Several years ago I was talking to a friend and mentioned that I had sold my house as a For Sale By Owner (FSBO). He was surprised that it was possible to buy or sell a house without a residential real estate agent. I was shocked that he didn't know he could trade real estate without a broker - however ill-advised that might be.
Brokers can only negotiate the sale or purchase of a house, right? Aren't they all the same since they have access to the MLS? Even though I've been in the real estate business for 23 years now, these misconceptions surprise me. I didn't have access to the MLS until 2 years ago and I've almost always hired a residential agent when buying or selling the homes I've lived in.
Real estate brokerage has evolved in the last 25 years to become a highly specialized industry. Many brokers have essentially become real estate advisors providing financial analysis, demographic studies, market analysis, site selection research, business planning, portfolio analysis and management, marketing plans, and even construction management in some cases. This is more the case for commercial brokers, but residential brokers have also become specialized.
For example, residential agents usually specialize based on geography first and then by the price range of the house, type of house (single-family, high-rise condos, etc.), type of client (owner-occupant or investor, buyer or seller), and type of service (sales or property management). Many will be a combination of these specialties - seller agent for high-rise, luxury condos in the Uptown area of Dallas.
Commercial brokerage is for more specialized than residential. Agents will often specialize based on 4 factors. First, by geography. Dallas or Phoenix. Arlington or McKinney. Second, by product type. Office, industrial, retail, hospitality, or multifamily. Third, by client type. Seller or buyer. Landlord or tenant. And finally, fourth, by service provided. Investment sales, tenant rep, project leasing or property management.
These criteria can be cumulative, of course. So an agent may focus on McKinney, retail properties, for landlords, for lease. One broker I know only represents church properties, but does so throughout the country. Another only sells large office buildings on behalf of owners in Dallas. While yet another handles only corporate real estate services for corporate tenants in Collin, Dallas, Tarrant and Denton counties.
The degree of specialization is often a function of the size of the market. For example, a commercial broker in Amarillo may have to represent both owners and users of several product types because there isn't enough business in any one to make a living. In Chicago, on the other hand, it's more likely that a broker would focus exclusively on owners or users with further specialization by product type.
Rarely do you see brokers cross the residential/commercial line though many of the national residential brokerage companies are trying to set up commercial divisions.
The good news is that owners and users of real estate have an incredible array of options when hiring a broker to represent their interests. The greater the specialization, the better the quality of service in most cases. It's important to find an agent who specializes in the area, product type, client type and service that fits your assignment. The agent must be of impeccable integrity, be willing to listen to your needs, and have the time to focus on your assignment. Don't be afraid to use one broker to help your company lease space, another to find a house to buy, and yet a third to handle your investment property. Ask for referrals even from a broker you have used.
Oh, and by the way, there is no law saying you have to use an agent at all.
Bob Gibbons is a Corporate Real Estate Advisor - Tenant Rep - with Reata Commercial Realty, Inc. based in Plano, Texas - http://www.reatacommercialrealty.com/. You may contact him by email at bob@reatacommercialrealty.com or by phone at 972-679-1142.
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