In commercial real estate brokerage, you will have plenty of challenges when it comes to finding quality listings and good clients. In most locations, towns and cities, the competition is fierce when it comes to commercial real estate agents. On that basis you really do need to have an effective prospecting model to implement at an individual level.
It should be said that most brokers and agents don’t do this very well. On that basis the opportunities are significant if you can create and stick to a good prospecting model. Create a habit around prospecting.
Here are some proven and highly effective prospecting and networking tips when it comes to agents or brokers winning new clients in commercial real estate today. Compare these to your current strategies:
- Stick to a defined area when it comes to targeting properties and clients. On a street by street basis you can move through the region and research the necessary property ownership details and business proprietors. Don’t spread yourself too thinly when it comes to large areas and diverse property types. Specialization will help you with finding listings and growing property knowledge.
- Devote 3 hours per day to the prospecting process. The cold calling process should occur first thing every morning prior to any meetings or property inspections. Make a priority to get your cold calls done prior to 11 am. Your meetings and property inspections can occur after that time.
- Split your prospecting time into two distinct segments. The first segment will be those people that you have spoken to before. Regular contact here will allow you to tap into the opportunity when those people are ready to make a sale or a lease transaction. The second group that you should speak to will be those that are totally new to your database. Feed your database with fresh contacts and opportunities with new people.
- Track the results that you get from all of your prospecting activities. Understand how your ratios are improving between outbound calls, meetings created, presentations made, and listings converted.
- Understand the differences between open and exclusive listings. As a general priority, you should be targeting exclusive listings at every opportunity. On that basis, track the numbers of listings in each case. Show the client the differences in time on market when it comes to open listings and exclusive listings.
- Any property that is converted to a listing should be packaged for the current market conditions. As you get results and feedback from inspections, you can make clear recommendations to the client regards pricing and marketing. Over a period of weeks, the repackaging of a listing can increase inspection and negotiation opportunity.
So there are some very definite things that can be done to improve your listing conversions and commission opportunities. The secret to making all of this work is to create a personal system of prospecting that you stick to every day. Refine your activities to the current market conditions, and soon you will see the conversions you require.
What is the value that you bring as an agent to a client in commercial property today? It is an interesting question for a client to ask when it comes to an agent selling, leasing, or managing commercial real estate.
Most agents would say one or more of the following:
- We know what we are doing
- We have good people
- We understand the property market
- We have done some great deals recently
- We sold (or leased) other properties like this recently
- We know how to market the property
The sad fact of the matter is that when they have said these things, they go no further. They do not back up their claims with detailed proof.
If you say anything to a client about your relevance or skill as a local commercial real estate agent, be prepared to expand on the issue and talk about it comprehensively and directly. Show the client some proof of why your statement is so important to their property position or need.
Here are a couple of ideas to use when it comes to showing the client that you really are the right agent for the job of marketing the property:
- Use a Gantt chart that shows the steps that you will be taking in marketing the property and converting the result that they need. Have different Gantt charts for the process when it comes to sales, leasing, and property management (commercial or retail).
- Define the target market in such a way that you are clear on exactly how you will connect with the right people and help them understand the property market.
When you pitch or present to a client, don’t discount your services and lower your marketing fees for the sake of attracting the client’s attention. Offer real and relevant marketing solutions that are so good that the client cannot ignore you. Sign them up on an exclusive listing.
Are there dangerous clients in commercial real estate? Absolutely; yes is the answer. You will come across them all the time. You must protect yourself from these clients that are out to manipulate the deal for themselves without true transparency.
Ethics in our industry is really important. Poor quality clients can derail your listing integrity and commissions. So the message is that you should keep to the rules in the industry that protect your actions and listing activities. Clients that are less than honest can destroy your business in many different ways.
So here are some signs to look for when it comes to client selection and communication:
- Watch out for the clients that will not sign an agency appointment ‘until you find a buyer or tenant’. The request happens all the time in our industry but you cannot and should not act outside of the laws of commercial real estate agency in your location. You are bound to act legally and with integrity; if the client wants you to ‘bend the rules’, they are not a client to have and you simply cannot trust them. In those circumstances walk away from the deal or the listing. Let some other agent waste their own time and risk legal action. It is not fun when legal claims are made against you.
- Some clients work with many agents. Now this is just fine if all relationships are ethical and legal, but your listing and negotiation information should be protected by a valid appointment to act and an established client and agent relationship. If you suspect that the client is sharing your ‘market intelligence’ with other agents, you could have a problem.
- If your client avoids giving you an exclusive listing, it can be a sign that you really do not have their commitment and trust. They could also be working with many other agents at this very moment in trying to sell or lease the property. Ask the questions and get to the real facts of the matter.
- A reluctance to give you full access to the property or comprehensive property detail is a sign that something is going on. A similar problem is evident with the client not disclosing tenant and income detail for the property. If the client is not being open and honest, step back from the deal until you know all the facts. Get copy of all current property related documentation before you go to the market, negotiate, or talk to other people. Understand the facts that are before you.
- Failing to put things in writing can be a big problem in our industry. Many conversations across the telephone happen every day. Always keep your notes of client and customer conversations and instructions. Evidence the matter back to the other party in an email or similar written or electronic form.
Lastly something should be said regards confidentiality. Know who your client is and what their instructions are. Keep client agent discussions and instructions confidential. Disclosure of privileged information can get you into a lot of trouble.
In many respects, you as the local commercial real estate agent will have some geographical territory and property type in which you specialise. When you specialise, you can provide much more value to the client with comprehensive local market information. It also helps you greatly when it comes to pricing and marketing solutions. Here are some tips from our Agents Newsletter.
To help you here, you can create a property inspection report process to be used for many different reasons and client requirements. The report can become a checklist around which you can base your recommendations and marketing strategies.
Here are some categories that can be merged into your property inspection report. Add to the list based on your specialist property type. Also add the geographical factors that may have an impact on any listing.
- The ownership of the property will need to be completely checked against the information provided by the client. Make sure that you’re dealing with the right people and decision makers.
- Review the description of the property and the title. Check out any encumbrances and rights of way that may have some impact on the title, the tenants, and the property ownership.
- You will sometimes find that there are issues relating to neighbouring properties and the local precinct that are not detailed on the title. Boundaries are a good example of that situation. Ask the client for an update regards any current outstanding issues that need to be resolved prior to the commencement of any listing and or marketing. Take notes in this process given that the information can have significant impact on future negotiations, or leases, and contracts.
- If the property contains tenants, you will need to review the leases comprehensively. Each lease can have strengths and weaknesses that can apply to the income stream and the property ownership. When looking at a property with a number of leases and tenants, take the time to go through the tenancy mix report, the tenancy schedule, and the lease profiles. You will need original lease documentation to do that, and expect that the process will take many hours if not days.
- Review the services and amenities that apply to the property and the current condition. Add to that the details of property improvements, strengths and weaknesses, zoning, and rates and taxes. It is worthwhile checking that the permitted use of the asset complies with the local zoning and approved development plans.
- Review the income stream for the property both in gross rental, and net rental. Review the outgoings for the property that apply on an annual basis. Check those outgoings against similar properties in the same area today. You need to know that your property is competitive when it comes to gross and net income. The net income will have an impact on the potential price that you may achieve a sale.
- Ask questions about the history of the property and the improvements over time. The landlord, the tenants, and the neighbouring property owners will have some value in this process.
All of these things lead to a solid set of recommendations that can be made towards the property marketing program in today’s economic climate. All of these things will give you relevant ideas to help in the promotional marketing activity.
You can get more tips like this in your Agents Newsletter.
In commercial real estate today, there is no need to complicate the sales pitch or presentation for the listing. Keep things simple in all respects. That being said you still need a plan to get the message through.
Most property owners and investors want the clear facts and solid recommendations that can help them with the property challenge. That is why generic pitches are a total waste of time. A full 95% of the presentation should be about the property and the client as you know it. The other 5% can be about your business and the relevance you bring to the listing.
To create a presentation about the property at such a high level you really do need to know the local property market and the trends over recent time. You should also know the subject property and the strengths and weaknesses of the improvements and location as you see them.
Here is a summary of approach to plan your presentation. Given the property type and the needs of the client, structure your presentation around the base model of:
- Tell them briefly who you are and why you are there (only do this if they do not know much about you and keep it very short)
- Tell them about the facts that you will be covering and why (overview only)
- Give them the facts. Tell them about the key issues in clear and concise points (substantial and detailed information)
- Give them relevant recommendations and alternatives (people like to have choices) relating to the previous point.
- Tell them what you have told them and summarise it (short summary)
- Ask for the business (be prepared for the answers you could get!)
As you move through these stages the client will give you an indication of their focus and concerns through questions and comments. When you can see what they are concerned about you can open up on the relevant points. Local property market knowledge can help you here.
The best listing pitch today needs to take into account the challenges of the property market locally and then regionally. Understand the pressures that people are operating under and then adjust your skills and knowledge around those facts.
It takes time to list, promote, negotiate, and close on a commercial or retail property. The business owners and the property investors that we work with are quick to enquire but slow to make a decision. That is why you need to be at the top of your game to encourage the enquiry momentum and property transaction.
Most clients and prospects in commercial and retail real estate want to make a decision, but they will only do so when the right facts and strategies are provided to them. If you fail on a listing or sales pitch, it is because you have not fully aligned yourself and your pitch to the client or prospect; that is the simple fact.