Imagine this, you’ve found the perfect office building and you’re ready to make it yours. From my previous blogs you’ve learned that inexperienced buyers can easily mistake the person showing the commercial buildings as someone who will take care of them in purchase negotiations. They don’t and here’s why: sellers want to make money and buyers want to save money. Knowing that, your search for the right buyer representative has begun.
Before you hire a buyer rep, it’s important to note that not all reps are created equal. Experienced representatives are crucial in winning a fair shake throughout purchase contract negotiations. Consider the relationship with your buyer rep a partnership that pays dividends.
As you keep all of this in mind, here are four crucial skills you’ll want to ensure the buyer rep you hire has:
Lease Versus Purchase Analysis
This is necessary when deciding the next step for your business. Ask your buyer rep to prepare a detailed lease versus purchase analysis so you can understand if it’s the right time to purchase a commercial building. Be sure to engage your CPA and financial planner in this discussion as they can advise what tax benefits building ownership offers.
Local Market Knowledge and Comparables
The best buyer rep is an experienced professional who knows your market. Your market is the geographic boundaries within which the office will be located. Buyer reps will use search engines to gather comparables and assess building information, which is essential during the negotiation phase. Ask your prospective rep which one they use and why. You may not know the advantages of one over another, but the rep’s answer will tell you if he does.
Top Negotiation Skills
All real estate sales have one thing in common: the seller wants the highest price for the property while the buyer wants the lowest price for the property. A successful real estate closing means that both parties received what they want and walk away happy. That’s where top negotiation skills come in. Your buyer rep should have a variety of negotiation skills to close the deal effectively. Included below are a few I consider essential:
- Keen listener
- Understanding of everyone’s objectives
- Finds solutions under pressure
- Kind, fair and internally strong
- Able to sidestep confrontational individuals
- Strive for a win-win beginning to a new relationship
Ability to Close the Transaction
The above points are insignificant if the title to the property never gets transferred to your name. Closing the transaction is an art that is often overlooked. Time is everything. If done too quickly, it may signal desperation from the buyer and limit the ability to negotiate a lower price. If done too slowly, another buyer may usurp your position. It’s similar to a conductor guiding his orchestra through the finale of a two-hour symphony. At the end, we want everyone clapping.
These tips are just a few things to keep in mind when hiring a buyer rep. For more helpful information on buying commercial real estate, look for Simply Own It, the American Dream, scheduled for publication in late 2020.
About Andrea Davis
Andrea Davis, CCIM, has practiced commercial real estate for over twenty years. Davis’s breadth of knowledge stretches from developers to landlords to buyer/tenant representation and investments. Within the commercial real estate industry, Davis has won numerous awards. The Phoenix Business Journal ranked Andrea Davis CRE in the top 10 of Ranking Arizona for the category of Office Brokerage. Her book, SimpLEASEity™, focuses on leasing and is the first in a series of commercial real estate guidebooks. Her next book, Simply Own It, the American Dream, is forthcoming this year.