Today real estate seems easy. Put your property online, receive dozens of offers, pick the one that is $25k -$100k over asking price with no contingencies and BOOM, your property is sold. You can probably guess that this is not the case for commercial real estate. But what is very transferable from residential real estate to commercial real estate is that in competitive markets like the one we are in, having an expert on your side may help you find and acquire the right property. Here are some pros and cons of hiring a commercial real estate agent to help you buy or rent a commercial space.

PROS

• Finding all the opportunities. Finding the right space can be a challenge. As we tell our clients, there is no “Zillow” for commercial spaces.  Commercial listings for sale or for lease are scattered everywhere. Almost half of all commercial listings are not even listed online. Many times relationships with property owners or driving by a sign in the window are the only way to find a space. When our team takes a listing, we post the property on 20 different property exchanges. This means, when we are looking for a space, we are looking on that many different platforms as well. It is practically a full time job. Not hiring an agent will likely give you less choices and take more time to locate what you need.  
• You’ll have a seasoned negotiator. Like residential real estate, businesses, on average, change office locations every 7-10 years. Retail and Industrial tenants move less frequently than that. The things that were important in negotiations a decade ago, may not really be relevant any longer and new potential items need to be negotiated in the lease or they could cost the tenant a lot. You want the negotiations handled by a professional who is writing these documents daily, not once in a while. It will also give you confidence when making an offer, to know what other spaces are leased/sold for – so you pay market price and don’t get ripped off.
• Best Level of Service. Having a signed buyer agreement with an agent will provide you with the best level of service. A signed contract gives you client privileges. For buyer/tenant clients, this means that the agent will put the buyer/tenant’s interest first and work on their behalf. It’s important to note that agents are paid on a commission basis. By not having a signed agreement with a buyer, it means that they could be cut out of the deal at the eleventh hour without a paycheck. An agent will be more motivated if they know they will get paid when the deal closes.
• Access to the right connections. Rarely is buying a building or signing a lease a single event that does not involve other professionals. Whether it is bankers, contractors, office suppliers, inspectors, lawyers, or a number of other professionals, you might need other expertise along the way. A seasoned real estate professional will have these people lined up for you, so that any bump along the way is addressed quickly and completely. An agent or team that has been doing hundreds of deals will have dozens of recommendations and a couple who are experienced in the specific thing you might need.  

But let’s be honest, if it was all benefits and no cons, then everyone would hire an agent when looking for commercial space. Anyone familiar in looking for leasing space knows, that a lot of the time there is no representation on either side.  Here are some of the cons of adding a commercial agent to your team.

CONS

• You might have to pay a fee for off-market opportunities. Sometimes a seller chooses to keep their property off-market so they can avoid agent involvement and having to pay commission. If you are a buyer represented by an agent, you may be on the hook for your agent’s commission for an off-market property. While there are certain ways to ensure that the fee is not absorbed by the buyer/tenant upfront, a great agent will almost certainly get you the value for your lease that is greater than any fee that you would have to pay.
• Not all buyer/tenant agents are created equal.  Typically you sign a contract with an agent that you will work with them exclusively. This is beneficial to the agent because they know they will get paid at closing and can go after off-market deals. The negative for a buyer is getting stuck with an agent that doesn’t understand your requirements or isn’t familiar with the commercial market and isn’t looking for properties through the many commercial marketing platforms. We always recommend vetting anyone you are looking to hire and making sure that person is giving you the value that you need in the transaction. Some buyers or tenants know everyone in town and don’t need an agent’s connections, but just advice on if they are getting a good deal or that all the different negotiating items have been discussed before a lease is signed. Buyers/tenants need to be clear on what they need help with and find the agent who can offer that expertise.

While this is a list of the major benefits and risks of hiring an agent, the truth is, hiring someone with a real estate license and hiring a professional is the difference between getting the benefits or wishing you went it alone. We joke with our clients that ‘my accountant and my lawyer are people I want to like, but at the end of the day, if they do their job well, that is the only way I will be happy’. We’d rather have unpleasant, but competent accountants than pleasant and incompetent ones. The goal is always to find a professional that is pleasant AND competent! 

Don’t simply hire someone for the sake of hiring someone and don’t go it alone because you had a bad experience with a real estate agent in the past. If you hire the right person to help you find a space, to buy or lease, it will set you and your business up for many successes in the future. If you find an agent or a team that focuses on commercial real estate and leasing, you will find they are worth their weight in gold.

– Written by Ethan Ash, Viktoria Alkova, Laura Stoll & Zeid Haddad