20 + 1 = Success

Understanding the Value of a Seasoned Broker

Years ago a real estate developer friend called and asked if I could help him sell an industrial project he was developing in a Southern state capital city.  He had gotten the project started but was having difficulty securing leasing and the project stalled.  He concluded that selling the property partially developed was his best exit opportunity.

After agreeing on the real estate commission he would pay if we secured a purchaser, I called a developer I knew from Illinois.  The prior year we helped him secure a lease for a build-to-suit industrial project in that same Southern market.  He was receptive to the deal I outlined and in short order agreed to purchase the development-in-progress.

A few months later, when it came time to close the purchase and sale, my seller friend called to renegotiate the real estate commission.  He complained that the “one phone call” I had made to secure the purchaser did not justify the commission to which he had previously agreed.  He reminded me that he worked for months to find the land, get it zoned, purchase it, design the building, and clear and prepare the site for the building.  “And after all that work,” he said, “I am only going to make about the same profit as the brokerage commission and you only made one phone call.”

I patiently explained that while it had taken him several months to put this deal together, it had taken me nearly 20 years of analyzing deals, negotiating purchases, and endlessly marketing myself and my services to hundreds of potential clients, just to know exactly whom to call, when to call them and what to say to make the deal happen.  I reminded him he had made a much better return on his time over a few months than I had over my 20 years.

The moral of the story is that seasoned brokers have developed exceptional judgment about people and how to motivate them.  Exceptional judgment comes from a history of making good judgments.  Good judgment comes from experience, and {sigh} experience comes from bad judgment.

The seller got what he wanted, a clean sale and a profit on his investment.  The purchaser got what he wanted, a promising additional real estate investment in a market with which he was already familiar.  And I got what I wanted, two satisfied parties and bit more of a return on my 20 years’ investment in people, relationships, and know-how.

The next time a good real estate broker helps you achieve your goal, give him or her their due and don’t argue about the commission.  You never know how many years it took them to get to know just the right folks to call to make your hoped for transaction a reality.

Galaxy Partners is a national corporate real estate firm headquartered in Atlanta, Georgia. Galaxy provides Consulting, Transaction, and Management services exclusively to corporate clients throughout the USA.

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