The importance of due diligence when selecting your real estate broker

Net lease real estate brokers provide significant value to real estate transactions. Among other things, they act as a level-headed go-between for the respective parties, and provide extensive experience and knowledge to help successfully facilitate transactions. 

Choosing the right broker is critical for achieving net lease investment goals. We have a lot of experience working with brokers. For your benefit, here’s an outline of our process for evaluating the brokers we partner with on behalf of our clients:

  1. Past History and Track Record
    1. How many deals have they acquired/sold on behalf of clients?
    2. How many times have they performed repeat business for buy-side clients? For sell-side?
  2. Ability To Convey Market Knowledge Accurately And Clearly
    1. Do they have an understanding of the tenant’s corporate performance, financial stability, operational goals?
      • Does this tenant request rent reductions?
      • Is this building the new prototype for this tenant?
      • How strong is the tenant’s balance sheet?
      • Is the rent above or below market?
    2. Comparable sales breadth and detail of information
      • How many examples of comparable sales does the broker have to show you?
      • Comparable leases in the surrounding area?
      • How similar are the comparables?
    3. Ability to verify proper value in today’s market
      • Using comparable sales is a good barometer for value, but investors should really strive to compare net lease assets to alternative investments such as corporate bonds. Capitalization rates should be viewed as a function of compounded risk. Is the spread between equivalent alternative investments and the capitalization rates justified? 
  3. Broker’s Ability to Focus on Your Property
    1. How busy is the broker? Are they really putting effort into your property search or sale?
      • Ask them who they expect to buy this property; developer, investor, end-user, and who they will be directly reaching out to and have worked with in the past?
      • How often will they conduct direct outreach? Or will they simply post the property to LoopNet, CoStar, and Crexi and hope someone calls?
  4. Analytical Ability
    1. Has the broker read through and abstracted your lease? Do they understand the clauses which pose the most risk and concern?
    2. What is the broker’s ability to advise on how your lease terms, property characteristics, and market affect the value of your property?

CAM Service Plans

Hopefully this outline helps you along your ownership journey!

If you have a moment, please review our service plans. These plans are designed to help landlords throughout the ownership life cycle.