Readers of this blog know we’ve been critical of brokers who apply residential sales principles to commercial real estate – especially commercial foreclosures and short sales. But as commercial real estate brokers selling investment properties in Chicago, we have to acknowledge at least one area in which residential real estate brokers get it right: exclusive buyer brokerage. Exclusive buyer agreements, which are pretty much the norm for home sales and commercial lease transactions in Chicago, are almost nonexistent in Chicago commercial investment sales.
But now more than ever, if you’re buying commercial investment real estate in Chicago, broker representation is critical. Still, a lot of commercial real estate buyers resist working with a broker because they get hung up on a few common myths.
Myth #1: The Best Commercial Real Estate Deals
Don’t Involve a Broker
For whatever reason, broker-less transactions have a certain mystique. But there’s no evidence to suggest that buyers fare better without a broker. In fact, in the commercial transactions we’ve observed, just the opposite is true. Furthermore, today’s market is so rife with potential pitfalls that buying commercial real estate WITH a broker is difficult enough. Doing it without a broker borders on irresponsible.
Myth #2: If You Don’t Use a Buyer’s Broker,
You’ll Save Half a Commission
It’s naïve to assume a seller will automatically take half a commission and put it in your pocket. But even if that seller is willing to kick a couple of points back to a buyer, that buyer has to ask himself, ‘Points off of what?’ In other words, without the counsel of a broker, how does a buyer know he’s getting a) the best price and b) the best terms? You may “save” half a commission, but at what cost?
Myth #3: A Buyer’s Broker Won’t Show Me
All Available Listings
The old-school street broker who limits access to property listings is a dying breed. Commercial real estate brokers in Chicago who are serious about doing deals and building long-term client relationships understand that sharing information and access to listings is how deals get done today.
In today’s market for Chicago commercial investment property there’s both great opportunity and great peril. For a buyer, the difference between finding one or the other is often a broker who’s contractually bound to represent the buyer’s interests through an exclusive buyer agreement.
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Peter Lynn & Dan Rosenberg | ||
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Building Equity Commercial Real Estate | |
