28 Qualities, Skills and Traits That Commercial Real Estate Brokerage Clients Watch For: The Good, The Bad, and The Ugly



Today, a review of the 28 things that commercial brokerage clients look for when choosing, working with, and firing(!) agents. Over the last week or so you've seen these lists in several posts, but I thought it would be a good idea to gather all of these ideas into one resource page that can be accessed easily.

The Lists:

Top 7 Skills and Qualities Investors Look For in a Broker:

1. Direct solicitation of potential buyers.
2. Quality communications and follow through.
3. Accuracy and quality of financial analysis.
4. Negotiation skills.
5. Quality of investment package.
6. Quality of research.
7. Team assigned to their transaction.

The Top 7 Things Tenants Look for in a Commercial Real Estate Broker:

1. Understanding of their business.
2. Open communications and accessibility.
3. A relationship built on trust and concern.
4. Financial/analytical skills and structuring advice.
5. Collaboration and a team approach to their needs.
6. Understanding of the market and opportunities.
7. Accompaniment on building tours.

The Top 7 Things Clients Look for When Selecting a Commercial Real Estate Broker:

1. Relationship with Broker.
2. Prior experience/performance.
3. Reputation of firm/brand identity.
4. Understanding of their business/objectives.
5. Personalized approach/solutions.
6. Fee structure.
7. Knowledge and advice.

The Top 7 Things That Frustrate Brokerage Clients:

1. Lack and poor quality of communications.
2. Lack of accessiblility to their broker.
3. Sloppy work, inaccuracies and poor research.
4. Feeling that they are just a commission source.
5. Brokers not knowing when they are "over their heads".
6. Lack of interest in their business needs and goals.
7. Lone Rangers and "listing-only" solutions.

So, you say, what's the point? Well, looking at each of these in turn and thinking about what they mean to existing and potential clients, we can see that there a number of solutions and, more importantly, opportunities presented in them.

I give you, The Profile of a Customer-Centric Brokerage Company. *Insert cheesy dramatic music here*

Many thanks to CEL&Associates Inc. who actually gathered the data and did the research to come up with all of these lists and the following outline of a customer-centric brokerage company.

A Customer-Centric Brokerage Company should:

  1. Possess a real-time 360 degree customer profile.
  2. Embrace a continuous feedback process.
  3. Hardwire the voice of the customer into all decisions.
  4. Invest in talen, training and professional development.
  5. Share knowlege of the customer.
  6. Commit to service excellence.
  7. Possess customer service standards.
  8. Build valued and lasting customer relationships.
  9. Include customers in company values.
  10. Tie commissions to customer satisfaction.
  11. Celebrate those who achieve customer satisfaction.
  12. Involve customers in solutions.
  13. Continuously seek customer feedback.
  14. Possess a thorough knowledge of customer needs.
  15. Exceed customer expectations.
Some powerful, and some surprising ideas. Stay tuned for more on these topics as I plan on dissecting a number of these ideas in more detail. Have a great weekend, and let me know what you think!

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The Top 7 Things That Frustrate Brokerage Clients Most

So far we've looked at what investors value most in their broker, what tenants value the most in their broker, and what clients value most when selecting a broker. Today, the other side of the coin, the things that really make clients blood boil.

Warning! If you are a commercial real estate broker and you do any of these things, even occasionally, you're sabotaging your business in ways you probably can't even imagine!

The List:

  1. Lack and poor quality of communications.
  2. Lack of accessiblility to their broker.
  3. Sloppy work, inaccuracies and poor research.
  4. Feeling that they are just a commission source.
  5. Brokers not knowing when they are "over their heads".
  6. Lack of interest in their business needs and goals.
  7. Lone Rangers and "listing-only" solutions.
What really frustrates you when you hire a real estate agent, particularly a commercial broker?

Source: CEL&Associates Inc.

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Top 7 Things Clients Look For When Selecting a Commercial Real Estate Broker

What's the difference between a client and a customer? Well let's take a look at the definitions (from thefreedictionary.com):

Customer:
n. cus·tom·er
1. One that buys goods or services.
2. Informal: An individual with whom one must deal: a tough customer.

Client:
n. cli·ent
1. The party for which professional services are rendered, as by an attorney.
2. A customer or patron: clients of the hotel.
3. A person using the services of a social services agency.
4. One that depends on the protection of another.
5. A client state.
6. Computer Science A computer or program that can download files for manipulation, run applications, or request application-based services from a file server.
[Middle English, from Old French, from Latin clins, client-, dependent, follower; see klei- in Indo-European roots.]
In real estate legal terms, a client is someone with whom a brokerage has entered into an agency relationship wherein they agree to provide certain professional services and owe certain legal obligations to the client. In reality, the client relationship, at least a good one, goes far beyond a mere legal obligation. While a customer is treated fairly and honestly, they don't get the same level of advice or counsel that a client gets, nor do they realize the long-term benefit of a true client relationship; they're just there to buy something and move on.

In my opinion the key really is the relationships. As much as new technology has made the job of finding property and property details easier, and much as it has made the task of marketing and finding real estate quicker, it cannot replace the human connection that face to face relationships build. I don't care how much you Twitter or write in your blog or how much time you spend on Facebook! These are good tools to start the conversation, but the connections, the relationships are the ticket.

Given this, it's no surprise that #1 on the list of things most valued by potential clients is the relationship with the broker. If the client doesn't feel a connection and doesn't feel that they can trust you, nothing else you do will ever turn them into true clients for life.

Without further ado, the Top 7 Things Clients Look For When Selecting a Commercial Real Estate Broker:
  1. Relationship with Broker
  2. Prior experience/performance
  3. Reputation of firm/brand identity
  4. Understanding of their business/objectives
  5. Personalized approach/solutions
  6. Fee structure
  7. Knowledge and advice
I'm always interested in varied opinions, so let me know what you think. Do you agree with this list? What would you change or add to it?

Watch for my next post on this topic: What frustrates brokerage clients most!

Source: CEL&Associates Inc.

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The Top 7 Qualities and Skills That Tenants Value Most in Their Commercial Real Estate Broker


As part of an ongoing look at what consumers want from their real estate broker, today I'm looking at what tenants value the most when choosing a broker to represent them.

Tenant representation is a very specialized field and one that doesn't get the respect it deserves, in my opinion. From a brokerage perspective, it just isn't very sexy. The deals aren't as visible, the commissions (generally) aren't as big as investment deals, and the broker is often seen as just another cost in the transaction rather than bringing the real value that they do add to the process.

So what do tenants look for in a commercial real estate broker? Here are the top 7:

  1. Understanding of their business.
  2. Open communications and accessibility.
  3. A relationship built on trust and concern.
  4. Financial/analytical skills and structuring advice.
  5. Collaboration and a team approach to their needs.
  6. Understanding of the market and opportunities.
  7. Accompaniment on building tours.
Source: CEL&Associates Inc.

Did I miss anything? What do you look for?

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What Investors Value the Most in Their Commercial Real Estate Broker

I recently found an old paper in my files that I had to have had lying around for the last 3-5 years. It was a summary of survey results put out by a company called CEL&Associates Inc. on behalf of the Canadian Real Estate Association. I'm sure that the results might appear in a different order today, but the underlying themes seem, at least to me, to be timeless.

Over the next couple of weeks, I'll post a few times on this topic and look at what tenants, clients, and investors look for when selecting a commercial real estate broker. I'll also post about what frustrates these same people and report on the profile of a customer-centric brokerage company.

Without further ado, the top 7 skills and qualities investors look for in a broker:

  1. Direct solicitation of potential buyers.
  2. Quality communications and follow through.
  3. Accuracy and quality of financial analysis.
  4. Negotiation skills.
  5. Quality of investment package.
  6. Quality of research.
  7. Team assigned to their transaction.
I'd love to hear what you think of this list, and where you agree or disagree.

Thanks for reading!

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HST Has Builders Sprinting

HST has builders sprinting - Yourhome.ca

"We've had a lot of customers sitting on the fence, but because of the tax they're much more willing to seal the deal," says Bazely, owner of Barrie-based Gregor Homes and president of the Ontario Home Builders' Association.

"We've ramped up production so we can close on our homes before the HST takes effect next year."

Bazely says he recently talked to his trades and suppliers to ensure they are ready for winter.

"Every week we lose, we get closer to that July deadline."

The new tax, which combines the PST and the GST, will have an impact on homes worth more than $400,000.

It would add, for example, $6,000 on a $500,000 home – enough money to upgrade to a better kitchen or floors, and a good incentive to close early for many consumers.

A $1 million dollar home gets hit with $36,000 in extra taxes.

An EXTRA $6,0000 on a $500,000 new home! Incredible! How in the world can anyone say that this is good for the economy?

In the GTA a $500,000 new home is not out of the ordinary. The Province will be cashing in on the backs of hardworking Ontarians and our fragile economic recovery is likely to take a serious hit when this ill planned and ill conceived new tax hits the road next year. How can they stick to the story that the average person will only see an increase of $79 per year in spending as a result of this new tax? Do they honestly think we're that stupid?! I hope everyone remembers this when it comes to election time.

McGuinty and his band of *insert expletive here* need to go!

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Getting the Best Possible Commercial Real Estate Advice

Commercial real estate can be tough to get a handle on and making sure you get the best commercial real estate advice can make the difference between making it and losing your shirt. Professionals and "gurus" have devoted years to identifying, financing and making deals happen no matter through all kinds of markets. Do you honestly think you're going to waltz right in and be the next Donald Trump?

Commercial real estate is a terrific way to make money, but you already knew that because you are here! So what's you're next step on the path to financial success as a commercial real estate investor?

First, get a sound knowledge base in real estate and investing principles. This could mean taking some courses at a local college or online, reading some books or attending some seminars. Obviously, a trip to Border's Books or the library is going to be cheaper than other two options, but do whatever you think is best for your unique situation. Any way you do it, you need to learn the basics of the business and know what you're getting into before you sink money into an expensive seminar, course or worse yet an actual piece of property.

The nature of available property investments differs from market to market, so the best piece of commercial real estate advice you can get is to find a mentor you guide you through it all. A good mentor, whether they are directly located in your market or not, can teach you how to spot good deals, avoid bad ones and maximize returns. They can also point you in the right direction as far as education, seminars, what you need and what's a waste of money.

Once you have a good knowledge base a reliable source of information for the type of investments you're considering, you're ready to test the waters. Find the local investors who are making your dream a reality and watch what they do. Do your best to follow their progress on deals and look at the work it takes to make it all happen. Start looking at properties and deals that are comparable to what successful commercial investors are involved in and prepare yourself for your first good deal that comes your way.

Still looking for more commercial real estate advice? TheRealWelathBlog is run by professional commercial real estate investors who know their way around a deal. Make sure to subscribe to their newsletter so you get the most out of their updates and this wonderful blog!

Emily Cressey is a Commercial Real Estate Investor based out of Seattle, WA. She and her partners have invested in over $30 Million in commercial real estate projects. If you are new to investing, or would like help getting started, visit their commercial real estate investing site and subscribe to receive your free 5-video Course On Commercial Real Estate Investing For Beginners.

Additionally, if you would like reasonably priced commercial real estate advice, please feel free to contact The Real Wealth Company for affordable hourly consulting.


Cressey, E. (2009, July 23). Getting the Best Possible Commercial Real Estate Advice. Retrieved November 9, 2009, from http://ezinearticles.com/?Getting-­the-­Best-­Possible-­Commercial-­Real-­Estate-­Advice&id=2651682

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Canadian Real Estate Sentiment Survey Results


“We’re in the third round of a five round boxing match, but in the first two rounds nobody threw a punch. At some point somebody’s gotta throw a punch.”

Source: REALpac / FPL Canadian Real Estate Sentiment Survey, Fourth Quarter 2009, Released November 3, 2009

I'm sensing a recurring theme on this blog about getting into the game. The time is right to get back into the investing game. Money is flowing, and the economy isn't floundering as badly as some had thought it might still be. Granted, the past 12 months haven't been all peaches and cream, especially in the brokerage world, but contrary to popular perception, the sky hasn't fallen on the Canadian commercial real estate market.

In fact, REALpac just released their Q4 Canadian Real Estate Sentiment Survey and found that, overall, investor sentiment is improving in Canada. It shows that overall sentiment about the market has improved, on their index, from 50 to 68 from Q3 to the beginning of Q4 2009. An impressive improvement to say the least.

So why doesn't the overall market reflect this survey? At least in my corner of the world, Peterborough, Ontario, transactions are WAY down relative to 2008. I did a quick bit of research and found some interesting results.

I compared all MLS® sale transactions recorded by the Peterborough and Kawarthas Association of REALTORS® from January 1 to November 4, 2008 vs. the same period in 2009 (it's an odd time frame, I know, but it seemed like a good idea at the time!). I only looked at transactions over $150,000 in order to weed out the business sales that did not include real estate, and leases that sometimes get recorded as sales.

2008 Number of sales: 39
2009 Number of sales: 26
2008 AVerage sale price: $494,437
2009 Average sale price: $357,385
2008 Average sale to list price ratio: 88.46%
2009 AVerage sale to list price ratio: 73.93%

Of note, there were four transactions over $1M in 2008, including one that was over $2M and only one transaction above $1M in 2009. (Remember, this is a small market with a combined city and county population of only about 135,000 people.)

So what do I see in these numbers?

First, there is an obvious trend toward fewer and smaller deals, including a drastic reduction in transactions over $1M. Secondly, and this is my subjective opinion, there isn't really a lack of interested buyers, rather there's been a significant lack of faith in the market in general on the part of would-be buyers. The perception has been that there ought to be more 'good deals' out there, and that by waiting it out, these 'saavy' buyers will be able to cash in on the distressed assets that must surely be just about ready to come onto the market.

But there haven't been that many distressed properties in Canada. I beleive that a lot of the poor sentiment is spill-over from the US media coverage of the severe slide they've seen in their market. In a recent article on globeinvestor.com, Kirk Kuester, managing director of Colliers was quoted as saying,

"There hasn't been that much distress [in the Canadian market], and if companies do find themselves in a bit of a pinch, it's not that difficult to raise equity on the market."
From the same article:
Brookfield Properties Corp. and its partners have an unexpected problem: They have $5-billion to spend on commercial real estate, but markets have recovered so strongly that they can't find the juicy deals they hoped would lead to 20-per-cent returns.

The stock market's resurgence from March lows has allowed many of the world's most challenged real estate companies to issue stock or sell bonds to solve financial issues brought on by lower rents and higher vacancies. Meanwhile, the sector is showing signs of recovery in Canada, further encouraging landlords to hang on to buildings that had caused concern through the recession.

"There really hasn't been that much out there," said chief executive officer Ric Clark. "When we first started thinking about this, we had many companies on the list as potential targets - the public markets have been so efficient that many have been able to solve their problems."

Brookfield set up a $5-billion real estate investment fund in September with Brookfield Asset Management Inc. and dozens of major institutional investors. The plan was to buy malls and office towers from owners that were struggling to keep tenants and pay mortgages.

While the U.S. market is still going through a historic upheaval (7.9 per cent of lease holders are behind on their payments and one in 10 shopping mall stores sit empty), things have stabilized enough that the consortium is rethinking its ability to score its targeted 20-per-cent return on any investment.
In fact, in the hunt for deals, many Canadian REITs have gone out and raised warchests to buy distressed assets that haven't materialized thus creating the real potential of reducing their stock prices. From theglobeandmail.com:
But what if the market isn't all that distressed? Third-quarter statistics from RealNet Canada Inc. hinted that a rebound is taking hold in Canadian commercial real estate markets after 18 months of contraction. If there aren't deals to be found, the REITs may have watered down their shares without giving shareholders any reason to hope for better payouts in the future.

"Most REITs have taken advantage of the open capital markets," said Mark Rothschild, an analyst at Genuity Capital Markets. "Most management teams have expressed confidence this capital will be used to take advantage of distressed opportunities - we believe that there will not be many extremely accretive acquisition opportunities and ultimately many of the recent offerings will prove dilutive."
I know I'm starting to sound like a broken record, but why aren't investors, large and small, private and institutional, looking at the cost of NOT investing? What is the real cost of inaction and hence lost opportunity? Waiting for the market to become more active and therefore more competetive means that there will only be even higher prices and reduced opportunities in the future.

What will you do? Sit on the ropes, waiting for your oponent to wake up and realize you aren't in the game, and be surprised when you get K.O.'d? If you're ready to get started and need some direction, please drop me a line. Get ready, round 4 is coming up!

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Why You Can't Afford to Ignore Vacancy When Buying Commercial Real Estate

Firstly, what is vacancy?

Vacancy is the estimate, usually based on historical data for a given property or property type within a given market, of the amount of space within a building that is typically vacant and is usually expressed as a dollar amount per foot or more commonly as a percentage of gross rent.

Vacancy is one of the most overlooked expenses, in my experience, when dealing with individual investors. For some reason, most people have a hard time believing that their building might not be 100% full 100% of the time.

Is this reasonable? Not even close. Especially in the current economic climate where vacancies are still climbing and businesses aren't expanding at the same rate that we've seen over the last decade.

As part of your due diligence when analysing a property you should always include a vacancy expense in your pro forma - even if the building is full at the time of the analysis. The building won't be full forever!

Don't misunderstand - some vacancy is good for the market. Shocking, but true. What happens when times are good, and growing businesses can't find vacant space to move into? They risk stagnation and missed opportunities. So a little vacancy is a good thing, but rampant vacancy is obviously harmful too.

How much vacancy is healthy? Well that really depends on the property type and the general market. Residential income properties generally use 5% as a normal vacancy rate (at least in my market), but storage properties typically run anywhere from 10-20% vacancy in healthy markets. The key is to do your research and try to find out the prevailing vacancy in your market and use that as a benchmark for comparison purposes.

Failing to factor in a normal vacancy rate in doing your financial forecasts can be deadly to your bottom line, especially when there's little room for error in a tight market.

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