The value proposition of engaging a Commercial
REALTOR as well as owning your own real estate can be summarized as follows:
1. The Agency has access to MLX, the back end
system of MLS.ca, as well as a list of established Sellers. More than two thirds
of all real estate transactions are derived either from web based searches or
from existing clients’ inventory.
2. A Commercial REALTOR typically does dozens of agreements per year and develops a facility with these agreements that is
unmatched even by most lawyers.
3. The probability of completing an agreement is
significantly higher through their involvement. Real estate transactions are
the only area of commerce where, by law, the agreement MUST be in writing. Real
estate is complex and a lot can go wrong*.
(* The list of what can go wrong is endless. Due
diligence is especially important in terms of building inspections, examination
of leases, timely fulfillment of conditions, completing financings, arranging
for Seller Take Back Mortgages, environmental audits, ensuring that chattels
and fixtures are properly accounted for and included (or excluded), examination of
maintenance records, understanding building systems, examination of contracts
and sub-contracts for property management and maintenance, equipment rental
agreements, appraisals, knowing what is warranted and what is not including guarantees for things like roofing or HVAC, providing law firms with the proper paperwork to complete
deals on time, knowing something about zoning and highest and best use, etc.)
4. Legal disputes are also a costly reality: for
example, many arguments revolve around fixtures, chattels or outbuildings in
dispute. REALTORS are insured in Ontario
to provide sellers and buyers with additional protection. Deposits are held in
trust accounts, which are also insured.
5. The Agency brings a sense of what the market is
doing at any given time. CMA (Comparative Market Analysis) gives buyers or tenants or, in fact, sellers, the
confidence that they are entering into a sound arrangement.
6. Spreadsheets that estimate the Internal Rate of
Return (IRR) and cap rates for a project are one of the key decision tools that a Buyer needs
to have. The IRR takes into account the three types of returns that real estate
provides: cash on cash returns, forced savings (the pay down of mortgage
principal each month) and real estate inflation.
7. There is also the additional potential
financial advantages of owning real estate including the sheltering of income
using depreciation reserves.
8. One other item needs to be mentioned and that
is the value of a professional’s time. It takes time to gain the expertise of a
REALTOR and also it takes time to sell or buy or lease a property. Professionals are
often better off using their time more productively in the things that they do
for a living rather than trying to be REALTORS.
9. The Agency will do most of the negotiating. It
is not easy representing yourself and many Canadians and some Americans find it difficult to
negotiate aggressively when they are representing themselves. Buyers or sellers or tenants and landlords often do not feel comfortable representing
10. It may also take longer to source your own
property, negotiate the agreement and complete it if you go without
11. Owning your own real estate can alleviate
future rental increases (for tenants), provide greater security of tenure, allow the owner to
develop brand equity in the location that they can retain over long periods of
time, diversify their asset mix, better provide for their retirement, make the operating
business more sellable and/or provide for a hierarchy and diversity of
ownership that makes tax sense and operating sense.
12. Real estate investing is quite stable in places like Ottawa—it is get rich, slow.
13. It can be less expensive to own than to rent.
14. Owning your own real estate gives you more financial
flexibility too—if there is a sudden need for cash, you can re-mortgage your
property to obtain that.
15. Interest rates are hitting historic lows and
prices have come off their peaks. You make money in real estate when you buy
not when you sell. That is, buy low, sell high. Or buy when everyone else is
selling and sell when everyone else is buying.
16. Realtors are often tied into financial networks, investor groups and mortgage brokers–they can assist their clients with financing.
Bruce M Firestone, B Eng (civil), M Eng-Sci, PhD, Ottawa Senators founder, Real Estate Investment and Business coach, ROYAL LePAGE Performance Realty broker, 1-613-762-8884 firstname.lastname@example.org twitter.com/ProfBruce profbruce.tumblr.com/archive brucemfirestone.com
MAKING IMPOSSIBLE POSSIBLE
postscript: please also read–
postscript 2: here’s what CREA says about the value of a commercial realtor–