admin / June 22, 2022
White Paper from SVN — What does cooperation look like?
Time’s Up for Non-Cooperation in CRE
What does cooperation look like?
By Kevin Maggiacomo
The clock is ticking on what is a systemic issue in commercial real estate investment sales: Non-cooperation and misaligned incentives create a loophole where brokers’ interests take precedence over sellers’ interests, resulting in an environment where most sellers are selling for less than fair market value. This model and way of doing business means that money is being left on the table by brokers and, more importantly, their clients.
In this white paper, we argue that:
- Today’s typical way of selling CRE assets is illogical and driven by misaligned incentive structures, instead of sound economic principles
- The CRE industry urgently needs to embrace cooperation to drive shared value in the future
- Cooperating proactively with the brokerage community is the most effective way to increase demand for CRE assets on the market
- Savvy brokers have the chance to embrace efficient, modern, and informed ways of working to achieve the best price and the best terms for their clients. We should know — SVN has been working like this for over 36 years.
Read the full White Paper Here (click to download)
What does cooperation look like?
No doubt, when asked, some brokers will claim to cooperate with other brokers. But if this cooperation is little more than a referral fee it creates yet another misaligned incentive situation. This is because, yet again, the monetary reward does not match the amount of effort required to earn it, and brokers representing buyers are better off spending their time elsewhere, connecting their motivated buyer to a seller where the deal offers them more than 25% of the commission fee.
What does cooperation look like?
If the above scenario is not cooperation, what does true cooperation look like? In our world, cooperation is an all-in situation. It starts with an equal split of the commission between the listing broker and the buyer’s broker, but extends beyond this.
TRUE COOPERATION IN THE COMMERCIAL REAL ESTATE WORLD HAS TO BE:
1. A 50%-50% COMMISSION SPLIT BETWEEN BUY AND SELL SIDE AGENTS
2. COMPANY POLICY
3. ORGANIZATIONALLY LEVERAGED: EVERYONE HAS TO DO IT ALL THE TIME TO CREATE AN EFFICIENT MARKETPLACE
What do SVN® franchisees say about cooperation in CRE?
Our cooperative culture and business model means we can cast a much wider net and drive value. It has definitely increased our market presence and opened doors to more opportunities. This is something we embed in our team early, starting with the onboarding process, and our advisors believe in the value it creates.
Nolan Julseth-White, CCIM, Managing Director, SVN | THE EQUITY GROUP
The value of a cooperative culture and business model is invaluable! I’ve been in this industry for two years at four different firms, and I’ve had my best income producing years since we started our SVN franchise in 2018. In fact, talking about the SVN culture of collaboration at listing presentations has definitely played a part in landing listings.
Janet F. Kramer, JD, CRRP, Managing Director, SVN | INSIGHT COMMERCIAL REAL ESTATE ADVISORS
Building a business with a foundation of cooperation and collaboration strengthens relationships both within and outside the office, increasing communication and deal flow. We regularly attract dozens of offers on listed properties because the brokerage community knows there is a fair fee attached to our listings. In addition, it means we can hire top talent that is attracted to the cooperative model where they can be a part of something bigger than just themselves or their team.
Perry Laufenberg, Managing Director, SVN | DESERT COMMERCIAL ADVISORS
Stay tuned for a new featured topic each week:
- The law of supply and demand
- Leaving money on the table
- The unfortunate power of misaligned incentives
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What does cooperation look like? & What do SVN® franchisees say about cooperation in CRE?
- Why now? & What you need to know
About SVN
The SVN® brand was founded in 1987 out of a desire to improve the commercial real estate industry for all stakeholders through cooperation and organized competition. SVN is now a globally recognized commercial real estate brand united by a shared vision of creating value with clients, colleagues and our communities. When you choose SVN, you mobilize the entire SVN organization of experts and all our trusted relationships to act on your behalf. This shared network is the SVN Difference. To learn more, visit our website, www.svn.com.
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