agents constantly have an ear to street and know what terms a sale or lease should include and at what price points. If selling, buying, or leasing commercial property is not your primary occupation, don't cut corners by testing your own negotiation skills in the real estate market. Hand it off to your commercial real estate agent and reap the rewards of their professional expertise.

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