By Bob Scullin, CEO, SIOR

Note: This is part 2 in a series about Achieving Success in Brokerage.  Click here to view the first part of the series.

Relationship Brokerage is the predicate of any successful career in real estate. Before anything else, the broker must identify the four corners of a territory and become known by all contacts within those four corners. The broker has to know about every transaction within his territory before it happens, and then have his finger in every one of those transactions. Only after all of that is accomplished does the broker start to make money. Let’s continue our discussion from where we left off last week.

3.         Know every transaction before it happens

The work product of any broker is market knowledge which is acquired by being physically present within the four corners of a territory and knowing each occupant of every building. This market knowledge becomes currency which purchases a free-flow of information with the broker’s contacts within the territory.

If the broker is present in the territory on a consistent basis, and meets personally with the occupants of buildings within the territory, he will know more about that market than anyone else. However, knowing about past transactions is not a valuable commodity. Knowing about pending transactions is the valuable commodity.

The broker must be knowledgeable about tenants or buyers looking for vacancies to fill. Who needs more space? Who needs less space? Who needs different space? Who’s moving in and who’s moving out of the territory? The broker acquires this valuable knowledge only by talking to the people occupying the buildings within the territory where the broker specializes.

Not only does knowing the coming and going of users within the territory provide coins for trade on an ongoing basis, it also provides advanced knowledge of pending transactions which will generate commissions. This is where the broker has a unique opportunity to take advantage of the situation and insert himself into transactions before they happen.

4.         Have a finger in every transaction

According to the Theory of the Void (which I just made up), no transaction happens unless a void is created. In a nutshell, unless there is vacant space, nobody can move into it and occasion a commissionable event. It is crucial that the broker understands when and where a void is going to be created, and that he be in a position to take advantage of that foreknowledge.

The idea of “having a finger in every transaction” means that the broker has an opportunity to benefit from upcoming vacancies. Knowing in advance that a particular tenant or buyer is looking for more space, or less space, provides the broker an opportunity to present alternative locations for consideration.

By uncovering that a particular contact is in financial difficulty and may be facing bankruptcy or foreclosure, the broker can know in advance that the contact’s space could be coming available — creating a void which presents an opportunity for the broker to earn a commission.

Even if the broker is not able to create a commission-generating event, there is beneficial value. Since other people will not know about transactions that have not yet happened, the broker has the opportunity to appear especially knowledgeable by judiciously using his knowledge of deals pending. By discreetly sharing knowledge of pending transactions, the broker shows a depth of market knowledge which can place him in an eminent position in the eyes of contacts within the territory.

5.         Make money

While it may challenge common sense, the primary objective of Relationship Brokerage is not to make money. If a broker’s primary objective is making money, then he should be able to measure his success by the amount of money made each day. But that is not how commercial brokerage works. There is a lot of work on a daily basis, but paydays come few and far between. Therefore if a broker’s primary objective is making money, then the result will be inevitable frustration and disappointment.

The broker whose first objective is to make money realizes that he will make little money after investing three months meeting contacts in the territory. He will be tempted to move to another territory, rather than focus on establishing relationships among his contacts. It is only in realizing that money is made in the long run by establishing relationships with contacts who become promoters, who generate referral business, that the goal of Relationship Brokerage is achieved.

Money is one form of recognition for a job well done, and successful brokers can expect to make a lot of money. But there is risk implicit in that expectation because paydays are few and far between, and brokers must invest significant time and energy in creating commissionable opportunities. Making money is therefore the final objective of the five prioritized objectives which are the building blocks of Relationship Brokerage.

It is for this reason that I describe Relationship Brokerage as a science rather than as an art. By doing the process over and over, reliable results are produced and successful brokers are the product of the science of Relationship Brokerage.

Next Week…

If practicing Relationship Brokerage is a challenge, then managing brokers who practice Relationship Brokers is doubly challenging. Next week we will suggest a management structure between broker and manager which lays the groundwork for building a successful career in commercial real estate.