When real estate investors and developers set a goal, they may not always have the necessary knowledge and resources to make fully informed decisions. This gap of information is normally addressed by getting in touch with one or more consultants who possess the expertise and local experience.
However, there’s a number of different professions associated with real estate consulting. In this article, the real estate experts from VERTEX will clarify the critical differences between real estate consultants and real estate brokers. Keep reading to learn more.
What is a real estate consultant?
Also known as “real estate counselors” or “advisors”, real estate consultants provide expert advice and recommendations to clients who are looking to acquire and develop properties. Their clients tend to be commercial real estate stakeholders rather than single-family residential home buyers / sellers.
Real estate consultants can perform an extensive variety of services based on their experience and background. One typical consultant is a construction professional or engineer who does property condition assessments (PCA) and inspections to identify and document any physical deficiencies of the land and/or structure. Other real estate consultants can be advisors and market researchers who are networked with local real estate professionals to analyze market trends, and draw on their own extensive industry experience to provide their clients with key data.
Real estate consultants commonly assist their clients with:
- Property development, in which the real estate consultant researches prospective construction sites, analyzes the competition, and conducts feasibility reports.
- Real estate investment, in which the real estate consultant performs a thorough economic analysis to help property buyers make sound financial decisions.
What exactly is a real estate broker?
Real estate brokers are licensed professionals who play a key role for property sellers and buyers. Their service is to act as intermediaries in real estate transactions. They typically specialize in a single segment of the real estate market (for instance, industrial real estate). This enables them to stay on top of any shifts in the market and obtain in-depth information about the available properties in a particular area, as well as the local tax laws, regulations, and customs.
Armed with this specialized knowledge, real estate brokers are supremely qualified to facilitate real estate transactions and even buy or sell property on their clients’ part. By providing crucial data about the property you’re thinking of purchasing, they help you make an informed decision and successfully navigate the transaction process. Finally, real estate brokers can negotiate the details of the transaction and finalize deals to their clients’ advantage.
How do real estate consultants and brokers charge?
Another way real estate consultants are different from brokers is in how they’re paid for their services. Real estate consultants work for a fee, which is typically calculated based on an hourly rate. Some real estate consultants also offer the option of paying for deliverables (usually a report of their findings).
On the other hand, real estate brokers primarily deal with property sales or purchases. Because of this, they’re normally only paid a transaction or commission fee when they finalize their work to close the real estate transaction.
When should you hire a real estate consultant vs a broker?
The timeline really depends on the investor’s or developer’s needs. The real estate industry in each market region has its nuances and depending on the person, the order of hiring can change.
Real estate consultants such as PCA inspectors are usually hired after the client has found a property they want to acquire. The consultants will then conduct extensive inspections to obtain detailed information about the property in question. Based on this data and the consultant’s advice, the client will then decide whether to go through the purchase of the property or look elsewhere.
For developers / investors who are trying to acquire property, sometimes they go to a real estate broker first to help identify potential buys. In other cases the client might have already selected a few properties through their own research and if they decide to proceed with the deal, they then get a real estate broker involved, who will negotiate and finalize the deal for them.
Property owners who are looking to sell their property will usually skip the services of a real estate consultant and go straight to a broker. This is ill-advised. A consultant can provide essential advice on how to maximize the property’s value prior to the sale and even determine the optimal time to put the property on the real estate market.