When to Use a Broker
Recently, I had a very interesting conversation with a business owner who was seeking to renegotiate his office lease. He told me he is working with a business consultant on the renegotiations. I thought; Wow! Hold on, a business consultant?
An office lease is typically one of the largest expenses for a business. As such, it is critical to have the person with the most knowledge and skills in negotiating leases. The more experience the better. The word “˜consultant’ can easily be misleading and tricky. Consulting is the right motive, but a real estate consultant is the right specialist.
Difference between business consultant & real estate consultant
- Talks only with existing landlord
- Limited knowledge = no competition, landlord has the advantage
- Client owes $ to business consultant
- May get results, but likely not favorable terms
A business consultant speaks directly to the landlord to find out his/her best offer. The business consultant then shares the information with the client, who then calculates their best offer. The business consultant, who has no outside sources to compare prices of office leases, “negotiates” a price with the landlord. The landlord has the upper hand in this situation as he/she is aware that the business consultant has no outside information. Along with this, the consultant charges the client, who is left with unfavorable results.
Real Estate Consultant:
- Talks with other landlord’s first to build knowledge and comps
- More experience and knowledge = more competition, landlord will deliver better terms
- Client owes $0, landlord compensates real estate consultant
- Best results and knowledge about the current market
The real estate consultant always puts the client first, asking what their intentions are before negotiating/speaking with the landlord. The more information and knowledge, the more skilled the negotiator: The real estate consultant researches other buildings in the area, compares lease prices and shares this with the client. The client then has the power of information to renegotiate the lease with the landlord at favorable terms comparable to market. The landlord is now aware that he/she has competition and is more willing to seriously renegotiate the terms. Along with this, with a real estate consultant, the client owes nothing as the landlord compensates the broker.
In conclusion, the business consultant may achieve results, but likely leaves much on the table. If you want the best results, think competition, think strategically, and get a real estate consultant.