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 but, most importantly, 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 started at one of the big firms, things may have been quite different.
Here are the 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 those 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 junior broker who will work your deal. If you’re under 20,000 SF, this most likely applies to you.
Working at a big shop doesn’t make you more intelligent, competent, or more creative in deal structuring. It also does not afford you exclusive access to information that is not readily available to all commercial brokers with access to Costar, public records, etc. (Note: CCIMs do have access to resources and tools unavailable to other real estate professionals). 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 chooses to continually 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 instead of the name that they build for themselves. This point hits close to home for me as 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, providing first class service to my clients, and good, old-fashioned hard work. When you’re choosing which broker to work with make sure you focus on the name of the broker, not the company name on their
In-house vs. a la carte
The big guys boast about all the resources they have in-house. 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. 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 are very good at getting their company name and brand out there, but seem to be less focused on promoting clients’ listings. I can’t tell you how many times I’ve been doing market research for a requirement and 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 sometimes only one or two pages (we believe in giving a buyer or tenant all the information they need to make a decision). Finally (for the sake of brevity), space planning and architectural services are usually 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. Do you recall my point about their marketing? This can lead to suboptimal decisions and results and has no basis in rationality. 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 consider all available information when choosing 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 devices of Madison Avenue.