A broker just called me "Cryptic"! Am I Doing Something Wrong???

Question

A few years back, a few buddies and I converted a 20k+ SF warehouse into a coworking space that ended up doing very well. Unfortunately, aside from the capital my partners equally contributed, I ended up with the burden of managing and growing the business by myself, and I left the company to start a new space on my own.

A private RE investor recently reached out to me and asked if I'd be open to doing a management agreement on a property he was looking at, however we later decided that the property was not suitable for a the needs of a coworking space. Although that deal didn't work out, he's encouraged me to continue looking at other spaces on the market that might be a good fit. The problem however is, I know nothing about commercial real estate. I don't know how to effectively prospect properties, nor the questions I should be asking when contacting the listing agent.

The other week I came across a property that's been sitting on the market for a while, that fit a lot of the criteria needed for a coworking space, so I wrote down a list of questions and gave the broker a call to get more information on the property. 20 seconds into the conversation, the broker called me "cryptic" after my first question and said he's not going to disclose any details about the property since I'm not being cogent. Here's a copy of things I wrote down to ask:

• What’s the backstory?

• How long has it been vacant?/How much is currently leased out?

• What’s the mix up of the current tenants?

- How many companies?

- When are the current leases set to expire?

• Copy of rent roll?

• Cap rate?

• Any information on the historical expenses on the property?

• Why’s the current owner selling?

• What’s the current activity?

Am I doing something wrong? Is there a better way in which I should be approaching these brokers, or handling these conversations?

I'm very good at what I do, and am determined to do whatever necessary to make this new venture come to life, but I'm really struggling to learn the real estate world and work out the right relationships with people to negotiate a deal like this.

Appreciate any help/advice you guys have to offer!

Joel Owens · Answer

"The problem however is, I know nothing about commercial real estate. I don't know how to effectively prospect properties, nor the questions I should be asking when contacting the listing agent." So from your post it seems you are NOT the purchaser just a gopher type person doing research for this private RE investor. As a commercial broker about 17 years in the business that sends up red flags all over the place. You do not know the space by your post so asking tons and tons of questions without the broker validating the ability of the buyer upfront. Everyone does business differently. How I might handle it is thank you for the call and ask that the actual potential purchaser submit financials showing the ability to buy and once received have a brief call with you and the buyer to go over basic questions. Anything more than that requires an LOI to be submitted. If a broker spent endless hours answering questions from people wanting to learn the business but do not likely have the ability to buy they would never close any deals. It's amazing I get contacted sometimes on BP with people asking me questions their broker should know. I tell them your broker is being paid for a service you need to contact them. If your broker doesn't know then they should question their choice of a broker being selected to help them with a transaction. TIME equals MONEY. Show the listing broker you have money to perform and they might be willing to spend time on questions. Some investors out there have misguided perceptions that brokers are just waiting for any old potential buyer to call them and spend tons of time with them for free answering all kinds of questions. Maybe the new commercial brokers with more time than money. The highly successful brokers are already multi-millionaires and many investors themselves. They don't waste time on general inquiries from non-validated buyers asking lots of questions. You screen first to make sure buyer is serious, realistic, and has money THEN the broker decides on spending time. The sellers like the brokers being the gate keepers to filter out looky loos from the ones with the money that can perform and are not playing games. I am not saying you are like this at all just saying I have talked to thousands of investors over the years and you learn by keywords they say and how they e-mail or make contact the probability of how they will be. That also goes for developers, regular sellers, attorneys, other brokers, etc. It's experience you gain in the field over time. Good luck

Cason Acor · Answer

By the sound of things, I can say the listing agent is probably a big reason why the building has sat on the market for so long. Your questions are fine.

Ronald Rohde · Answer

I would only ask for proof of funds if I'm presenting an offer to another broker. I talk to probably 15 new people a week, I wouldn't ask my admin to google phone numbers or mispelled names. I just talk to them, get a gut feel, and move on with my life ( I may not make thousands per hour, but I can afford to let some legit clients go)

Account Closed · Answer

Account Closed · Answer

Joel just illustrated the problem with brokers, they pre judge every call and contact. They all think they can spot a buyer vs non buyer by "keywords" ...total joke. Huge problem in the industry

Account Closed · Answer

Your questions were absolutely fine. In my experience if the sellers agent is annoyed in any way at my questions I am doing a good job unpacking the lies in their offering memo or listing. So I'd take it as a compliment. Does he/she want you sign an NDA to answer "Whats the back story?" LOL.

Joel Owens · Answer

We all have varying business models and ways of doing business and sometimes those do not connect or resonate with others. It doesn't mean their way of doing business is better or worse, right or wrong. It just means two parties have different visions of what they want their life to be and how they want their business to work. I tell people all the time we are not a fit and wish them well. Then I have had clients for many years where we are happy working together and tend to have similar views on business and life.

Joel Owens · Answer

I have a set of qualifications controls I use from 17 years in the business. I am in the top percentile in my field making thousands per hour for my time.I am not going to spend time on someone that wants to be a (secret agent buyer).Details matter in the ability to perform. Complete transparency from a buyer helps foster a relationship with the broker. Commercial space is very, very different than the residential space.Otto you have a right to your opinion and I respect that.I am not a fit for everyone but can do 10 deals a year and make 1 million in income or more so do not have to work with all buyers.I hope you find a broker you enjoy working with that shares your same philosophies on business.

Ronald Rohde · Answer

Time is limited, how else should we screen our time?

Phillip McDonald · Answer

These are the same types of questions I ask as an appraiser. These are valid due diligence questions, there is nothing wrong with these questions. Maybe the conversation conveyed that impression, not the questions. A good broker will be asking qualifying questions when speaking with a prospect, so there is a bit of a give and take. Is it possible that the broker did not feel you were being as open regarding your needs and motivations as he/she would have liked?