In my 33 years practicing commercial real estate as a Broker, I have experienced many discussions about how to select a commercial real estate Broker. Many property owners, tenants and buyers essentially fly blind while selecting a professional to represent them. We usually like to work with someone we like, and certainly we cannot discount relationship issues when making a selection. We want someone with whom we find it easy to communicate, and whose company we enjoy. While these are great choices when we are selecting a pal, they may not be the best approach when selecting a representative.

Although I have been productive and successful beyond my wildest expectations from my earliest days in this business, as I look back, I realize there was enormous luck involved learning this business and avoiding misrepresenting clients while I did. Unless a young agent is closely supervised, the potential for costly mistakes, some of which could lead to litigation, are certainly possible. We all love to work with enthusiastic people, and certainly the youngest among us are very enthusiastic. I must confess that while I love this business, my obvious enthusiasm for every project with which I'm involved is less obvious than when I was a puppy. That said, following is an outline that could be used when selecting a Broker or agent to represent you. You may have ideas of your own about the selection process that I have overlooked in this essay. Please email your feedback and ideas to make this tool better.

(Many of the questions are relevant only to Southern California, where we initially wrote this to assist a client evaluating Brokers.)

Questions for the Brokers about them and their companies

  • How long have you been in the business?
  • How long have you been selling and leasing commercial real estate?
  • Do you have any professional designations?
  • On what do you specialize?
  • On what does your company specialize?
  • In what year did you get your real estate license?
  • How many transactions have you completed in your career? Can you provide a list for the past 3 years with a map showing their locations?
  • What is the character of your brokerage company? For what types of properties does your company specialize?
  • How long have you been with this firm?
  • How long have you practiced in (the city in question)?
  • Are you a member of AIR?

Questions about marketing elements for this building

  • What are the characteristics of the likely buyers/lessees for a property like this one?
  • If you put the property on the market how long do the brokers think it will take to sell?
  • How many properties in this approximate size range have sold in the past 12 and 24 months?
  • What is the price range and price per SF for those properties?
  • Who were the buyers of those properties, and for what were they purchased?
  • If the Brokers with whom you have met have given price opinions, how closely do they match the comparable leases and sales? (Many owners fall into the trap of selecting a Broker based on the value the Broker asserts. When this happens, the owner's expectations are eroded over time, and the property, if it sells or leases, does so at the actual market price. An owner can never recapture the lost money from a long vacancy or time period to sell a property. The net effect is that the property eventually sells at market price, but the owner has it tied up with a Broker who used a high price to get the listing, and then convinced the owner of the value over time. This is a steep price for an owner to pay.)
  • How closely do they match properties competitive with yours?
  • In what category is the most likely buyer?
  • What category of use is most likely and why?
  • What value does the Broker place on the property?
  • What methodology did the agent use to determine value?
  • Have the agent share their calculations, and the comps on which they relied to determine the value.
  • Ask the agents to give you comparable sales for the past two years and to plot those sales on a map.
  • Ask for a list of competitive buildings with a spreadsheet outlining relevant attributes ofThe sheet should also rate these elements on a 1 to 5 scale with the same scale for the subject property.
  • If the Broker is really conversant with the area, the Broker should be able to relate relative attributes of the comps in comparison to your property. If they cannot, how conversant and active are they in the market really?

Agent questions about the agent and their marketing

  • Ask the agent to plot the sales/leases in, (The city or submarket), they personally have completed on a map with a list of the properties.
  • Ask "What are you going to do for me to market my property?" Can you give me a written plan?
  • Can you give me ten references from property owners for whom you have sold/leased properties in the past few years?
  • Can you share the names of five buyers/lessees you have represented, and the addresses, size and characteristics of those properties?
  • Can you share the challenges you have overcome completing these transactions and how you accomplished it in each case?
  • What escrow company and agent do you normally use? Do you mind if I call them for a reference?
  • How many commercial transactions have you consummated in your career?
  • What do you perceive to be the biggest challenge to selling/leasing this building?
  • Why did you get into the commercial real estate sales business?
  • What did you do prior to Commercial real estate? What did you learn prior to this career that has helped you to be successful?
  • Who is your best client? How many transactions have you consummated with them?

The ability and willingness to answer these questions should separate the players from the pretenders. The decisions you make selecting professionals with whom to work are essential to your long term success. These decisions have significant economic impact and the choice of an ineffective practitioner can result in financial losses that are gone forever. Selection of the right Broker can be a decision that pays you dividends for decades.