I started my career as a commercial real estate broker in March of 2008 with a small brokerage firm in Reston, VA. It was just me and the principal broker. On top of that, I was starting out in the greatest economic crisis since the Great Depression. To say I was thrown into the deep end of the pool and told to swim would be an understatement. It was more akin to being thrown into the middle of the ocean during a hurricane.
Looking back, I was fortunate in many ways. While I had no administrative support or name recognition, I did have an experienced, well-respected, and ethical broker who took me under his wing and taught me the business. I didn’t just learn how to broker a real estate transaction. I learned how to do so the right way; putting my clients’ interests before my own, building a reputation for honesty and fair dealing, and going the extra mile to help others and get the deal done.
If I’d begun my career at one of the big firms, things may have turned out very differently… and not necessarily for the better.
Here are reasons why choosing the big firms may not be the best choice for you:
How many brokers do you think are working your deal?
CB Richard Ellis is the largest real estate firm in the world. Do you believe that all the firm’s considerable resources are being devoted to your requirement? At the big shops, agents and brokers form teams to work a listing or represent a client. I’ve observed that these teams are generally two to four people; consisting of one or two senior brokers who are supported by one or two junior agents (who do most of the work). They may sell you “the team” but that doesn’t mean that they’re all working on your deal. Depending on the size of the deal and/or importance they place on it, you could be passed off to a less experienced, junior broker. If you’re under 20,000 SF, this most likely applies to you.
Working at a big shop does not make one a more intelligent, competent, or creative broker. Many times, the difference between helping a client accomplish their goals or not is in how the deal is structured. Working at a big firm does not make one a better negotiator. Negotiations are based on leverage with both macroeconomic and microeconomic factors at play. Successful negotiations are about understanding those factors along with each party’s goals, needs, etc. within that context so that the deal can be structured in accordance with both. This comes from regular market research and analysis. The big firms do not have access to exclusive market data not readily available to anyone with an internet connection and Costar account (CCIMs, on the other hand, do along with the technical and analytical expertise to make sense of said data). The difference is at the big firms, in many cases, market research and analysis are performed by junior brokers and analysts, not the brokers. You should judge a broker based on their experience, not by the company name on their business card. You want to work with a broker that continues to educate themselves on changing market trends and conditions.
Which name is important?
Many brokers at the big shops are knowledgeable, good brokers, and this is not meant to disparage them; however, there are also many that rely on the company name on their card to get them business rather than their own. This point hits close to home for me because I never had the luxury of my company’s name opening doors for me. I built my own brand and reputation by being the best at what I do and providing first-class service to my clients through good, old-fashioned hard work. When you’re choosing which broker to work with make sure you focus on the name they’ve built for themselves, not one that’s been built for them.
In-house vs. a la carte
The big guys like to boast about all the resources they have in-house; using it in their pitch to win business. They’ve got analysts, marketing people, space planners, etc. I’d say that I hate to rain on their parade, but that wouldn’t make much sense in the spirit of this article. So, let’s look at these in-house resources and see if they live up to the value they’re purported to provide. The analyst position at the big shops is really just a stepping-stone to become an agent and the research they’re doing is more of a tool to win new clients for the brokers than it is to help you. As I mentioned, your broker should already be knowledgeable and up to date on market conditions. As far as marketing goes, they seem to be more focused on promoting themselves and less focused on promoting their clients’ listings. They are very good at getting their company name and brand out there but I can’t tell you how many times I’ve been doing market research and have come across property listings without floors plans, flyers, or even asking rates (this is intentional in some cases). If I do come across a flyer, it’s oftentimes only one or two pages and still may not include floor plans. I believe in providing buyers and/or tenants with all the information they need to make a decision, which is why every listing of mine has a comprehensive property package with floor plans, professional photographs, zoning information, etc. (if an owner does not have a floor plan I take measurements and create one for them). Finally, space planning and architectural services are generally provided by the landlord at no cost to the tenant (they’re part of the deal). You can either choose to go with the landlord’s architect (and/or contractor) or opt for an improvement allowance and select your own. It’s the difference of being locked into the in-house option or having a choice.
Free your mind
The big shops rely on a few psychological principles to win them business. One is the familiarity principle (also called the “mere-exposure effect”) which refers to the phenomenon that causes people to feel positively about things to which they are frequently and consistently exposed. Recall my point about their marketing materials? This type of thinking has no basis in rationality and is likely to lead to suboptimal decisions and results Another is the principle of authority which causes people to follow or choose “knowledgeable experts.” Basically, it goes like this: “CB Richard Ellis is the biggest real estate firm in the world. They must be the best.” As I said before, CBRE has many fine brokers, but be aware of my previous point about who will actually be representing you and working your deal. Finally, they rely on the principle of consensus in which people will look to the actions and behaviors of others to determine their own. “Northrop Grumman works with CB Richard Ellis… so should we.” You’re an individual with unique goals, needs, etc. What makes sense for one company may not make sense for you. These psychological principles serve as shortcuts to decision-making and surrender our individuality to groupthink. You owe it to yourself to make a conscious decision when determining which broker to represent you and your company.
The points I’ve made above are not meant to criticize firms such as CB Richard Ellis, Jones Lang Lasalle, Cushman & Wakefield, etc., nor is it meant to extol the virtues of the boutique brokerage firm. Rather, its purpose is to dispel the myth that going with the big guys is always the best choice and will yield the best results (they’ll certainly tell you that it is). When making a decision as important as who will represent you, it’s my belief that you should be fully informed as to who and what you’re getting and not be misled by the devices of Madison Avenue.