Shaking hands for a business agreement.
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It might seem obvious that you’d want to work with a broker who has high standards when you’re selling your home or commercial property. Certainly, there are various requirements that salespeople must have to operate in the market. However, it can be important to check for signs that the broker will act ethically throughout the sales process.
Keep in mind that it’s essential to find someone who will take a long-term view of the relationship. A credible broker will act with your best interests over their own. They’ll be a fiduciary and make sure to do right by you, even if it’s to their detriment. As I mentioned in my previous article, it’s really important to have a professional put themselves in your shoes and be client centric.
Follow these guidelines to learn more about a broker’s standards and evaluate if they align with yours.
Check for Real Estate Credentials
It’s common for brokers to have state licenses, and many also obtain higher levels of certification. In commercial real estate, this could include distinctions such as CCIM, which stands for Certified Commercial Investment Member and indicates they are a recognized expert in the real estate industry. They might also have obtained additional coursework from their local real estate board. They may have higher learning, such as continuing education, professional studies, or a master’s degree.
Review the Commissions Landscape
If a broker is representing your property for sale, they’ll be receiving offers which could come directly to them or be from another broker. If the bid comes straight to the broker, they could make a full commission on the deal; however, if the offer is from another broker, they might have to split the fee. This means that a direct offer could yield double the commission for a broker compared to a split commission with a co-broker involved.
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You’ll want to watch and listen to make sure your broker handles these situations wisely. If they are pushing to work with a direct buyer, it could potentially be a sign that they are hoping to get a full commission and avoid splitting a fee 50/50 with another broker. Observe conversations to see what statements they are making and which questions they are asking. You’ll want to be working with someone who is looking to get the best offer for your property, regardless of how the commission will be impacted in the end.
Check the Broker’s Interest in Purchasing
Some brokers sell properties, and also invest in real estate. I do this myself; however, it’s essential to follow certain guidelines to avoid a conflict of interest. If you’re working with a sales professional who offers to represent you to sell your home or building, and then shares that they would prefer to buy your property themselves, it could be a red flag. That’s because there is a possibility that they are not looking to get the highest price for your asset. In fact, they could be aiming to swoop in and buy the property for a lower amount.
When I act as an investor, I always buy properties represented by another broker. That way, I know the owner is working with an advisory team to get the best price. The broker has the chance to run a professional marketing campaign and look at offers from various buyers interested in the property.
As you carry out initial conversations with brokers, pay attention to their educational background and how they respond to your questions. During the sales process, be aware of the commissions landscape and look at the potential buyers that are approaching the property. If the broker asks to purchase your home or commercial space, it may be a sign to consider working with another sales professional. In the end, you’ll want to partner with a broker who has high standards and ethics, and who will act in a professional manner throughout the sales process.