The Education of a Broker: Part One
David Greene Feb. 13, 2014, 7 a.m.
Benny G. has been in real estate for 30 months and he’s starting to hit his stride. He was introduced to a couple of tenants through the referral group that he attends twice a month at 7 a.m. He met a small tenant through a relationship at his alma mater and he placed several tenants he found through canvassing. Benny has been put on some deals with a seasoned broker, though at a low split. He makes about 200 cold calls a week but prefers to foot canvass buildings on the edges of the better neighborhoods. Benny has a small draw.
Benny has made 18 deals in two and a half years, most of them in the 1,500- to 3,500-square-foot range, though he did close a 6,500-square-foot deal and an 8,500-square-foot deal with his senior. Benny is starting to look for another apartment on the Upper East Side, this time without a roommate.
Benny feels comfortable talking Manhattan. He is learning the “ins and outs” of several submarkets. He can explain loss factor, understands the concept of “buying up rent” and knows the language of an office “build-out”. Knowledge is king. He’s gaining confidence and moving up. His social life has picked up too, real estate being that warm and enticing elixir that so many want to know more about.
Benny occasionally works with Rita Jones, a smart, sophisticated broker in the business for about 15 years. Rita has brought Benny onto a couple of transactions and offered to back some of his draw. She sees a long-term relationship with a young “up and comer”.
Benny may be young, but he is learning something new every day. He tends to only show office space represented by familiar names. He’s heard the stories about owners who pay lower commission rates or ask for multiple payments over a very long period of time; some even ask for discounts. One friendly broker said to him, “You are not the owner’s partner”. No broker wants to experience being twisted up by an owner who does not appreciate the value that a broker has brought to his or her building. Brokers put their livelihood on the line every day trying to make something out of nothing. It’s hard enough to find tenants and make deals without worrying whether you will be paid.
Benny has learned not to waste time. Rita taught him that it was important to understand who was successful and who was not. Why work with someone who wasn’t successful, no matter the space requirement? Things have a way of working out for people who are successful. It’s the old adage about hard work and good luck.
Benny feels that he has earned his way into a better split. He wonders why Rita hasn’t come to him to reward him for his hard work and dedication. Why does he need to even have this discussion? Rita feels that were it not for her, Benny might just be another young broker running around in circles rather than working hard and remaining focused. Besides, she put her money behind him. Even if the splits favor her significantly, she believes in Benny–does anyone else? Benny learned from a friend to get the “agreed to” splits in writing. It’s imperative to have a discussion about splits at the beginning of the requirement so everyone knows how much effort to put into an assignment. Eventually, the two parties speak. And though Benny thinks he should have gotten more and Rita thinks she gave away too much, they have agreed on a new split. All is well with the world, for now.