The Buyer-Agent Role in Commercial Real Estate.
If you have been following the real estate market over the last year, you have likely read or heard about the NAR lawsuit. On October 29, 2023, a federal jury found NAR (National Association of Realtors) and some residential real estate brokerages guilty of conspiring to artificially inflate commissions on home sales, making them liable to pay around $1.8 billion (later settled for $418 million) in damages to sellers who objected to the commissions they were obligated to pay buyer’s agents.
A settlement was reached in early 2024 that may drastically change the residential real estate brokerage environment, especially as it pertains to buyer agent fees. Effective August 17, 2024, commissions will no longer be displayed on the MLS, and MLS participants working with buyers must have a written agreement in place before touring a home. Many critics argue that the possibility of buyers having to pay their own broker commissions will force many to forego using a buyer agent, and if inexperienced, likely putting themselves at a significant disadvantage in the transaction process.
While it is uncertain whether this will eventually affect the commercial real estate world, it is important to understand the value the right commercial broker can bring to the table. If we do see a shift toward buyers being required to pay commissions, we will undoubtedly see buyers electing to save a few bucks and go at it alone. However, a good broker can often be the key to success in a commercial transaction; here are a handful of compelling reasons why enlisting the services of a professional broker is a good idea:
Market Knowledge and Expertise – A good commercial broker knows his or her market inside and out and has a bead on nearly every transaction that is taking place in that market. This knowledge of market dynamics, current trends, local regulations, and more, allow a broker to tailor advice to their client’s specific needs. Whether a client is an investor or owner-user, a local broker will know what makes a good deal in their market and advise their clients accordingly.
Negotiation Skills –Commercial real estate brokers are adept negotiators who can represent your interests effectively. Negotiating the price and best possible terms is an important part of any real estate transaction. If a buyer doesn’t have experience in this area, having a skilled broker can lead to significant savings and more favorable outcomes that may have otherwise been left on the table. Remember, the seller’s broker has a fiduciary duty to negotiate the best deal for their client, not the buyer.
Risk Mitigation – It is always advisable to seek legal counsel when dealing in commercial real estate, as there are always inherent risks such as legal issues, zoning regulations, financial liabilities, cloud on title, complex lease issues, and more. However, an experienced broker will be able to identify these issues upfront, potentially saving their clients from making costly mistakes and avoiding legal disputes in the future.
Exclusive Listings – A buyer without a broker will often miss out on opportunities that are not publicly advertised. Most brokers spend a great deal of time searching for new opportunities, and while some sellers aren’t ready to bring a property to market, they might welcome off-market offers. A good broker’s expansive list of industry contacts will maximize a buyer’s chances of finding the right opportunity.
Long-Term Partnership, Long-Term Success – Establishing a relationship with a great broker can yield long-term benefits. Broker’s will understand your specific needs and become trusted advisors who will always have your best interest in mind. When that great deal comes across a broker’s desk, their trusted clients are the first to know about it.
It may seem feasible to navigate commercial real estate independently, but the benefits of hiring a professional are undeniable. A broker’s role can be pivotal in achieving a successful outcome in the competitive landscape of commercial real estate. Partnering with an experienced broker can yield long-term results that maximize a buyer’s return on an investment, therefore far outweighing the short-term cost of a commission. Often, a mutually beneficial relationship is formed and continues far beyond an initial transaction.
Jordan Burgess
Jordan joined NavPoint in 2021, bringing a people-first approach and a strong work ethic from his 7 years as a golf professional, most recently at Castle Pines Golf Club. A University of Denver graduate and northern Colorado native, he now helps clients achieve their real estate goals across office, retail, and industrial assets.
