If you do not have the experience in a particular field whether law, medicine, art or sales, the wise decision is to direct your questions to a pro in that field that can answer your questions with some degree of knowledge and experience.
In commercial real estate there are many different asset groups and not all brokers are qualified to speak about each one with any degree of certainty. Try to hire a broker that specializes in your select property group of interest.
If the 1031 trade is of interest and triple net property or properties are your topics, go with a specialist for that sector not a broker in residential sales or maybe an apartment specialist as example. Friendship with a commercial real estate broker is not the answer either. Business needs to be set aside from a friend or relative in a field that they may not have the knowledge to get the job done.
Interview your prospective real estate broker; make sure the firm is well established in the sector and how much experience your broker really has in doing deals.
Reading a book on commercial real estate or going to real estate school and passing a test to get a license is NOT the qualification he or she needs to assist you by any means.
ASK TOUGH QUESTIONS AND EXPECT SOLID ANSWERS THAT COME FROM THE TIP OF THE BROKER’S TONGUE. ANY HESITATION OR HEMMING OR HAWING FORGET THEM, GO TO THE NEXT PERSON!
A quality real estate broker has a fiduciary responsibility to serve, you, their potential client, in the best way possible and not think of the maximum fee they can earn but what is the best result for you, the investor.
The broker needs to share the good, the bad and the ugly about every deal and even offer suggestions of other options that they, as the broker, will not necessarily receive any financial compensation but may be a better solution for you, the investor.
By doing this, you will most likely respect them more and give them other business or recommend them to other investors that want a truthful real estate broker willing to place themselves second to their client’s needs, not their own compensation.
Some doctors and lawyers take on pro-bono jobs and so do QUALITY commercial real estate brokers!
A good real estate broker understands:
- the terms of a lease,
- location of a property,
- the quality of the tenant,
- the finance aspects of the deal and
- the overall cash on cash return with either upside potential or negative aspects in the long term.
Some real estate deals look great on the surface but underneath they are a disaster waiting to happen.
Your commercial real estate broker should be able to recognize these pending disasters and advise you accordingly. You should also have a quality real estate attorney and CPA at your side advising you of legal aspects and tax consequences of the potential real estate deal but not allow them to tell you their opinion of the quality of the real estate since this is not their job or field of expertise.
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