Professional Report - 2nd Quarter 2012

NAI Wisinski of West Michigan in Grand Rapids, MI, likes to say,
“Brokers are notorious for poor communication.”
If there is no good news to report, it’s easier not to report, which
is exactly the wrong thing to do. Kunst observers, “Even if there has
been no new activity in 30 says clients want to know you are thinking
of them and their property.”
The problem is, when there is no good news to report over a very
long period of time, no matter how good the communication is, the
client will get antsy.

“There is always a risk when a listing starts having anniversaries,”
Kunst jokes. “Then the client’s attitude becomes, ‘maybe somebody
else has a different set of tools, a different set of contracts.’”
Michigan has been one of the states hard hit by the recession, so
there are a lot of properties that have sat vacant for a long time with
no buyers in sight. NAI Wisinski had one of those industrial prop-
erties and the owner was getting impatient. With the listing up for
renewal, the building owner hinted he might go elsewhere.

Kunst wanted to keep the client, “so what we did was bring our marketing team in with the objective to basically revamp the whole marketing approach, saying, ‘let’s pretend it’s a new listing and the efforts in the past just didn’t take place, because the situation on the property hadn’t changed.’ The economy was beginning to improve, so we developed a new marketing plan for the next 12 months and affirmed we would be fully accountable to fulfill it.” The client ended up re-listing with Kunst’s company. “We got one last crack at it,” he says.

For brokers, the killer is usually a regime change at the client’s company. “I’ve lost relationships that I had for 20 years because companies have gotten a new person in charge of real estate and they want to get rid of the old associations,” notes Jack Britvan, SIOR, a principal with Commercial Realty Services of Long Island in Woodbury, NY.

"The Biggest issue you have is landloards letting clients see paradise."

You lose the smaller clients when they want to save money, Britvan adds, “I had a client tell me my services were no longer needed. He wanted to save money and the person who he was counting on to help with his real estate needs was his accountant.” Besides this being a bad idea because the accountant had screwed up a prior real estate deal, when the client tried to deal directly with the building owner, who Britvan had previously been negotiating with on the client’s behalf, the building owner told Britvan’s old client, sure he could negotiate directly but Britvan would get his commission no matter what happened.

“The building owner called me to tell me about his conversation with the client and he did so because he knows brokers are important to his business,” says Britvan. “The client called me and said, ‘I thought about it and decided it would be good to have you back on the team,’ never mentioning the conversation he had with the building owner.”

Paul Kluck, SIOR, RPA, a vice president with CBRE in Greenwood Village, CO., is a very old-style broker.

“Although my company would like me to get an exclusive ten-
ant representation signed with a tenant, most of the time I work on a
handshake,” says Kluck. “My philosophy is I am going to outwork
another broker in the market. I will give you the best service and it
doesn’t matter what other relationships you have.”
Recently, Kluck worked with a Canadian company looking to
expand operations in the United States. “It was a difficult assignment
and after about a year and a half, we finally identified a building and
were ready to close,” he recalls. “I sent them my tenant representa-
tion agreement, which was forwarded to the company’s legal counsel
in Houston, who responded by saying they had signed a national rela-
tionship with another brokerage company.”
Kluck appeared to be out-of-luck on the assignment, but then the
guy from Canada, who was the president of his division, went to bat
for Kluck, and told the counsel, “You are going to pay him and we are
not getting another broker involved.”
Kluck comments, “The only reason he did that for me was because
I out-worked all other brokers and proved to him I was the one he
should be using in Denver – and no one else.”
The job of a broker is to listen, says Greg Schenk, SIOR, CNE,
president of The Schenk Company in Columbus, OH. “If you do that
there is less chance somebody will want to go out the door. The real
key is setting a realistic expectation upfront. Here is where the market
is; here is what you will get for a range of markets; and here is the
range of allowances based on what the landlord looks at in terms of
credit, length of term, amount of space, and cost to build-out.”
The better due diligence on the front-end, the better it will be on
the back-end, Schenk cautions. “If the company has one foot out the
door, we try to bring a client’s needs profile out and have them sign
off on that profile. Have what the client wants in writing; if you have
that in hand, it diffuses a lot of issues.” That’s only half of the equa-
tion. The other piece of the puzzle is getting the landlord to cooperate.