The Reata BizBlog

Several years ago I was talking to a friend and mentioned that I had sold my house as a For Sale By Owner (FSBO).  He was surprised that it was possible to buy or sell a house without a residential real estate agent.  I was shocked that he didn't know he could trade real estate without a broker - however ill-advised that might be.

Brokers can only negotiate the sale or purchase of a house, right?  Aren't they all the same since they have access to the MLS?  Even though I've been in the real estate business for 23 years now, these misconceptions surprise me.  I didn't have access to the MLS until 2 years ago and I've almost always hired a residential agent when buying or selling the homes I've lived in.

Real estate brokerage has evolved in the last 25 years to become a highly specialized industry.  Many brokers have essentially become real estate advisors providing financial analysis, demographic studies, market analysis, site selection research, business planning, portfolio analysis and management, marketing plans, and even construction management in some cases.  This is more the case for commercial brokers, but residential brokers have also become specialized.

For example, residential agents usually specialize based on geography first and then by the price range of the house, type of house (single-family, high-rise condos, etc.), type of client (owner-occupant or investor, buyer or seller), and type of service (sales or property management).  Many will be a combination of these specialties - seller agent for high-rise, luxury condos in the Uptown area of Dallas.

Commercial brokerage is for more specialized than residential.  Agents will often specialize based on 4 factors.  First, by geography.  Dallas or Phoenix.  Arlington or McKinney.  Second, by product type.  Office, industrial, retail, hospitality, or multifamily.  Third, by client type.  Seller or buyer.  Landlord or tenant.  And finally, fourth, by service provided.  Investment sales, tenant rep, project leasing or property management.

These criteria can be cumulative, of course.  So an agent may focus on McKinney, retail properties, for landlords, for lease.  One broker I know only represents church properties, but does so throughout the country.  Another only sells large office buildings on behalf of owners in Dallas.  While yet another handles only corporate real estate services for corporate tenants in Collin, Dallas, Tarrant and Denton counties.

The degree of specialization is often a function of the size of the market.  For example, a commercial broker in Amarillo may have to represent both owners and users of several product types because there isn't enough business in any one to make a living.  In Chicago, on the other hand, it's more likely that a broker would focus exclusively on owners or users with further specialization by product type.

Rarely do you see brokers cross the residential/commercial line though many of the national residential brokerage companies are trying to set up commercial divisions. 

The good news is that owners and users of real estate have an incredible array of options when hiring a broker to represent their interests.  The greater the specialization, the better the quality of service in most cases.  It's important to find an agent who specializes in the area, product type, client type and service that fits your assignment.  The agent must be of impeccable integrity, be willing to listen to your needs, and have the time to focus on your assignment.  Don't be afraid to use one broker to help your company lease space, another to find a house to buy, and yet a third to handle your investment property.  Ask for referrals even from a broker you have used.

Oh, and by the way, there is no law saying you have to use an agent at all.

Bob Gibbons is a Corporate Real Estate Advisor - Tenant Rep - with Reata Commercial Realty, Inc. based in Plano, Texas - http://www.reatacommercialrealty.com/.  You may contact him by email at bob@reatacommercialrealty.com or by phone at 972-679-1142.

So you have a client who buys or sells a house.  What's the average commission going to be?  In my area of Dallas/Ft. Worth, one side of the transaction will generate a commission of approximately $5,000 assuming an average sales price of $170,000.  So you the client on your marketing list and send them stuff for the next 6 years until they are ready to buy or sell again.

What if you could get another $5,000 from that same client without any additional work?  Sounds good, doesn't it? 

Well it's possible.  Most residential agents get to know their clients fairly well during a transaction - where they work, what their hobbies are, the names of their kids and what sports they play, etc.  This information can be useful in earning additional income.

I'm not talking about selling your customer's name to a telemarketer.  I'm talking about arranging for an additional service for your clients that they need anyway.

Corporate Real Estate Services.  Companies hire Corporate Real Estate Advisors or Tenant Reps to represent them when they lease or buy commercial space for the company to occupy.  Office buildings.  Warehouses.  Retail stores.  Medical office condos. 

A commercial real estate agent who specializes in providing real estate services to companies is an expert at searching for space and negotiating with commercial landlords and sellers.  An office lease, for example, can easily be 50 to 100 pages or more and contain language that most people have never heard of.  Corporate Real Estate Advisors deal with this all the time and undestand the process, the language, the differences from one product type to another, and can guide companies through the maze.

Realtors often feel intimidated by the complexity of corporate real estate and don't ever even think about it.  But they are leaving money on the table.

So how do you make money from corporate real estate?  Referrals.

Your referral to a Corporate Real Estate Advisor could result in a 20% referral fee.  So to get your additional $5,000, here's the math. 

You introduce your client who works for a small, local company to your Corporate Real Estate Advisor referral partner.  The client introduces the Corporate Real Estate Advisor to the company owner or manager and gets hired.  Let's assume the company occupies 6,000 square feet of office space and after researching the market and negotiating with their landlord, they renew their lease for 5 years at an average rental rate of $18.75. 

The total lease value is then $562,500 - 6,000 SF x $18.75 x 5 years.  Let's assume the Corporate Real Estate Advisor negotiated a 4.5% cashout commission making the total commission $25,312.  You get 20% for a simple introduction and you get a check for $5,062.50. 

Sweet.  And the best part is that you have provided your client with an additional service that they really needed.  Guess who the hero is?

The $5,000 is just an example.  The actual number could be smaller or higher depending on the size of the deal, the rental rate or sales price, the number of years on the lease, etc.  I've seen referral fee checks as small as $500 and as large as $250,000.

As you have probably guessed by now, I am a Corporate Real Estate Advisor and I want to be your referral partner.  My clients are all kinds of companies in every industry type you can think of - doctors, lawyers, high tech, insurance, retail, distribution, restaurants, manufacturing, financial services, even residential real estate.  I only represent the corporate users.  I don't have any landlord listings so I can be totally objective in the recommendations I make to my clients.

But I used to be a landlord for the first 20 years of my career.  So I understand how landlords think, what motivates them and what they will typically agree to in a lease.  I was the guy who signed the leases for the landlord on over 6 million square feet of deals throughout Texas and the Southwest in my last company.

Feel free to check out my website - http://www.ReataCommercialRealty.com/ - and feel free to call me to discuss this further.  Thanks so much.