It’s that time of year again…taxes! As we compile our information, the similarities between the different methods of filing tax returns is strikingly similar to the commercial real estate business. What do I mean?
With our taxes, we can file by TurboTax (or some other software program), we can go to H&R Block, an accountant or a CPA. Each of these methods costs a different amount and as a result, we expect more out of one than the other.
Likewise with commercial real estate. You can do it on your own, seek out a residential agent, seek out a commercial broker or seek out a commercial professional with a designation that proves their level of expertise in a certain area. Let me explain.
Finding a piece of commercial real estate on your own is like using TurboTax. You may end up with a “return” but was it the best “return” you could get?
The H&R Block method I equate to using a residential agent. They know their business and can do the leg work for you. However, they don’t have the depth of knowledge that an accountant or commercial broker does and you may leave “something on the table” by using this method.
The accountant is a seasoned veteran and is similar to a commercial real estate broker. They have experience and depth in their industry. They would generally be more equipped to provide a higher level of expertise than the other 2 methods, thus yielding you a “higher return”.
Finally, the CPA is like a CCIM (Certified Commercial Investment Member) or SIOR(Society Industrial Office Realtors). In order to hold the designation, they had extensive educations requirements, a proven track record in their field and had to take and pass an extensive exam on their subject.
Either method can get you a “return”. The question is are you looking for just any return or the best return? Your choice in a service provider can make the difference.
You get a new listing on a piece of commercial real estate and you are so happy! You’ve heard about the large commissions for commercial real estate so you want to handle this listing right.
You put in on the MLS, post a sign, add it to the Realtor caravan, and send out just listed postcards. 30 days pass and you have very little activity. You decide to have an open house. A few of the neighbors trickle in but no serious interest. You even get the client to agree to a price reduction. You get a couple of more showings but that’s it.
Your long term client with whom you’ve sold many homes is very disappointed in you and cancels the listing. They list it with a commercial broker and the property closes about 90 days later.
What went wrong for you? If you read my Ten Things You Need to Know About Commercial Real Estate, you would know that commercial brokers are generally not members of the local Realtor board. Consequently, they do not use the MLS. Since a buyer of commercial real estate will often use a commercial broker, leaving the property out of view from commercial brokers is a huge oversight.
