Real estate's newest conversion: commercial brokers

Real Estate Weekly, Sept 1, 2004 by Daren W. Hornig

Where does the future lie for the commercial real estate broker? In residential real estate.

Unless you are one of the handful of brokers at the handful of firms that control the handful of key clients, the multimillion mega-deal will remain an elusive dream. The reality is that unless you hold one of the top slots on the brokerage team, by the time the commission splits are divvied up, the rewards are often much slimmer than anticipated--or needed to sustain you--for the six months, one year or longer that you devoted to the deal.

Our reading of the marketplace at Dwelling Quest and our experience in the past few months as we interview new candidates for our growing residential sales team, points to increasing frustration within the commercial brokerage world--frustration with the mahogany ceiling and the limited square footage in the executive suite. And to those "frustrated" brokers, who have talent and drive but not the opportunity or who don't want to labor in the trenches for much longer, we say, the door is open.

In residential real estate, the market is wide open with hundreds of thousands of opportunities for leasing, buying and selling. And many of the roadblocks faced in commercial work simply do not exist, such as the rigorous, time-consuming presentations mounted just to compete for a client, let alone negotiate for space. Here are more advantages:

There are many fewer cold calls resulting in hang-ups;

The layers of lawyers, banks and insurance companies that must be dealt with are fewer and more streamlined; the relation-ships more personal;

Business can literally walk in your sales office door;

The time frame for deal completion averages 90 days, not nine months

The payout is in full at the closing.

As for financial rewards, the average commission ranges from $30,000 to $60,000; the average New York City apartment sells for $1 million; many more transactions can be closed in a year and the bottom line is: you don't have to wait years to make an excellent income. It is not unreasonable to expect to make $250,000 in your first year if you apply your well-honed commercial brokerage skills.

The market is wide open for another reason. Residential real estate may no longer be the province of the bored dilettante or the part-time dabbler, but it also has not yet reached the professionalism of its commercial counterpart. And that is where the greatest opportunity lies, for the brokerage skill, market acumen and business knowledge of the commercial broker are sorely needed in residential brokerage. In part, that is due to the growing sophistication of the customer. Buying a home is the largest financial commitment most individuals make in their life time; New York buyers are among the most sophisticated in the country. They are at ease with Internet technology and complex financial transactions, and given that real estate is regular dinnertime conversation in New York, their familiarity with the going sales rates in various markets is unusually high.

This sophistication demands a broker able to provide them with a higher level of service, knowledge and results than ever before. Commercial brokers are well poised to take on this challenge because of the many capabilities they've developed to succeed in the corporate world: detailed market insight, a thorough knowledge of finance and financing structures, the ability to perform financial analyses, a knowledge base of building systems and structures, the skill to canvass and qualify customers and assist developers.

Residential real estate holds the promise of a substantial income, deal-making satisfaction and personal connection with your customers. Above all, you'll find your "conversion" is a chance to reshape the profession and gain financial success, while being in the forefront of the profession.

DAREN W. HORNIG

PRESIDENT AND CEO

THE QUEST GROUP, LLC