Archives: Berger Bites

A property manager’s job would be to oversee the property which would include any services, repairs, any deferred maintenance that needs to be done.

Commission is calculated on a lease by the gross lease value paid to the landlord. If it’s a multi-year lease, it is paid on the gross value of the multi-year lease. For example, if a lawyer signs a three year lease, pays $2,000 a month, the lawyer pays a $24,000 annual rent to the landlord. We take the $24,000, multiply it by three years, and you get a gross lease values of $72,000. The commercial real estate broker is compensated on the gross lease value of $72,000.

If you’re in the market to buy commercial property, having a broker is very important. A broker will serve several functions and bring you several advantages. First, they know the inventory in the market. They know what buildings are for sale. They know what buildings are off market, but might be for sale. You could approach them unofficially and make an offer. They know the quality of the building.

A broker will tell you if a building is good for your purposes, if the tenants in the building are good, if the construction is well done or not, if a building might be functionally obsolete, and another property might serve your purpose better.

A good broker will also tell you what the value is, what you ought to be paying for a property. They’ll run market comps. They’ll adjust those comps where necessary and tell you what a particular building is really worth and what you ought to pay.

A broker will then work with your lawyer, or with you directly and help you come up with contract terms before it goes to a lawyer and help you put everything into 1 document, 1 offer document, 1 contract document, make sure everything’s done to protect you.

Finally, and this is something most people don’t think of, a broker will help you think about your exit strategy before you buy. What are you going to do with this property in 3 years, 5 years, 10 years? How much should you expect to get for it? Will your mortgage be paid off at that time? Will you have a balloon, certain things that you won’t think of ahead of time, but it’s very important to go into a purchase with an exit strategy.

Property management services are negotiated between the landlord and Berger Commercial. It’s typically a predetermined percentage of the rents collected at the property.

The cost to hire a broker varies from market to market. Generally speaking in South Florida, the cost to hire a broker is paid by the landlord or the seller of the property. For sale properties, it’s generally five to six percent of the full sale price. For lease properties, it’s generally four to eight percent of the full lease value over the term. That, again, is paid by the landlord or the seller. It’s not paid by the tenant or the buyer. There’s no cost to a tenant or buyer.

A lot of tenants or buyers will tell me, “Isn’t there a hidden cost? If I come in with a broker, won’t they charge me more?” The truth is, they won’t. I’ve spoken with many landlords, many sellers and they appreciate having a good professional broker in the transaction that will help keep the buyer or tenant reasonable. Let them know what the market is and it makes the transaction go more smoothly. More where they don’t have two asking prices, there’s not an asking price for people who come in with a broker and then a lower price for people who come in without a broker.

Everyone is starting at the same level. How far below that you, as a buyer or tenant, can get that or how far above, you as a landlord or seller can get it depends on how good your broker and your team is to push that one way or the other for you.

Commercial real estate brokers are compensated on a commission basis by the percentage of the transaction they complete. For example, a commercial real estate broker can sell a million dollar office building, and then make a percentage of that transaction. If it’s 3%, they would make $30,000 of that million dollar transaction.

Berger Commercial is able to provide an estimate of the value of your property. It’s because we’re in the market every day, we’re negotiating with landlords for buyers and the sellers of properties, and we know what the market value of a property is. We also use an analytical approach, we look at comparable sales of properties nearby, going back one to two years, we also look at the income and expense of the property to determine the return on investment, and finally we’ll look at the cost approach of the property to determine what it would cost to rebuild a building on that property. We take all that together with our knowledge in the market, being in the trenches every day, combine all that, and we give you an estimate of the value of your property in today’s market.