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How to choose a COMMERCIAL REAL ESTATE
BROKER -
Mississippi Business Journal's 2000
How-To Guide
In many ways, picking a commercial real
estate broker is a lot like selecting an attorney, accountant,
physician or some other provider of professional services.
A needs assessment is conducted, a fixed
pool of candidates or companies is contacted, personal chemistry
is juxtaposed against industry competency and sooner or later, a
head honcho somewhere pulls the trigger.
J. Michael Boyd has seen clients come and go
during his 27 years in the real estate business and considers a
professional organization he runs, the Society of Industrial and
Office Realtors, an invaluable tool to help companies refine their
aim and hit the target with the most points.
"It gets down to a pretty basic question:
What do I have to offer? The answer is my time and
integrity," Boyd said. "If I screw somebody one time, it's
cocktail-party conversation forever. If I do a great job,
they may never even think to mention me."
Washington, D.C. based SIOR was founded in
1941 and has 1,800 active members who staff 800 offices in 450
markets throughout North America. Boyd touts the
experience of SIOR brokers as their most valuable asset.
"I'd rather have a heart surgeon who's done
1,000 operations than the new guy who's done 10," he said.
The first step, the needs-assessment phase,
forces companies to closely examine themselves, establishing
parameters, priorities and expectations for whatever the real
estate project is, from negotiating a lease to buying land or a
building. A careful analysis will reveal the scale of the
assignment, financial considerations and a timetable for
completion.
Once the assessment is complete, a framework
is in place to select a commercial broker. Two important
issues are next, affiliations and recommendations, elements that
will help determine who is best equipped to meet a company's
specific goals:
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Affiliations may seem like they're a
dime-a-dozen, but many groups such a SIOR demonstrate a
commitment to excellence, education and high ethical standards.
SIOR brokers represent the top 2% of industrial and office
brokers throughout the United States in terms of sales volume.
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Letters of recommendation give credence to
a candidate's area of expertise and experience. Additional
recommendations from bankers, lawyers, government and
development officials further define a candidate's skills and
talents. "I think what you want is somebody who's
experience in their field, a specialist," Boyd said.
"After we've done a good job for somebody, we have actual
clients who will promote us. Word-of-mouth references are
sometimes the best, because they gravitate to repeat business."'
After the field is whittled down to a short
list, a more in-depth analysis of various areas should be
conducted before the actual interview process is begun.
Companies should consider a firm's history, including its
collective experience in the marketplace and overall reputation,
as well as its skills and tools.
The "skills and tools" used by SIOR members
involve a combination of research, planning and project
operational skills. The research divisions is particularly
important because it often serves as a backdrop for investment
decisions.
The next step, the interviewing process, is
key because compatibility and passion cannot be replaced by
machines, faxes and voicemail, according to Lottie Gatewood,
director of marketing and communications for Oncor International,
Inc., also based in Washington, D.C.
"No matter how the industry changes,
commercial real estate is always going to be a person-to-person
business. You're selecting an individual to handle your
business not only for their professional skills, but also the
personal confidence you have in them," Gatewood said.
Oncor, founded in 1958, has 51 companies
running 180 offices, representing 200 international markets and
6,400 employees. The system is comprised of privately-owned,
locally-based commercial firms in major markets.
"Know your broker's reputation and how much
market knowledge he or she has, their track record within the
community, the track record of the company where he or she works,"
Gatewood said.
Once a broker is selected, a comprehensive
follow-up program should be established to generate periodic
reviews and reports of the project. Certain milestones
should be established which can be used as evaluation criteria for
the relationship between the company and the broker.
"More than anything else, today's commercial
real estate broker should function more as a consultant than the
antithesis of such, the transaction-driven, commission-crazy deal
maker looking for an easy payday," Gatewood said.
"Clients rely so much more on a broker to
participate in the actual workings of the company to help in the
decision. The broker must have the flexibility to mesh
within a client's business as well as understand his or her own
business," she said.
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