White Paper from SVN — Why now?

admin  /   June 29, 2022

White Paper from SVN — Why now?

Time’s Up for Non-Cooperation in CRE

Why now?

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)

Why now?

Why now?

Despite this systemic disconnect, the CRE industry is not in bad shape, you might argue. Indeed, the real estate industry was a top three contributor to the uptick in the US’s GDP in the fourth quarter of 2021 . Why change an apparently winning formula, and why now? **

The two main reasons – that your clients will demand it and that technology will make it inevitable – are closely intertwined. While the CRE industry has been temporarily immune to this and other global trends, this won’t last forever as expectations change. The broker of the future is going to be driven by a more informed client, who is armed with real estate data that they simply didn’t have access to a decade ago. Now and moving forward, clients will have the ability to profile and understand a CRE market from 3,000 miles away, or from the other side of the planet.

The broker that doubles down on a matchmaker role is going to be usurped by the broker who understands that clients have unprecedented access to data, and what they really need is someone who can make sense of that data to drive actionable information and insights that no one else has. Meanwhile, the matchmaker role is inevitably going to be automated.

What’s more, clients intrinsically understand the power of a network. From hiring, to booking holidays, to shopping, to commuting, people tap into the networks every day. They’re not going to be convinced that a single broker’s database will magically produce the perfect buyer for their property compared with the reach of a network of brokers and their distribution channels. Furthermore, the profile of CRE buyers is changing, with more foreign direct buyers, international investors and first time CRE buyers than ever before. Clients of the future will demand broker cooperation and the generation of organized competition through fee sharing to get the best deal at the best terms for their properties.

THE BROKER OF THE FUTURE IS GOING TO BE DRIVEN BY A MORE INFORMED CLIENT

** BUREAU OF ECONOMIC ANALYSIS, US DEPARTMENT OF COMMERCE

What you need to know

The clock is ticking on what is a systemic issue in commercial real estate investment sales. Misaligned incentives create a loophole where brokers’ interests take precedence over sellers’ interests, resulting in a situation where most sellers are selling for less than fair market value. This model and way of doing business is causing sellers to leave money on the table. 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 client. We should know, as SVN was founded on the basis of these principles in 1987 and have been working like this for 36 years.

IF YOU’RE INTERESTED IN LEARNING MORE ABOUT THE POWER OF COOPERATIVE BROKERAGE, VISIT WWW.SVN.COM

Stay tuned for a new featured topic each week:

  1. The law of supply and demand
  2. Leaving money on the table
  3. The unfortunate power of misaligned incentives
  4. What does cooperation look like? & What do SVN® franchisees say about cooperation in CRE?
  5. 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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