Buyer's representation in the commercial world

2 Replies

I'm currently looking at some at some opportunities in commercial real estate. I've always worked in residential in the past. Is it typical to retain a buyer's broker? Is the buyer's broker's commission usually paid through the broker's fees in the transaction, similar to the way it works in residential? Thanks in advance for the help...

I used a buyer's agent for my business (a non-real estate business).  Their fees are paid similarly to residential, at least in Austin.  In other words, the property owner pays the commission.

"Is it typical to retain a buyer's broker?"

YES it is. I will tell you why. The large brokerage houses I can just relay my experience interacting with some of them. They are nice but tend to have one mission. That mission is multiple people are on a team. They want to sell at all costs the portfolios given to them by the sellers. For them splitting with the team and paying for the secretary they have  to do volume to make coin. So a buyer new to the commercial space they will generally gloss over or not respond to questions about the downsides of a property or what financing makes the most sense. Once it closes they are gone to the next one.

New commercial buyers simply do not know what they don't know and it can cost you big time.

A commercial buyers broker helps a purchaser understand the process and how to evaluate properties to make them work or not. The selling brokers with listings simply will not spend the time educating them or sourcing other listings that make better sense to buy for that purchaser. I am sure there are exceptions but I see this a lot where someone new contacts me and says " Is this a deal " and I go over all the reasons it is not and we start working together to find the right property.

So essentially I work with first time commercial buyers as one of my niches. They tend to buy 3 to 5 million properties or higher versus a first time home buyer buying a 100k to 200k house. Commission is paid by the seller most of the time unless they are offering something really low then the buyer might be required to bring some additional in.

It seems lately everyone is cashing out of California. I have lots of clients that are taking the gain and buying commercial elsewhere.

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