If you have spent any time around the typical commercial real estate broker, odds are you have heard the term “deal” one time too many. “Deal” is certainly the most overused term in the brokerage vernacular. Brokers love to throw it around, whether talking about past closings, new prospects, or even buildings themselves. Although an integral part of the language of the broker, does overuse of the word “deal” send the wrong message to clients?
Our definition of a deal is fairly specific. A deal refers to a transaction in which real property is exchanging ownership: one holding period is ending and another is beginning. When a property is in the process of transfering, it is perfectly appropriate to call it a deal because a “deal has been struck,” or, a “deal has been made.” Once the property has exchanged ownership, it will be a “closed deal.”
Many brokers, however, define “deal” differently: quite simply, a gateway to a paycheck or a synonym for “commission.” This mentality tends to cause brokers to go overboard by calling everything a deal:
Don’t you own that 30-unit deal on 14th?
Are you interested in acquiring any deals?
The psychological effect of the broker’s “deal-first” mentality on clients is undeniable: the broker views them merely as a means to an end. Conversely, an owner views their apartment building as their investment, their livelihood, their future, their family’s future. For many owners, their apartment building is a monument to their success, the embodiment of their life’s work.
Deal-centric terminology enforces transaction-based relationships and perpetuates the “greedy broker” stereotype. Rather than focusing on “deals,” brokers should be forging long-term relationships; relationships built on putting the client’s best interest first. In the most recent bull market, a lot of brokers got away with putting the deal before the relationship, but today the “game has changed.” Those brokers who built real relationships with their clients are staying afloat, even thriving, in this “dreadful” market, while the “churn and burn” brokers have fallen by the wayside.
Today’s market is one in which a select few brokers will “separate themselves from the pack” and emerge as market dominators. These brokers will first and foremost need to be experts in the rental and capital markets, with a keen understanding for investors’ return expectations. Furthermore, successful brokers must provide outstanding customer service, placing the best interest of the client above all else — even if it means killing the ever-elusive deal.
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