How to refer a commercial client as a new agent

Question

Hi there,

I'm a new agent that got my client not too long ago. I have a client looking for a commercial place but seem when I called a few brokerage, they said you should refer it to their commercial agents as I'm new? Would that be the truth? Or how I could refer to someone with the split? Thank you.

Thao Tran · Answer

Hi Ryan,

Thank you for the comment. I might just refer them to someone experienced.

Thao Tran · Answer

Commercial sounds very appealing but I’m currently bombarded with some other projects so I might just refer them for this time. Thank you for the info!

Joel Owens · Answer

Thao is there a commercial department arm within the brokerage you are  currently licensed in?

Are you trying to just collect a referral fee or really learn the commercial business?

If you are trying to learn the commercial business you might want to meet with the broker or agent specialized in that particular asset class (retail, office, industrial, etc.)  if your family is buying local. The referral fee might be really small if they are giving you training and knowledge at the same time.

If people want to hand off a lead and let the broker/agent do their job with no interruptions that is VERY different from a new agent wanting to hand off a lead to a commercial broker/agent that is experienced and want that broker/agent along with doing the transaction to train them up and answer questions along the way. That is triple or more the work for a single transaction. In that instance they would be helping your family learn the client, you the referring agent, and be conducting the transaction at the same time.

Ryan Landis · Answer

@Thao Tran make sure your brokerage allows you to represent clients on the commercial side. That being said, might be easier to refer it to someone that specializes in commercial real estate (ideally what they want - i.e. industrial/apartments/etc.) and then work with that agent/broker to help them out. Depending on the state, you may be able to get a referral fee for this as well.

Thao Tran · Answer

They are my family so yes, they are committed to work with me!

Thank you for the info, it's greatly appreciated.

Joel Owens · Answer

Define commercial place? Retail, warehouse, industrial, office, large multifamily, etc.?

What size of deal? 2 million, 5 million, 10 million in price or larger

Have you seen potential clients financials to verify they have capability to purchase?

Commercial is a different world than residential. Not really any room for a referral from another broker as the pie gets split up too much. If you are new agent you basically are passing off a cold lead and trying to get a referral fee in the process. Most experienced commercial brokers/agents are very busy and would prefer working with buyers where they do not have to pay a referral fee on.

You have mom and pop type commercial catch all firms that do residential and everything in between but usually 1 million and below type stuff unless in a rural area and then they typically do it all. In more suburban to urban core you have specific commercial real estate companies only that focus on middle size to larger properties. By design those companies structures are different than residential splits and commissions. Training is different,more intense, and specialized. So if 100k commission say 50k goes to brokerage. Remaining 50k with 3 people on a team senior person gets maybe 27k, middle agent 14k, junior agent 9k. As you can see there is just not any room to pay an outside referral fee. If there was it would be very minimal.

There is a difference between a cold lead and a hot lead. Cold is a general inquiry that you have had limited interaction with and they are just passing off the info right away. Hot lead is a someone who has sent PFS to show they have capability to buy, willing to sign an exclusive agreement to commit to 1 broker or agent, and have a pressing reason to sell (1031 exchange, capital needs to get put to work right away, etc.)

As a principal commercial broker I am the company so get to keep what I make minus my company expenses but most brokerages do not have that structure as they are the larger firms mainly focused on listing volume and not a buyers specialist.

Good luck

Thao Tran · Answer

Thank you Charlie

Charlie Cameron · Answer

There are definitely more nuances to know for commercial deals.  I won't pretend to know a lot more than the apartment realm.  But you should easily be able to refer your client over to an agent within your brokerage with more commercial experience for whatever referral fee/percentage you decide on.

How to refer a commercial client as a new agent

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