The phone rings. “Hi, I’ve got some money I need to invest into a good commercial real estate deal. I’m ready to buy right away” says the very authoritative prospect on the other end of the phone. If you are relatively new to the business, this certainly sounds like an exciting call right? Maybe….maybe not. You begin to qualify the prospect by asking some questions about their specific needs.
“I’ve got a few hundred grand to put down, and I have a great relationship with my bank so financing won’t be a problem. I want a 20 – 30 unit apartment building within a 30 minute driving distance from my home. It has to be low maintenance and have a high occupancy. I don’t like problems and I want a nice cash flow right from the beginning. It should be located in a good neighborhood near public transportation and nice amenities like shopping and restaurants. Ya got anything like that kid?”
Pretty specific and the prospect certainly sounds real. Based on the info you’re now armed with, you set out spending your valuable time researching and tracking down qualified properties. You scour Loopnet and CoStar. You drive the market. You call other brokers who have similar listings. Maybe you make a few cold calls to owners of properties that fit the bill. Hours, days maybe a week or two of work and you’re ready to show the prospect 3 solid prospects that fit what he described perfectly. You call to set an appointment for showings.
“Oh yeah, hi kid. Hey listen, my brother in laws cousins girlfriend turned me on to a great deal on a distressed shopping center in Ohio that I could buy for cheap. Plus it’s only 50% leased so there is plenty of upside. The market is a bit dicey but it’s turning around so I’m just in time for the upswing. And the seller will hold the financing so I don’t have to try to qualify for a bank loan. But thanks for looking….I’ll call you again if I ever want to buy something else.” Time and effort, down the drain.
While this may be an extreme example, it happens all the time. Combing the market looking for something that will satisfy the whims of a buyer or tenant is risky for the unseasoned commercial real estate agent. Don’t get me wrong, I’m not saying that we should not work with buyer’s and tenants, but for those who are ramping up their careers in commercial real estate, obtaining exclusive listings is a far, far more efficient use of their time. Why? Because when you control salable inventory through an exclusive listing agreement with a seller or landlord, you have more control over the destiny of your career. With proper marketing and representation, you can let the buyers and tenants come to you. In a perfect scenario, you will generate multiple offers and create a competitive bidding environment for you listings. This will drive values higher and show your client that you are delivering the positive results they have hired you to get for them. Spending your hours, days and weeks creatively and proactively marketing YOUR listings is a far more efficient way to grow your income in the commercial real estate business than running all over town, unprotected, looking for space or assets to accommodate a buyer or tenant. Focus on obtaining good exclusive listing assignments and you will control your destiny. The buyers and tenants will come but they will be looking at inventory that YOU control.