What Is a Commercial Real Estate Broker?
Are you considering buying, selling or leasing commercial real estate? If so, you’ll need a commercial real estate broker. These professionals are distinct from real estate agents, although they often share responsibilities and are both licensed. Here’s the main difference:
- Real estate agents come in many forms. Whether they are a listing agent, buyers agent, dual agent or transaction agent, they must operate under a broker.
- Real estate brokers are licensed to do everything a real estate agent does and then some. Depending on the state, brokers are required to have a minimum number of years of real estate experience, additional licensing and take continuing education courses throughout their career. Brokers are qualified to manage their own business and supervise a team of real estate agents.
A commercial real estate broker is an expert in non-residential properties. Commercial properties include retail space, office space, healthcare, apartments — anything where an investor either collects money for rent, or buys/sells the property for business purposes. The broker acts as an intermediary between the seller and buyer or landlord and tenant.
What Does a Commercial Real Estate Broker Do?
As with any real estate professional, a commercial broker is responsible for acting in their client’s best interest. This could mean analyzing finances to secure the best deal when purchasing a property, soliciting potential tenants or buyers, or negotiating a lease to avoid any hidden fees or unwanted clauses.
Read on for more detailed explanations of the typical responsibilities of a commercial broker:
A broker dealing with acquisitions helps their client find and purchase a property. This includes every step of the process: from researching the market and weighing the risks of each investment, to negotiating the best price and terms of purchase.
On the other side of acquisitions are dispositions. A broker working in dispositions helps their client sell a commercial property. In other words, a broker helps the investor liquidate their assets in order to have cash in hand. Disposition can occur in three ways: selling the property in a traditional sale, selling the property with owner financing or facilitating a 1031 exchange.
More often than not, commercial brokers are involved in leasing transactions. They may either represent the landlord in finding a tenant for their commercial space or represent the tenant in securing the best deal for a rental space. The next section contains more information on the types of brokers involved in these transactions.
Types of Commercial Real Estate Brokers
Commercial real estate brokers come in four forms:
- Listing brokers work on behalf of the landlord to find tenants, negotiate with tenants and set up lease terms. They earn a commission on rent during the lease — typically three to six percent.
- Tenant reps work on behalf of the potential tenant in order to find them the best value and suitability in a commercial space. Their commission is also paid by the landlord. If there is both a listing broker and tenant rep involved in a leasing transaction, the brokers will typically split the commission. Most brokers represent landlords or tenants, depending on the situation. This doesn’t necessarily mean that they are trying to lease one specific property for a landlord or find a space for a specific tenant. An example client in this situation would be an investor seeking to add a commercial property to their portfolio. Even though they don’t work exclusively for one side or the other, this type of broker is still legally required to act in their client’s best interests.
- Dual agents represent the landlord and tenant simultaneously. This can be tricky when it comes to conflict of interest. As such, a broker acting as a dual agent will typically take on a more neutral role during negotiations, tending to focus more on the technical and legal side of the transaction rather than an advocate for a specific party. Dual agency is illegal in eight US states, although it is permitted in Mississippi.
When Do You Need a Commercial Real Estate Broker?
The short answer is: all the time.
If you are entering a commercial real estate transaction, it’s wise to have a broker on your side. The main reason for this? If you are a tenant, any potential landlords will most likely be working with a commercial broker. The same goes if you are a landlord, buyer or seller. Most people utilize a broker for commercial transactions, and you’ll definitely want a level playing field.
Commercial real estate is an entirely different level from residential real estate. In addition to the sheer amount of time it takes to research the market, browse through listings, schedule appointments, negotiate rates and contracts, commercial properties also involve extra zoning laws, tax requirements and other complications. A commercial broker has spent years becoming an expert on those areas so you don’t have to.
In addition, many commercial property listings are inaccessible to the general public. While you will be able to view some listings, a commercial broker will be able to access the best properties that are hidden behind a hefty paywall.
A broker will also work with you to understand the exact type of property you need for your business — or the type of profit you desire from selling a property. They’ll have an instrumental network of contacts in the real estate industry at their disposal. In the long run, working with a broker will save you time, money and a lot of headaches.
Work with Speed Commercial Real Estate on Your Next Commercial Transaction
Speed Commercial Real Estate has been serving the Jackson, Mississippi area for over 17 years. We are industry leaders specializing in property sales, management and leasing. Our team not only includes experts in the commercial real estate field, but experts in the Jackson area. At Speed Commercial Real Estate, we pride ourselves in using innovative strategies and unmatched commitment to service to achieve the greatest outcome possible for our clients. Contact us via our website or give us a call at 601-987-0202 today!