We thought we'd save money by acting as our own leasing agent. That's how we learned--the hard way--what realtors really do.
image courtesy flickr user swisscan http://www.flickr.com/photos/swisscan/
A good commercial realtor is worth his or her weight in gold.
To many of you, I may just be stating the obvious. But we learned this the hard way.
Last year my small company needed to relocate to a bigger, better space. We knew that we would continue to lease, where we needed to be located (generally), how much space we needed, and roughly how much we could spend.
Armed with that information, we figured it would be in our interest, and in the interest of our future landlord, if we acted as our own leasing agent. We could then take the money we saved by not having a realtor and split it with our landlord. That would make us a more attractive tenant, right?
I guess, in a sense, forgoing a realtor did make us a more attractive tenant. When building owners realized we did not have representation, they thought they could take advantage of us. And without a realtor acting on our behalf, we were also often seen as a company that didn’t need to be taken seriously.
We didn’t know any of this in January 2010, when our quest for a new location began. We scoured online listings and drove around acceptable neighborhoods. We even called listing agents directly to see spaces, even though it’s Real Estate 101 that you should never do this. That’s how sold we were on our belief that landlords would share our enthusiasm for saving money.
We looked at many buildings. Some were good, some were bad. We did our own CAD work to figure out if a space would work. (That part of going it alone worked.) The building owners were generally happy to give us CAD data for us to work with, so there was no need for us to work with an outside architect to figure out how we could actually use the space in a prospective building.
By summer, we felt ready to offer our proposals to the finalists. We figured that any of the options would be acceptable, and that we could use each as leverage against the other.
At least, that was our plan until the first proposal was ignored. The other proposals were all replaced by the building owners’ own proposals, which bore no resemblance to what we had drawn up. We started to negotiate a lease for the space that we liked best, but after weeks of going around in circles it was clear that we weren't getting anywhere.
So we bit the bullet and hired a commercial realtor. Thank goodness. We had done a great job of figuring out which space and location would work best for us, but the real value the realtor provided was negotiating the terms of the lease and the build-out provisions. We didn’t get everything we wanted, but we got a lot more than we would have otherwise. We got a significant rebate to cover build-out costs, reasonable repair terms, and the ability to have dogs in the office. And, of course, the wisdom not to try this on our own next time.
HANS STEEGE is a co-owner and the CEO of Dero, a Minneapolis-based business that builds bicycle-friendly communities worldwide. Before landing at Dero, Hans worked as an engineer in the machine design and product development industries.