The Value of a Real Estate Broker in the Transaction - February 2006
by Bill Gladstone, CCIM, SIOR

Some people do not use real estate brokers in their transactions, while others prefer their presence. The preference to use a broker is a chosen advantage for a number of reasons.

In some instances, it is the value added services a seasoned agent brings to the deal. Other times, it is nice to have an experienced professional when the difficulty of specific deal points between Seller and Buyer (Landlord and Tenant) need to be “smoothed over” with people skills.

Style supercedes substance, and in many cases that is what a good broker can do; use his/her style to keep (or put) the deal back on track. The fee paid to the broker is a lesser price to pay than watching the entire deal blow up. Especially, if it is a deal where the broker uses his/her people skills to keep all parties in line by using knowledge and skills learned over time, again the fee is worth it. However, I am the first to admit, brokers are not needed in every deal; only in transactions where they can bring a value added service to the table.

When selecting your broker, look for that “value added” feature they possess. This is no different than the process you used to select your accountant and your real estate attorney. You want individuals who can supply the best services to fit your needs. The broker should be selected in the same way.

I was involved in a transaction, which I had sold a 48,000 SF industrial building to an individual. As we went through the mechanics of the deal, he asked me if I would help him sell his current building. I agreed but he asked for one exclusion in our contract; his next door neighbor whom he thought had a sincere interest.

I asked him if he had considered a 1031 tax deferred exchange. He did not know what that was and no one had mentioned it to him. I explained it to him in a very simple form and encouraged him to talk with his accountant immediately. Once he grasped the concept he knew there would be a sizable gain since his existing building had appreciated somewhat over the years and was now fully depreciated. His taxable event would have been about $50,000. By working with his accountant he was able to parlay that into the basis of his new building and use that money to help purchase the new structure. He told me I was well worth the six percent fee (approximately $25,000) being paid to NAI CIR.

Copyright 2006 BillGladsone.com. All Rights Reserved.

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