To Co-Broke Or Not To Co-Broke: That Is The Question

In the residential real estate market, seeing a seller’s broker working together with a buyer’s broker is commonplace. It’s also considered the norma that brokers would cooperate and share information (though brokers will want to make sure they are following the latest rules of engagement as a result of the settlement with the National Association of REALTORS®). Even with the new regulation, residential brokers are able to maximize the sale of properties by not only approaching direct buyers who they know, but also accessing a much larger universe of buyers.

However, it is often shocking to me that in commercial investment sales, the arrangement is often not the same. Sometimes brokers prefer to keep their listings in house, and not share them with outside brokers. In a sense, these brokers see listings and investment sale opportunities as currency. Many brokers prefer to keep these potential sales to themselves.

Consider the following factors related to cooperation in the brokerage community as you look for a broker to sell your property.

Reasons Brokers Don’t Cooperate

When brokers avoid sharing information with other brokers, there are usually a couple of reasons to explain their decision. One is based on the finances, as a broker may prefer to keep a commission to themselves. If a property is not as widely available, it may be seen as a better opportunity. And sometimes brokers might think that they don’t need to look broadly in the market because they already know buyers who might be interested.

That said, in large marketplaces like New York City, I would point out that it is impossible for any single broker to know every potential buyer in the world. In fact, many foreign buyers who come to the U.S. as first time commercial real estate buyers enter through residential brokers. After purchasing several residential properties, they might look for a commercial opportunity. If there is one that is publicly listed, they might pursue it.

The Benefits of Co-Broking

One differentiator that my team and I have in the Tri State investment sales group for Avison Young is that we publicly make our listings available from day one. We post them on places like CoStar, LoopNet, and CREXI, along with any other multiple listing services where buyers and brokers can find them. We also fully acknowledge that we do not have a monopoly on every single buyer in the marketplace. When we get a broker who brings us a buyer, we might not know the buyer and may need to qualify them.

For sellers, when you’re looking to hire the right broker, there can be benefits from having higher levels of exposure. I discuss ways to find a great broker in Step 2 of my book, “The Insider’s Edge to Real Estate Investing.” My team and I operate under the concept that the larger the exposure, the more people you can reach, and the higher the sales price that can be generated. If your goal is to sell your property for the highest price, you can ask brokers when you interview them if they post their listings on multiple sites or cooperate with brokers. If they respond that they do, you can ask them for examples. You might request to see the last three transactions that were co-brokered when commissions were shared with a buyer’s broker.

Overall, when selling a property, it is essential to work with the brokerage community to maximize sales price. While co-broking may be standard in residential real estate, this practice is less common, with brokers often opting to keep listings in-house. The advantages of co-broking include broader market exposure and potentially higher sales prices, as more potential buyers are reached. When selecting a broker, consider their willingness to cooperate with other brokers, as this collaboration can lead to a more competitive and successful sale outcome.