Commercial real estate brokers get a bad rap sometimes.
They can be seen as pushy and aggressive, or borderline unethical. If you’re a potential prospect, you might get hounded by calls and visits from brokers. If you’re a broker, you could find yourself on a team so competitive you’ll have leads stolen right out from under you.
The commercial real estate industry at large also has a bit of reputation. It’s known as an old boy’s club, and one that’s pretty outdated in terms of technology. Many brokers still rely on Excel or even pen and paper, and they don’t trust technology for their business.
That’s what some people say, anyway. And at times, maybe they’re right. But you and I know that these perceptions don’t accurately reflect the full reality of CRE.
We break down four common myths about commercial real estate—and why they’re false.
1. You’re all alone in a cutthroat industry.
We hear it frequently: brokers are highly competitive individuals, even amongst their own teams. They don’t trust anyone with their network of contacts, maybe because they’ve been burned before. With such large commissions on the line, they’re protective of their deals because they think other brokers are out to get them. (And to be fair, some are!)
You’re also the only one responsible for your paycheck at the end of the day. People like to talk about the hustle of sales, and it’s true that you have to put in the work to get results. There are lots of lone wolf brokers out there because they WANT to be responsible for themselves.
But here’s the thing. Even lone wolf brokers started with a mentor. Mentorship is absolutely crucial to any broker starting in the industry, and it’s important to ongoing success, too. You need someone to show you the ropes, and later in your career, you can pay if forward and be the mentor yourself.
In addition to mentorship, teams are becoming more and more common in commercial real estate brokerage, probably because you have the opportunity to make more money. Surveys have shown that the more tenure you have in the industry, the more likely you are to have a team, and the more money you make.
2. Brokers don’t need technology because it’s a relationship-driven industry.
The brokers who have been in the game for a while now are often skeptical of technology. They still do a lot of deals on the golf course, so to speak, and are confident in their business because they’ve spent years (sometimes decades) building relationships in their communities.
You can understand why they might be skeptical of all the new technology on the scene. They’ve got their network, they have their processes, and are doing quite well financially. Why adopt new technology? How could that help them with their relationships?
The relationship aspect of brokerage isn’t going anywhere. But there are a few reasons this industry DOES need technology.
First of all, the new generation of brokers expects it. Anyone breaking into commercial real estate needs a database to track all their relationships and to help them with the complexities of each transaction. And there is in fact technology built for that now!
Even if you’re not starting out, technology can still help. Commercial real estate technology doesn’t replace relationships, it enhances them. It can help organize your network so you never lose track of anyone again. It can remind you to call previous clients once a quarter, and give you all the background information you need to make a connection. It lets you segment contacts into strategic groups so you can prospect more efficiently. It streamlines all these process and automates tedious tasks so you can devote more time to face-to-face interaction.
3. CRE technology will displace brokers.On the flip side, there are also people out there that like to stir the pot by declaring that CRE technology will one day REPLACE brokers. There’s more information that’s publicly available than ever before, and more technology and marketplaces to connect buyers and sellers. They’ve been saying it at least since 2004, and probably before.
Technology has changed the role of the broker in some ways, it’s true. But after the first wave of innovation—CoStar and LoopNet, in particular—progress stalled out for about a decade. And since it started picking up again in recent years, we’re not seeing anything like disintermediation.
Instead, brokers are finally enjoying the benefits of workflow efficiency that other industries saw many years ago. Technology isn’t replacing brokers, but empowering them to be more productive and enabling them to focus on the human side of the commercial real estate business.
4. When it does come to CRE tech, all CRM systems are created equal.
Brokers are notoriously late to the game when it comes to technology. Many still use spreadsheets, and consider CRM (customer relationship management) to be overwhelming or just unnecessary.
Customer relationship management, commonly referred to simply as CRM, is a generic concept. It refers to technology that helps companies track, manage, and analyze interactions with contacts, whether they're prospective or current clients, and is used by businesses across industries. Many brokers lump all CRM in the same category, and dismiss it for their business because commercial real estate deals in more complicated, complex transactions.
But these days, there are a number of CRMs designed specifically for commercial real estate, and an even more precious few actually built by brokers with tools that put your data to work for you. Those CRMs are designed for your success and tailored to the broker’s workflow. You need more than a contact database; you need a CRM that organizes your data for action and gives you the tools to put it to work.