President, Principal, and Broker
Choosing the right agent to find the most appropriate commercial real estate space for your business is not as straightforward as you might think. But it doesn’t have to be a daunting task. To ensure positive outcomes, you must ask the right questions to gain insight into potential agents’ experience, support, and processes.
I have found that incorporating the following seven questions during initial interviews is the key to identifying the agent that best fits your company’s needs.
Please note that these questions are geared toward hiring an agent as a buyer or tenant representative. If you are interviewing an agent as a landlord or seller representative, modifications will be needed.
1. What is your specialty? Not all real estate agents are created equal. In fact, the real estate division does not govern who can work on residential or commercial transactions. They rely instead on brokers to supervise their agents’ practices. In the commercial sector, agents specialize by product type. For example, there are agents who work exclusively on office buildings. Others may specialize in industrial buildings and some may concentrate on retail spaces. You get the picture: if you need a warehouse, you need to find an industrial specialist; if you are opening a retail franchise, a retail agent is the best fit for your needs.
2. How many companies like mine have you represented? Taking specialties a step further, the right commercial real estate agent will have experience working with companies similar to yours. For example, whether you are a medical practice, e-commerce company, or hair salon, you should deal with an agent who understands the space requirements of your respective industry. Or if you are a small business owner—as opposed to a publicly traded company—you want to work with an agent that understands the resources available to you, your decision-making processes, and how valuable your time is as you try to handle multiple tasks by yourself.
3. What are your qualifications/designations and who are your references? You wouldn’t hire a general physician to perform heart surgery on you, would you? Like other professions, commercial real estate requires agents to hone their skills in their areas of their practice. There are numerous professional organizations with which agents can pursue designations, continue their education, and develop best practices. You should know what designations an agent holds in order to determine the agent’s qualifications and level of expertise.
Some specific designations to look for include:
- Certified Commercial Investment Member (CCIM). This designation indicates that the agent has completed advanced coursework in financial and market analysis, and has demonstrated extensive experience in the commercial real estate industry.
- The Society of Industrial and Office Realtors® (SIOR). Members of this organization are recognized by corporate real estate executives, commercial real estate brokers, agents, and lenders as the most capable and experienced brokerage practitioners in any market.
- Certified Leasing Specialist (CLS). Established by the International Conference for Shopping Centers to advance professional standards in shopping center leasing, CLS certification is achieved through mastery of a body of knowledge, completion of the eligibility requirements, passage of a rigorous half-day written examination, and commitment to a code of professional ethics.
Finally, don’t be shy about asking for professional references. It always helps to talk to other business owners to learn about their experiences with the agent.
4. Tell me about your company. As mentioned above, an agent’s broker is responsible for supervising them. This question is designed to help you learn about the real estate transaction experience of the company from which the agent works. There are several national and regional commercial-only companies and many qualified local commercial-only companies. There are also top-notch commercial agents who work for companies that also do residential. It is important that the agent you choose works for a company that is able to support the agent’s commercial activity.
5. Who will I be dealing with throughout the process? Many commercial agents work in teams. It is not uncommon for the senior agent, who is the most decorated, to pitch the business or conduct the needs assessment and then turn the project over to another agent to carry out or execute the work. This is perfectly normal; however, it can be frustrating if proper expectations are not established. Make sure that you also interview all the agents with whom you will be working to ensure the entire team is a good fit for you.
6. How are you compensated? Most buyer and tenant representatives are compensated by the seller or landlord. This means that if you are the buyer or tenant, there is no cost to you! There are cases in which the agent will ask the client (you) to commit to their compensation. Contrary to popular belief, this is not out of line. However, in these cases the amount of compensation, when it is earned, and how it is paid should be clearly outlined in writing. That way there are no surprises to you—and you can decide if the transaction cost makes sense for your business.
7. What is your process for representing a company like mine for this type of transaction? The best commercial agents behave more like someone selling professional services than someone selling. That is to say that professional services should feel like a consultative experience. There should be a needs assessment or discovery exercise to thoroughly understand your needs and interests, followed by a market survey that outlines all the options available based on your criteria. The agent should then assist you in prioritizing the best options for you before commencing with negotiations with a letter of intent or Request For Proposal (RFP). During this negotiation process, the agent should work as a facilitator to reduce all your options to an apples-to-apples decision, offering decision support metrics such as net effective rent and total consideration. At the end of the process, your agent should work as a facilitator, assisting you in making the best decision based on your company’s needs. You should not feel like you were sold something you didn’t want.
When you use these 7 questions to assess real estate agents for your business, you are sure to identify the agent that will best fulfill your needs. Good luck!
About the Author
Hayim Mizrachi, CCIM, is the President and Principal of MDL Group, a full-service commercial real estate and property management company. MDL Group was founded in 1989 and is currently a market leader in Southern Nevada, providing positive outcomes for a varied profile of commercial real estate clients. A recognized leader in the real estate community, Hayim oversees all brokerage activity at MDL Group, exceeding 200 unique transactions with a gross value over $107 million annually.