Why should I hire a real estate professional?

As most of you know, the ICI real estate market is setting record highs for both Sale and Lease prices.  I’ve been in Real Estate in one form or another almost all my life, but I’ve been involved professionally for 15 years, and this is by far the wildest market I’ve ever seen.  And while I didn’t start out in this industry as a Realtor, I have been able to see the benefits of a Realtor from both the Landlord/Buyers side and the Realtor’s side which has given me a deeper understanding of the benefits of hiring a Realtor, especially when it comes to establishing & analysing price.

One of the most misunderstood notions I hear time & time again is whether “my friend is a Residential OR Commercial Realtor”.  In Ontario, under REBBA 2002, when a real estate student graduates from OREA College and receives their Realtors license, they are in fact legally allowed to represent clients in BOTH Residential & Commercial/Industrial transactions.  However, most of us choose to specialize in one of the two.  Some agents choose to do both and while it’s totally acceptable and legal to do so, it’s also very hard to be an expert in all areas of the real estate market.

Specializing in anything whether it be real estate, manufacturing, agriculture, etc. Does have its competitive advantages (FYI: It is important for me to state that describing a Realtor as specialized, or an expert is strictly against the Rules & Regulations under REBBA 2002 so for the purpose of this blog I am referring to specialized as a broad term for any industry).  Some of the specific benefits of specialization are:

1. Better Value Proposition

When you specialize, you’re able to provide your target market with a superior value proposition over companies that generalize in a related field. You essentially become a bigger fish in a smaller pond, as opposed to the other way around.  “By specializing, you become an expert in a specific field,” digital strategist Paul Boag says. “This narrows down how many other companies can compete with you for that specialist work. Furthermore, you are able to offer services that are not replicated by automated tools or that justify being a permanent part of an in-house team.”

2. Smaller Learning Curve

There’s a lot that goes into running a successful business including staying up to date on new trends, best practices, and developments. If you’re in an industry where innovation happens at a swift pace – such as in medicine or IT – then you’re all too familiar with this challenge.  Real estate valuations are currently changing month to month rather than year by year which is also creating major challenges.

By specializing, you can lighten your load by reducing the learning curve. When you’re only focused on one or two niches, you’ll find it easier to focus your time and attention. This results in better comprehension and expertise.

3. Higher Perception of Authority

If you have a brain tumor, who do you perceive as being more authoritative and knowledgeable – a general surgeon or a cranial neurologist specializing in the diagnosis and treatment of spinal cord tumors? That’s obviously a rhetorical question. The individual with the specialty is viewed as authoritative.

When your business decides to specialize, it automatically garners a higher perception of authority in the marketplace. This can allow you to charge more, while also accepting fewer clients.

4. Higher Conversions

Generally speaking, specialization leads to higher conversions. For example, let’s say that a customer is searching online for a Realtor to sell their property. In their search, they see three different company names:

  •   ACME Real Estate Inc. Brokerage
  •   XYZ Real Estate Inc. Brokerage
  •   Phillip Moore Commercial Real Estate, Sutton Group Incentive Realty Inc., Brokerage

While all 3 may be able to sell her property the Seller is directly informed that Phillip Moore does Commercial Real Estate.  As a result, this company attracts more customers and produces higher conversions.

5. Better Networking

Finally, specialization leads to better networking opportunities. This is simply a result of the circles your business runs in. When you specialize, you’ll see an uptick in word-of-mouth marketing (assuming you produce a high-quality product or service). You’ll also discover that you’re interacting with people and organizations that are closely related to your specialty. This means you’re more likely to strike up profitable relationships.

While I do not want to cast a shadow on anyone who chooses to represent both Residential & Commercial clients (Andy Stuart in my office does both rather well) I often do find that it is much more challenging to specialize in both markets and without a detailed and concise understanding of the market it leads to less benefits for your client’s and yourself. I’ve seen several deals this year alone where I watched a Realtor, who knew little about the ICI market, fumble through a listing.  Marketing material was poor, showings were disastrous, and the process was less than desirable.  But the worst part was the valuations I saw; some of these properties were vastly overpriced.  I mean, property prices are extremely high to begin with.  When a competitor overvalues a property, they either didn’t understand the local market or didn’t have a great enough education to understand valuations using the income approach.  Having enough confidence to advise a client of the true value of their property is extremely important (and if you don’t know your market you probably won’t have that confidence) as if you overvalue the property it will not sell, it can get a negative stigma associated with the property, you’ll have a frustrated client and you might very well sell for less than what could’ve been achieved if you had listed the property correctly.  Here are some of my insights as to why to hire someone who ‘FOCUSES’ on ICI Real Estate only.

1. Specialization in the type of property you desire

When searching for a commercial real estate property for your new venture, you need to consider all the demands that your business will make on it. If for example you’re looking for office space you’re looking for needs to cope with all the ins and outs of your line of work, from location and amenities to size and ease of access. A good Realtor will listen to all your requirements and will show you properties that will meet your specifications.

2. Knowing the market well

Although it might not seem too hard to do a quick Google search for the ideal office, the process is a lot more complicated than you might think. A well-trained commercial real estate agent knows all the details of the market, knows exactly where to look, and isn’t afraid to do some thorough research. You can be sure that the options he or she will present to you will be much better than what Google’s results will showcase.

3. Excellent connections

If simple research doesn’t yield the expected results, a good commercial real estate agent has a fool-proof backup plan. The well-established network of professionals they know can help you find the office of your dreams. While it might be hard for you to locate the right people to reach out to, it only takes a mere phone call for a Realtor to find out more, which brings us to our next point.

4. It’s quicker than if you did it yourself

If you want to save yourself some time, then leave it to the professionals. You only need to find a Realtor you can trust, who is willing to listen to your exact requirements and is set on producing the best results. This way the quest for your ideal piece of commercial real estate becomes a hassle-free procedure, which will save you a ton of time.

5. It can save you a few bucks

One of the main reasons many people avoid hiring an ICI Realtor is because of the commission one needs to pay for this professional service. What some might not realize, however, is that the broker’s fee is often not paid by the business, but rather is paid by the landlord once the lease is signed. And let’s not forget about all the financial gains you can receive thanks to your Realtor’s knowledge of privileged market information and negotiation tactics.

6. You can leave negotiations to the expert

Once you’ve hired a good ICI Realtor, you won’t have to worry about haggling over the price, or about the amount of space and the amenities which come with the property. Your Realtor will do all of that and more for you, and the only thing you’ll have to do is make sure your needs are understood. Thanks to your Realtor’s well-established network of professionals, they will probably get better deals through negotiating as a professional than you ever will as a simple tenant.

7. You only have to deal with one person

With all this being said, another great advantage of leaving everything to a professional brokerage is the fact that you’ll only have to deal with him/her instead of an entire group of people. Thus, you won’t need to deal with a myriad of legal documents and papers, but instead, you’ll simply have to read one lease abstract. Not having to worry about these details sounds like a pretty good deal to us!

8. The Process

Just like with Residential there are tried, tested and true processes we use in ICI transactions when developing a sales strategy for winning a listing and then marketing it for lease followed by getting through the offer period and paperwork. While it seems easy in theory it actually is a well-thought-out and educated equation.  A good ICI Realtor will oftentimes take additional education courses such as getting their CCIM (Certified Commercial Investment Member(ship)) or their MBA in Real Estate.  It’s extremely important to be able to understand the terminology in this segment of the industry as well as to be able to do complex financial calculations.  All of this boils down to the process a good ICI Realtor creates. 

All in all, having a professional on your side can really pay off when you’re searching for the perfect base for your business. A commercial real estate sales representative can help you out in many ways, so don’t hesitate to reach out to the one you can trust.

 

 

Phillip Moore

Sales Representative

Sutton Group Incentive Realty Inc., Brokerage