Stories of a commercial real estate agent, pt. 1. The market uncensored
Our interlocutor has spent years working as a broker on the commercial real estate market and signing contracts worth millions. During this time, he managed to get to know many facts about the lease process and the market itself, which customers are usually unaware of. The general knowledge about the commercial real estate market is very small; meanwhile, it is an industry through which huge amounts of money flow. And where huge money is involved, there are often situations, about which few people want to tell…
A frequent recurring problem among clients of real estate agencies is that they are neglected by agents. They do not get the care they have hoped for. Where does it come from?
You know… If you have several clients and some of them provide you with a chance for a much larger commission than others, you definitely neglect the latter. The agent often neglects the tenant who is looking for a relatively small area and is not 100 percent sure whether he will rent anything at all. From such a man, one does not answer phone calls, one does not reply to emails as fast as the client would probably want to… Similarly with the landlord. The one who has a renovation and several cubicles to rent in his building is unlikely to be a dream client. These are, unfortunately, the brutal realities of the market – everyone would like to have a good broker, but the majority can only count on a less-experienced junior agent, who will still focus on those locations where is the highest potential earnings.
And at the time when you started working in a brokerage, you actually felt that sometimes you neglected your clients? Or that you could not help them the way you knew they needed it?
In this profession, before they even let you into a city with a client, you make so-called cold calls – you call people to confuse them in order to convince them to make a transaction with you.
How do you sow confusion? What do you say?
For instance, you call random companies drawn from a list and say: “Good morning, I would like to interest you in a brokering service. The building that you are currently using may soon cease to meet your requirements, so it is a good time to look around for a new office in a new location.” Brokers may receive a commission when changing the location, so it is bad for them when companies occupy the same place for many years. To put it simple, brokers earn a better living when there is movement on the market instead of stagnation. Just like on the stock exchange – a broker makes money when he constantly trades in financial instruments, and he does not make a profit on selling one good instrument once in a lifetime.
And on what basis do you say that their building “may soon cease to meet their requirements”?
It is done like this: you find an office building, you go to it, you take pictures of boards on which the tenants are listed, then you call them and loyally inform that soon there will be traffic jams in the area, because a street renovation is planned, so maybe they would like to move the headquarters. It is not that these people are lying – because in order to say this, the renovation really must be in the plan. When a junior manages to find a client in such a way, sometimes he will be served by a senior – unless it is a small contract, for an area below 1000 square meters. Then, this junior is sent, and he starts to wander. Such situations are really common.
What do you mean by saying “to wander”?
If, as an agent, you have three months of experience in the market and you are let go with a client who is looking for 150 square meters, you can not tell him much more than what you read for two hours on the Internet. Most brokers have a very narrow field of activity and will lead tenants mainly to those buildings they know well, where they have agreed rates and know the landlord. And if other, better building is 50 meters away, whose landlord is unknown to the agent, he will not try to take the client there. That is why most customers are really poorly served. To get a broker-senior with experience, who will want good for the tenant and not the money, is almost impossible, especially in the case of small contracts. Neglecting clients who give less chance for profit is very common.