In over 30 years of commercial real estate investing – and more than 500 acquisitions – the majority of our deals have come from brokers. Although there are four basic methods to find a good real estate deal (brokers, on-line, direct mail and cold-calling) the broker segment has always been the most successful category for many reasons that include:
- A huge volume of VETTED deals at reasonable prices. There is no oversight to on-line listings, and many have huge flaws (market, zoning, utility, survey, title, etc.). But brokers tend to only accept listings on deals that have no built-in deal-killers as they have no desire to waste their time unless it has a good chance of closing.
- They do the dirty work so you don't have to. Sending direct mail and cold calling is not any fun. Brokers find their listings in the same manner. Essentially, the broker is doing the work for you and the seller is the one who pays them in the form of their commission.
- Brokers are excellent at manipulating sellers to be more reasonable on pricing. When there's a broker involved the seller is constantly told to keep their pricing reasonable, but with the other methods there is no "referee" to keep the seller in line.
So if we're all in agreement that brokers are probably your best shot of finding your ideal commercial real estate transaction, then how do you work with them to get good deals under contract? There are several important points to review:
- Make a complete list of all the brokers in your niche. Each and every broker has their own stable of listings, including the coveted "pocket listings" which are not shown to the general public. To not just hit a few of them. Make a comprehensive list and hit them all.
- Get signed up to receive their regular emails of listings. In the modern era, most brokers will send out their listings on a regular basis. But you have to register with them first.
- Don't give up there. The "passive" approach to brokers is not always a winning formula. If you call and email brokers once a month it sends some important signals to them which include 1) that you are very aggressive and would work to overcome any problems that might arise 2) that you are stubborn and would be the right selection of a buyer who has infinite persistence 3) that you are worthy of showing their "pocket listings" to and 4) you make them think of you more and are therefore more likely to show you listings before the general public.
There's still issue we need to go over: what to tell brokers when you talk to them. Because you can do all the bugging you want, but you have to send the right message to get the job done. Here is what you should tell a broker when you reach out to them – whether by phone or email:
- Be more than just another potential buyer. Differentiate yourself by being specific in what you are looking for and giving the broker a short "elevator speech" on why you're a solid buyer choice. Talk about your past successes, why you want a property, and how you're ready to pull the trigger on a good deal.
- Tell them you already have the cash for the down-payment – even if that's not the whole story. Brokers prefer buyers that already have the down-payment in the bank and can write a check for it. Of course, even if you don't you could always raise the money once you're under contract so you can probably tell a fib here (most buyers do).
- Try to create "bonding". Brokers prefer to work with people they like. Be yourself and see if you have something in common with the broker. Be a good listener. Look for areas of mutual interest.
If you use these basic rules you should be able to navigate deal selection with the brokerage community better than 90% of other buyers, who are just winging it. And you will be shocked at the deal flow you can get with a concerted effort to look at every listing that every broker has