In commercial real estate agency, you will come across many property developers. They are useful people to know given that they will take on new projects from time to time. New properties and new developments are a great opportunity for bulk commissions. Project leasing work will emanate from new property developments.
Here are some tips from our Newsletter.
The focus of the property developer is to put the project together given the requirements of the local market. They require the assistance of a good agent to solve the leasing challenge or the selling requirement as the case may be with the new property developments.
All of this being said, there are good property developers and some that are not so good (I guess they will say the same of real estate agents!). If you are going to work with property developers, make sure that you have a valid and enforceable appointment to act and that your fees are well defined.
Here are some rules to apply to the project work with property developers:
- Trust is very important from both parts of the property equation. They need to trust you and your skills in moving the property. That’s why they focus on the choice of agent and will normally appoint the agent with a proven track record in project leasing.
- You need to trust the developer and his ability to pay your fees for the hard work that you put in. They will usually ask you to do a lot of work ‘up front’ to help them get the project together with their financiers. This work may be for no fee at all, but you should at least have a long term appointment signed on the property before you get involved in ‘free’ advice.
- They are likely to cut your fees and delay your fees (it’s a common problem), so be prepared for some difficulties there. The basic message is do not work for a developer that is less than honest in payment of fees. Over time they will usually self-implode because no-one will trust them. They need a good agent more than you need them.
- Check out the other projects undertaken by the developer before you commit to serving them on an appointment to act. A successful developer will have left a trail of good property projects locally.
When you get involved with these developers, be aware of the commissions you want and how you want to be paid. Every part of the project sale or leasing should incur a commission that is fair and relevant for the work involved. Do not provide discounts to the developer to win the work; he or she is likely to make you earn every dollar of your commission that you make. Be prepared for a strong but challenging business relationship.
You can get more Commercial Real Estate Agent tips like this in our Newsletter.