How to Select a Commercial Real Estate Company

Selecting a commercial real estate company can be a challenging process. You want to hire someone who is knowledgeable, skilled, experienced and can match your goals and ideals. This is easier said than done. One company may offer you some of these features while others have the remaining characteristics you desire. There is no lack of the number of commercial real estate companies out there, which claim to possess peerless knowledge and skill. So, how do you go about selecting a commercial real estate company?

The secret lies in finding a real estate company that suits your needs and criteria. Yes, there are some overlaying concerns that also need to be considered like appropriate documentation. However, when you are looking for one of the best real estate companies for your needs, you need to do more than just scratch the surface. Here are some tips outlined below that can be useful in helping you during this process.

Let’s take a look at them:

Look at their experience

Commercial real estate is a blanket term and this business can be multi-faceted and highly nuanced. Therefore, you cannot just hire any real estate company for your needs. You have to start looking for one that suits your criteria. For instance, if you are interested in buying or selling properties in strip malls or shopping districts, you shouldn’t hire a company that deals in offices and residential homes. You want someone with a background in the kind of real estate you are focused on or else the company will be of little use because they will be out of their depth.

Assess their reputation

One of the best ways of spotting the best companies is by taking a look at their reputation. How can you do that? There are certifications, customer reviews as well as awards that are readily available due to the magic of the internet and the culture of open communication. If you find a commercial real estate company that seems appealing, you can do some research and discover if they do stack up. This step can be immensely helpful in allowing you to dodge a bullet.

Go over client’s opinions

The greatest problem with reviews is that they are mostly from satisfied customers. Unhappy customers either don’t post or their reviews are removed. Therefore, it is recommended that you ask the commercial company to provide you with a list of their past clients. This allows you to do some homework of your own and identify any weaknesses or problems that a previous client encountered.

Meet the representative

Last, but very important; don’t hire a company over the internet. Always meet their representative in person and see if they understand your needs. Open communication is vital in this business and if you are not comfortable with them, there is no point in starting a relationship.

My First Investment Deal – Don’t Let Fear Stop You

Because I have been investing for a long time, many new investors assume I’ve always known how to buy and sell investment real estate. Absolutely not true. No one is less experienced than I was starting out, but I had an absolute goal and I was willing to work hard to achieve it.

Let me tell you about my very first deal:

Jim and I knew we had to let people know that we wanted to buy houses if we were ever going to find deals to purchase. So, we began a little bit of very inexpensive marketing to get the phone to ring – walked neighborhoods putting out flyers, had magnetic signs on our car doors, put an ad in the local Nickel Paper (a three line ad was only $265 for a year). I had questionnaires printed out and stacked by the phone so, if a seller did call, I’d remember which questions to ask.

Like most new investors, I was terrified. Because I didn’t know what I was doing, I really didn’t want sellers to say “yes” to my offers, so I always made very low offers. Investor ignorance is not always a bad thing.

Almost the very first call was a woman calling from out of state. Back at that time, our phone had caller ID and it said the call was coming from “US Gov’t. Baltimore, MD”. I was convinced I was being arrested for doing something illegal, but quickly rationalized with myself that I couldn’t have done anything seriously wrong by that point, so I answered the phone.

The woman’s voice said, “do you buy houses?” What? The government already knew I was buying houses?!

As it turned out, her son lived near us and had taken down our phone number from the magnets on my car doors while I was parked at our local grocery store. The condo she was selling was actually in our neighborhood, and she was calling all the way from Baltimore, MD! This was so weird.

Anyway, it was vacant and had been on the market with a real estate agent for a year. I asked for the property details and promised to call her back. After doing my due diligence, I called and offered 65 cents on the dollar. She said, “Honey, I’ve owned this condo for six years and I still owe more on it than that!” I told her that I totally understood, that I was not going to be her best offer but that I was one solution, and she was welcome to call back anytime if she had more questions during her selling process.

I was so relieved that she didn’t take my offer. That night, she called back…

She asked, “if we did the deal, how it would take place?” I explained it to her, told her we would close with our attorney, and that she would have to write a check for the difference between what I was offering and what she still owed. She thanked me and hung up.

The next day, she called back and accepted my offer.

I had never even seen the inside of the property and was scared to death. Later that day I met her son at the property to check it out. It was immaculate – all new carpets and paint, all appliances including washer and dryer, a 2 story living area with a 2 story stone fireplace, an upstairs office area that overlooked the living area below. It was amazing. Because it was my very first deal and the seller actually paid to have me take it off her hands, I took this as a sign that I was heading down the right investment path!

Morals of this story?

Don’t think you need to know everything before you start investing. You really learn what you need to know while you’re investing.
Don’t think for the seller. Many assume that, if the seller owes too much, they won’t accept your low offer. Not true! Many sellers pay to sell. If their need to sell is great enough, they write a check at closing.
Don’t let fear stop you. No one knows what they’re doing at first, in any job, but surround yourself with people who do know the business so you always have somewhere to turn for answers.
Always be a resource for the seller. Most sellers need help. Offer it to them. You are forming relationships that will lead to great referrals. Be willing to help, even if you aren’t the one they sell to.

The Weakest Link

One thing we found after purchasing over 50 real estate notes is that we sometimes get the chain of title missing 1-5 links in the chain! When we buy a note/mortgage we send the original files to our document custodian for document scrubbing of any defects or exceptions that create a break in the chain of title. We have purchased many notes with breaks in the chain, and sometimes it takes hundreds of dollars to fix it.

When someone buys a home with a bank loan, the bank loans the money to purchase it from the seller, and the bank will want a promissory note signed by you that you will pay it back. They then put a lien on your home to secure it if you do not pay it back. Its usually a mortgage, or deed of trust. In some states you hold the deed, in others, the lender does.

And don’t confuse a deed of trust with a deed. He who owns the property has the deed. A deed of trust is similar to a mortgage, an encumbrance on the property that can be removed when paid off.

And since the banks have the right to sell the loan, they sell the note with the mortgage/deed of trust combined. If there are any missing documents (breaks in the chain of title), the document custodian goes about trying to find the original, or get a new original created & signed, or in some cases, an Affidavit of Lost whatever is required depending on what is missing.

I have seen Lost Note Affidavits, Lost Assignment Affidavits, Lost Allonge Affidavits, etc. One time we had multiple breaks erased in the chain of Assignments since the missing ones were under MERS, as was the original lender, and they were able to be skipped under the MERS umbrella.

Recently, we have purchased a couple of notes from an equity fund that have been delayed because of missing documents, and while its nice of them to fix this before they sell it, as many don’t, it makes me wonder why they are doing this now when they sell it, vs. when they first buy it.

We do it first for a number of reasons, for example, if we have to foreclose, the attorney needs to show that we have the complete chain of title, or the case will be thrown out because there is doubt you really own it. And during that time frame, anything can happen, they can file for bankruptcy, or another lien can foreclose, or they can burn it down. Or when we go to sell it, we want to be able to do it quickly, and not wait for the missing documents.