Does Size Matter? In Real Estate Investment Sales, the Answer Varies
Jotham Sederstrom Aug. 1, 2012, 7 a.m.
Super-sized, mid-sized, mini or bite-sized, brokerage firms run the gamut from global mega giants the size of a small city to as minimalistic as a one-person show.
Bigger doesn’t always mean better and good things don’t always come in small packages.
Let’s peel away the façade and look at the different-sized platforms to see if size truly matters to a seller of real estate. For the purpose of this column, we will assume the property is listed exclusively.
In multi-office firms, it is rare that the entire firm works on one client’s property sale. Usually just one agent or a few agents will work on the deal. Most of the time, they represent the entire sales force that will be marketing the property and sourcing a prospective purchaser. True value comes when a specifically qualified and experienced team is sourced to handle the assignment.
Ideally, a seller benefits most from the full attention of a team pulled together from a deep bench of talent. Having the ability to draw from a wide reserve of experienced mavericks with specialized skill sets and extensive resources best suited to the property is rare in most firms.
The best platform for a seller is where experienced brokers collaborate to bring their specific strengths and expertise to the deal. It is unique and extraordinary to find a firm where a seller has the advantage of a collaborative all-star broker lineup championing for her goals. When an entire sales team is engaged and incentivized to work together on a particular seller’s deal, the seller will achieve the optimum benefit. To achieve this end, every broker should be invited to work on the deal in efforts to source a potential buyer. By triggering its full arsenal of market-penetrating brokers and support staff, a seller can confidently expect that every qualified purchaser has been targeted and engaged.
There should be a fair commission split paid to the broker who sources the buyer. Additionally, the listing broker should not necessarily enjoy a distinct advantage over the process, especially if a higher and better offer comes in over his buyer’s best offer. The goal should always be to source that unusual buyer who stands out from the crowd by offering a higher price than the crowd. The listing broker must be able to put aside his personal desire to double his fee by procuring the buyer. If he is not completely focused on what is in the seller’s best interest, he is doing that seller a disservice.
I was told by one seasoned broker who represented a very experienced buyer that his written offer was rejected by the listing broker because the buyer had misspelled the address of the property. His offer was 15 percent higher with stronger terms than the bid they chose. When challenged, the listing agent, who had only been in the business for less than a year, replied that he couldn’t take the bid seriously without a perfect Letter of Intent. Luckily for him, he made both sides of the fee. Unfortunately for the seller, he never knew about the other offer.
A successful sale is one in which not a penny is left on the table. This can be achieved from just one office if that one office is able to cast a smart enough net that will capture the attention of the international, national and local audience. An office that promotes constant personal interaction among its brokers has the clear advantage toward achieving what’s in the seller’s best interest. Brokers who collaborate and freely engage one another will champion for the seller. Collaboration combined with a commission structure that fairly compensates the broker who delivers the buyer with the best offer equals “the perfect team.”
One broker I spoke with told me that if the property was not the product type she specialized in she was not permitted access to the information even though she may have a buyer in her database who would be an ideal candidate.
In the perfect selling world, the best firm for a seller is the one who custom-sizes the team, the market, the incentives and the effort. The right firm should have a platform that enables a team-selling effort, ahead of the curve traction, with up-to-the-moment market intelligence. Its platform’s resources should offer hands-on personal attention with a balance of institutional service and entrepreneurial creativity. It should be the driving force for the seller and it should offer an experienced team that is nimble, resourceful and knowledgeable about the changing nature of market fundamentals.
At the end of the day, it’s all about quality, not quantity.
Adelaide Polsinelli is a veteran real estate professional with more than 25 years of real estate brokerage experience. She is senior director at Eastern Consolidated, an investment sales firm in New York.