3 Questions to Interview CRE Brokers

Seeking advice from an investment professional can be as risky as making a deal.

“There is no such thing as a free lunch,” says the U.S. Securities and Exchange Commission (SEC). “Investment advisers and brokers do not perform their services as an act of charity. If they are working for you, they are getting paid for their efforts.

In all cases, you should always feel free to ask questions about how and how much your adviser is being paid. And if the fee is quoted to you as a percentage, make sure that you understand what that translates to in dollars.”

These words ring true for investors of all scale and interest. It’s best to take a careful approach and know what to look for. Here are a few questions to get you started:

 

What are your credentials? How long have you worked in Commercial Real Estate (CRE)? If you work for a brokerage firm, how long has it been in business?

Do some thorough research on your own. The Financial Industry Regulatory Authority (FINRA) oversees brokerage firms and their employees and offers a public database that exposes details on about 17,000 brokerage firms. And always remember to take a close look at your broker’s credentials.

Let’s get down to brass tax. What are your fees? How do they compare to your competitors?

There’s no time like the present to start asking the important questions. Be sure you’re aware of how much authority you’re handing over to a broker before you sign on. Remember, brokers are looking for the best commissions and will often negotiate deals that lead to long leases and high rents. Have a firm idea of what you want before you partner with a broker.

What type of service will you provide? How, exactly, will you be representing me?

In other words, are you worth my time and money? “Brokers often know right off the bat which buildings are available, plus any restrictions, zoning, and proposed development the company owner might not be aware of,” says 42floors.com. “They are familiar with areas, trends, and even local business owners and landlords — all information providing an edge to the client.” Be sure you find a broker that can provide you with the edge you need.

Why are you a suitable investment partner for me? How can you help me reach my investment goals? Do you specialize in a certain type of CRE property?

These days, brokers work for tenants, landlords and even as dual agents. Be sure you find someone that suits your needs by asking the right questions.

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