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Home » Real Estate Brokers-What Restaurant Owners Need to Know

May 7, 2020 by Mark Chase 11 Comments

Real Estate Brokers-What Restaurant Owners Need to Know

What restaurant owners should know about real estate brokers is a two-part article.

This is part one and provides an overview of real estate brokers and the second part discusses “How to Hire a Restaurant Broker”.

Real Estate Brokers

The term “real estate brokers” or “agent” is very broad.

It’s important to understand the different roles of real estate brokers and how they are involved with different aspects of commercial real estate.

A real estate broker is required to meet more stringent educational requirements; an agent works under a Broker’s license.

 

Commercial Real Estate Brokers

Most commercial real estate agents or brokers specialize in a specific type of property or geographical area.

For example, office agents/brokers specialize in office buildings, and retail agents/brokers typically lease or sell retail properties and shopping centers.

WARNING!! It’s not a good idea to work with a broker that sells homes or works on a property type such as office buildings or apartments if you are opening a restaurant.

This can be just as dangerous as hiring a dentist for heart surgery.

Who Do Real Estate Brokers Work For?

Most brokers work for the property owner or landlord. Some brokers called Tenant Representatives or “Tenant Reps” work primarily for tenants.

Who Pays the Commission?

When a property owner hires a broker they agree to pay a commission to the broker.

Typically, the commission is a percentage of the lease.

For example, if the total rent paid over 3 years is $30,000 a 6% commission will equal $1,800.00.

The commission does not change the amount of rent the landlord is prepared to accept.

It has been agreed to and factored into the rent prior to marketing the property.

The Landlords broker, “Listing Agent”, agrees to share the commission with “outside agents” if the agent/broker represents a tenant willing to sign a lease.

Most transactions include both a Landlord and Tenant broker.

Tenant Broker

If a tenant wishes to use their own broker to help them find and negotiate a lease, the tenant typically gets the services for free from the tenant’s broker.

Should You Use a Real Estate Broker

In most cases using a broker will save you time, provide access to properties that are not public knowledge, and help negotiate a better lease than you would on your own.

The biggest mistake first time restaurateurs make is to think they will get a better deal “cutting out the middle man” or working directly with the landlord’s broker.

They mistakenly believe the landlord’s broker will reduce their commission so that the restaurateur can get a better deal.

This rarely happens. If you would like to prove this to yourself, call on any property and ask the broker if they will share their commission with you.

A few reasons to consider hiring (the right) real estate broker:

  1. Access to the information you don’t have
  2. This is their profession, and they know more about governmental regulations, rents, and lease agreements
  3. No cost to you for their service
  4. Save time

How Do You Chose the Right Broker if you are a restaurateur ( part two)

Are you thinking about opening a new restaurant?

 

 

8 Hidden Dangers in Restaurant Lease Agreements

Do you have questions about opening a new restaurant? I’m here to help and happy to answer your questions.

Just click here to submit your questions.

Cheers!

Mark Chase
Restaurant Real Estate Advisors

Filed Under: Blog

Comments

  1. Josh says

    May 12, 2015 at 1:57 PM

    Hello Mark,

    I just saw you on Twitter… you retweeted us so I decided to check you out. Because of that, I came across your blog and am very impressed with your content. I don’t have the time to really look into all your content at the moment, but I’m going to keep an eye on this and watch for more blog posts from you in the future.

    Thanks for the retweet on Twitter, and I look forward to following you. Now, time for me to find the subscribe button for your blog.

    Have a great day,

    Josh Lyons
    Sperry Van Ness | SouthLand Commercial

    Reply
    • Mark Chase says

      June 1, 2015 at 11:05 AM

      Thanks Josh. Sorry for the slow reply I was not receiving updates about comments.

      Reply
    • Samuel Weir says

      December 28, 2018 at 1:30 PM

      I have a 120 seat restaurant located in Deland Fl. It has been serving local seafood, steaks, and Prime Rib for over 35 yrs. I would like to list it for sale or lease. Please feel free to contact me at Captsam581@gmail.com or 386 307 0047… Thanks Samuel W. Weir

      Reply
  2. Darryl M. Young says

    March 17, 2018 at 8:39 PM

    I like information

    Reply
  3. Hazel Owens says

    June 27, 2018 at 8:51 PM

    That’s interesting that a real estate broker can provide access to properties that are not public knowledge. This would benefit restaurant owners since this would give them more options of where to put a restaurant. Using a broker would also give them quicker access to those properties and the owner could get a better deal.

    Reply
  4. Al Daubenschmidt says

    March 22, 2019 at 10:01 AM

    Mark, I own a Pizzeria restaurant in Randolph VT. It is difficult finding a good restaurant broker in this remote area. I am looking to sell as I would like to retire somewhere that is warmer and it doesn’t snow. Any suggestions would be highly appreciated.
    Sincerely,
    AL Daubenschmidt
    802-431-0240

    Reply
  5. Business Working Capital says

    August 15, 2019 at 6:32 PM

    I am a restaurant owner. This article is a good source of knowledge for me. This site is very helpful. I will definitely return to this site. Thanks for sharing this article.

    Reply
  6. Nova Cash says

    October 14, 2019 at 8:12 PM

    My friend is a Real Estate Broker. I think that this article will definitely help him. Thanks for sharing this article. I will share this to him. This is very informative and helpful.

    Reply
  7. Factoring Finance says

    December 29, 2019 at 5:41 PM

    Thanks for sharing this article. I also think that it is very important to know the importance of real estate brokers. I think that by when we hire real estate brokers, we will definitely be able to avoid issues. This is a very helpful article.

    Reply
  8. WeFactor says

    January 5, 2020 at 5:18 PM

    I want to start my own restaurant. I think that with the help of this article I will definitely be able to decide well, whether I will need a real estate broker. This article is very helpful for me. Thanks for sharing this article.

    Reply
  9. Lauren says

    January 13, 2020 at 1:39 AM

    I am opening my new restaurant next year. This article is very helpful for me. I’ll definitely return to this very helpful article. I’ll share this to my friends as well.

    Reply

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