Business, Profits and Strategy

8 Questions to Ask Before Interviewing Real Estate Service Providers

Your company's about to embark on a real estate project...and you drew the short straw! Now, you must ask and answer some important questions. Information about current business procedures and future plans must be gathered, analyzed, interpreted, and converted into an intelligent plan. Someone will have to make some serious decisions and eventually, authorize a transaction.

You'll be responsible to coordinate all of the above and execute that transaction. And then, the real work begins.....planning, design, furniture, equipment, technology, people, files, politics, packing, moving, unpacking....what if you or your staff have never done this before? You`'ll have to deal with brokers, contractors, attorneys, accountants, architects, engineers, movers, shakers, and others, too! What kind of transaction should your company complete? Where do you begin? Who should you hire?

First things first! Assess the type of internal resources that are available for this project:

Andrew B. Zezas, SIOR
Relationship Manager,
Strategist, President
(908) 245-5999 x11
andrew.zezas@realstrat.com

1. How many real estate projects of this nature have we completed before?

2. Are we versed in the goings-on of the commercial real estate market, including trends in lease terms and negotiations?

3. Do we truly understand the dynamics of real estate (beyond just rental rates and vacancies) in the geographic area in which we're interested?

4. How much time will we be able to commit to this project?

So, what kind of internal resources does your company have available for this project? None? Let's go to square one. Answer these questions:

5. Does the company view your project as strategic in nature?

6. Will important people, like your CEO, the Board, or other stakeholders, be watching your performance on this project, or at least be focused on the outcome?

7. Will this project be viewed as an everyday occurrence, a non-mission critical event?

8. Will management demand third-party verification of your analyses and recommendations?

Depending on your answers to the above, you may need to assemble a team of experts to advise you as to how best to plan and execute your project. One of your first and most important service providers will be a real estate broker or advisor. Whether your company needs a broker or advisor will depend on how you intend on planning and executing your project.

Consider this comparison:

Real Estate Broker:
Typically transaction-oriented; skilled in negotiating; the best brokers maintain precise market knowledge and build strong local business relationships; most provide services on a project-by-project basis, although some are qualified to service multiple project accounts; typically commission-based compensation model.

Real Estate Advisor:
Typically provide advice and guidance before recommending a particular transaction; helps clients in evaluating, planning, and developing real estate solutions that will support their business, finance, operational, and other objectives; most often provides strong negotiating, project management skills, and market knowledge; ability to quickly assess new geographic markets in the context of the clients' objectives; usually engaged for strategic, complex, or multiple market projects; diverse compensation model can include commissions, retainers, and so on.

Read The CFO's Guide to Hiring the "Right" Real Estate Service Provider. Order your copy here.

If your company simply needs a real estate expert to execute a transaction that you've already planned, and merely as a means of protecting your company's financial and other interests, then a traditional real estate broker may be your best alternative.

If you require assistance in:

planning an optimal real estate solution;
understanding the operational and financial implications of your company's alternatives on its ability to grow and generate profits
managing a complex project, or;
making business decisions about how alternative real estate solutions might impact your company's overall performance and support its business objectives;

and if you prefer that your service provider execute your desired real estate solution, then you may wish to engage a Real Estate Advisor.

Once you've got your real estate service provider in place, then begin to build the rest of your team in order to receive proper advice, guidance, and services.

Be certain that your real estate service provider and the rest of your team are conversant in the type of real estate transaction structure (lease, buy, or otherwise), that best supports your company's objectives.

Read The CFO's Guide to Understanding Corporate Real Estate Transactions. Order your copy here.

One more thing! Never "broker" your broker or your advisor. If you've taken the time to assess what type of real estate service provider your company requires, then interviewed and selected one that you believe will best serve your company's needs, build a trusting relationship with your service provider. Provide him or her with sufficient detail so that he or she can correctly advise you and represent your company in negotiations. One of the most critical mistakes you can make is in only giving your advisor bits and pieces of your business plan, and only telling him what you think he needs to know. With only part of the story, its likely that your service provider/advisor will only succeed in obtaining part of what your company would otherwise be entitled to.

Treat your advisors and service providers as part of the company, and they'll work that way, too!

Andrew B. Zezas, SIOR, is Relationship Manager, Strategist, and President & CEO of Real Estate Strategies Corporation, Publisher of "Business, Profits and Strategy", a monthly online publication read by thousands of business, financial, and real estate executives nationally, and, is the author of two new real estate books, The CFO's Guide to Understanding Corporate Real Estate Transactions and The CFO's Guide to Hiring the "Right" Real Estate Service Provider, both of which will be available shortly at www.thecfosguide.com.

Mr. Zezas is well-known for his ease and informative style of public speaking, and has given talks, presentations, and has lead educational programs for business, professional, government, and trade associations, including the Building Owners and Managers Association, American Management Association, the U.S. Postal Service, RealComm, Society of Industrial and Office Realtors (SIOR), and others. Andrew is National Chairman of the SIOR Tenant Representation Specialty Practice Board, and is a licensed real estate instructor in Texas and Indiana. He can be reached at 908 245 5999 or via email.

Real Estate Strategies Corporation, located in Kenilworth, New Jersey, and serving clients throughout the country, helps companies create and execute Business DRIVEN Real Estate Solutions...and Opportunities, faster and with less risk. Visit www.realstrat.com.

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