How to Choose a Chicago Commercial Real Estate Broker

Most commercial brokers in Chicago do one of two jobs in a given deal. A landlord-side or listing broker is hired by the building owner to fill space. A tenant-side broker, or tenant representative, is hired by the company leasing it. Both can be courteous and well informed, but they have different clients. When you call the number on a sign, you are usually reaching the person who works for the owner.

Some firms do both jobs, in different deals or even on the same one. That is not automatically wrong, but you should know about it and decide if it works for you. Our guides on tenant reps versus landlord brokers and on tenant-only versus full-service firms set out those differences. Here, we focus on how to choose among real candidates in Chicago.

Illinois regulates this work. The Real Estate License Act defines a broker to include someone who, for compensation or with the expectation of it, rents or leases real estate or negotiates to do so for another. It also makes it unlawful to act as a managing broker or broker without a license and a valid sponsorship. Checking takes a minute.

1. Go to the Illinois Department of Financial and Professional Regulation's Check a License page and open the Real Estate License Look Up.
2. Search for the individual broker and for the firm. IDFPR says the lookup covers both individuals and entities.
3. Confirm the license is active and the name matches the person you are hiring. IDFPR notes that new licenses can take up to 24 hours to appear.
4. If your search crosses state lines, ask how the broker handles licensing in other states, since each state has its own rules.

A license is a minimum, not a measure of quality. Treat it as a basic check and then move on to the questions that separate candidates.

Our general list of questions to ask a broker has more. These are the ones we would press hardest for a Chicago search.

• ✓Who will actually tour with us and negotiate, and can we meet them now?
• ✓What deals of our size and type have you done in the past few years in this part of Chicago?
• ✓Can we speak with two recent clients, including one whose deal was difficult?
• ✓Which landlords and owners here have you negotiated against recently, and what did you learn about how they work?
• ✓How do you decide which buildings to show us, and will you bring us sublease space, spec suites and options outside your own firm's listings?
• ✓Does your firm represent landlords, and could it represent the landlord of a building on our list?
• ✓How are you paid, and is any part of your compensation affected by which building we choose?
• ✓If your firm has a designated agent, who is it, and how would you handle a conflict?
• ✓Can you show us a sample of the proposal comparison you would give us?
• ✓What will you tell us if the right move is to stay where we are?

Pay attention to how each candidate talks about the option of staying put. A broker who treats your renewal as a real choice is thinking about your outcome, not only about a transaction.

Market knowledge is easy to claim, so ask for proof you can test. A broker with real knowledge can tell you about a building's ownership, recent changes in management, and how a specific landlord tends to handle allowances and approvals. They should also be able to explain how Cook County property taxes and reassessment affect a pass-through, and how submarkets differ for your commute. If you ask them about any of those topics, you should hear specifics. You should not hear only general statements about the market or a list of properties.

Also ask how they would approach your particular problem. A small firm with a short timeline, a growing company that needs an expansion option and a mature company considering a smaller footprint need different plans. If a pitch sounds the same for all three, it probably is. Ask each candidate to walk you through the first month of your search, including what they would need from you, which buildings they would rule out and why, and when you would see the first proposals.

Tenant representation agreements commonly set an exclusive period, a scope and how the broker gets paid. Review the length and how to end it, what happens to deals still in progress when it ends, and whether it covers one location or all your needs. In a Chicago search, ask how the agreement treats a renewal with your current landlord. Have your attorney read it. Our guide to tenant representation agreements has more detail, and our guide on who pays the broker explains how compensation usually works.

Tenant Advisory Group is based in Chicago, and it was founded in July 2008 by Bill Himmelstein, a CNE. We represent occupiers: tenants and buyers of office, clinical and industrial space. We do not represent landlords or sellers of investment property. Our firm has completed more than 500 transactions totaling over $1.5 billion, and we have saved clients more than $350 million. We also work nationally for clients with needs outside Illinois.

We would rather be compared than assumed. Ask us the same questions you ask everyone else, and call our references. One client's description of the process is a fair standard to hold any broker to, including us: