When you work in commercial real estate brokerage you need plenty of quality listings, and then a buyer management system to support and encourage offers and sale contracts. If you choose the right listings, enquiries should come your way; every enquiry is an opportunity for the future and that is why the process should be well managed.
As a special note here, exclusive listings help you control buyers; open listings by contrast give you little control over the property, the client, and the buyer enquiry. So your primary focus should always be to attract and convert exclusive listings that you control as an agent or broker; if the listings are of quality, then you should have a good ongoing source of enquiry. That is where your database becomes really important, but more on that later.
Here are some buyer management ideas:
- Buyers are sometimes ‘liars’ (or selective information providers), and on that basis should be fully qualified before you do too much with them. Understand exactly who they are (including contact detail), what they want by way of property, how they have found you, and question deeply their ability to act on a property purchase. All of this has to happen before you do anything else. Expect the buyer to limit or manipulate the information they give you; careful questioning should solve that problem and get to the real facts.
- Have they seen other property locally? If they are working with other agents and are considering other property to purchase it is best to know about it up front. That is why ‘exclusive listings’ are so important; you control the listing stock and so any inspections are yours to create and control.
- What do they know about the local property market? That information is part of the qualification process. See what they know about competing properties, prices, and methods of property purchase (see what purchase method suits them the best).
- Are they a ‘hot buyer’? By ‘hot buyer’ I mean someone that has the ability to act and is motivated in some way to take immediate action. Find out what time frames they have to satisfy the property need as well as the critical ‘must have’ factors in property location, improvements, and property type. If they are ready to act on a purchase then they should rise to the top of the enquiry list, and a full review of your available listings should occur.
- Don’t show them too many properties at any one time; 3 or 4 are usually enough in any one property sitting. Too many properties inspected at one time will usually frustrate the buyer decision and deal momentum.
When you understand these things you can put some urgency into the property selection, inspection, and purchase process. That’s how you work with buyers of commercial property today.
Commercial real estate agents can be quite successful if they choose to work as a buyer’s agent. That being said, the agents success in this process will be based on the commitment of the buyer to a valid agency appointment, and the size of the property that they require.
As a general rule, don’t work as a buyer’s agent with buyers that fail to sign an agency appointment. A buyer’s agent will be paid the commission by the buyer when a successful and satisfactory property has been found and negotiated on a contract.
The buyer’s agent process works when you focus only on the high end of the property marketplace, and the larger businesses and corporations that require specific property solutions. They are normally the only groups that are prepared to pay the required commission to their agent when a property has been found. The smaller and more common buyers in the marketplace are always shopping around for generic and local properties; they will approach many agents as part of that property selection process.
The agent that controls the listing will control the enquiry. You can waste a lot of time chasing around the market place for a buyer that is being less than honest and open with you. Check out the buyer before you get active and look for properties. The key message here is that you should mainly focus on quality listings rather than small buyers that have little or no allegiance or commitment to an agent.
If you are to include high end property buyers as part of your prospecting efforts, then only focus on the buyers at the top end of the industry and the local property market. I go back to the point that when you control the listing, you control the enquiry and you then will have many buyers coming to you anyway.
The listing of quality local property will always produce better enquiries and inspections. That’s how you find the smaller buyers and the smaller tenants seeking property relocations. When you control the listing, they need to connect with you as part of the inspection and negotiation process. The same can be said for other agents that may have suitable buyers for your property listings.
So here are some rules to help you work as a buyer’s agent in today’s commercial real estate market place:
- Qualify the buyer before you spend too much time assessing their property needs. Given that you are acting for the buyer as their agent, they will need to be totally honest and open with you when it comes to property needs and requirements.
- A buyer of substance should be of a corporate nature or large property investor. The property that they are looking for should be quite specific in location, type, cash flow, and improvements. Is this buyer prepared to pay your commission? If not, walk away.
- Ensure that the buyer commits to you as the agent to service them in this property requirement. The only way to get the commitment is on a valid agency appointment to act. That appointment should be signed before you spend any time looking around the marketplace. Don’t work with in any property buyer that tells you they will pay your commission when you find a property. Many agents have lost commissions in that process.
- If the buyer is of a corporate nature and is seeking a specific property for business and manufacturing needs, inspect their current property location and operations. Get to know how they currently operate or trade when it comes to manufacturing, staff interaction, customers, and the provision of goods and services.
- Identify the ‘must have’ requirements that will make or break the momentum in any property choice and decision.
- Understand who the decision makers are within the buyer business structure and corporate identity. If you are dealing with a board of directors, you will need to understand how decisions will be made and how long those decisions will take. Understand the delays that could occur for your clients between the time of contract and settlement.
- You will need to establish a short list when it comes to satisfactory properties that may satisfy the clients need. Question them as to their previous activity in the marketplace, and if they have inspected any properties with any other agents previously.
- Establish the requirements for due diligence as part of selecting the right property for your property buyer. Recommend that they appoint an experienced property solicitor as part of the due diligence and contract process.
- If the property is of a special or specific nature, the buyer may require investigations from experts on their behalf, such as engineers, architects, and surveyors.
- Question the buyer as to the ideal timing of property acquisition and settlement.
- You will be negotiating the contract on behalf of the buyer. Understand their budget when it comes to property pricing, documentation, property investigations, finance, and settlement.
- Make sure they have the necessary finance and or finance approval capability to move ahead on a contract when a property has been found.
Some commercial real estate agents are quite successful when working in this part of the market. That being said, it is a special process and does require a specific buyer focus.