Realistic Expectations: What CRE Is Really Like (S4:E16)

Everyone sees the closing photos. Few people see the months of work that happen before the deal ever gets done.

In this episode of In the CRE Vault with Mike & Marc, the guys pull back the curtain on what it's really like to be a commercial real estate broker. From working six months ahead of payday to managing client expectations, pricing properties correctly, navigating slow markets, and building lifelong relationships, they share the realities that don't always make the highlight reel.

Along the way, you'll hear why patience matters, why overpricing can cost more than you think, and why the best brokers aren't just selling buildings—they're building trust.

Whether you're an investor, business owner, or just curious about life in commercial real estate, this candid conversation offers an inside look at the business with plenty of laughs along the way.

Presented by NAI FMA Realty, serving Lincoln, Nebraska and beyond with expertise in commercial real estate brokerage, property management, leasing, investment sales, and market insight.

Thanks for tuning in to In the CRE Vault with Mike and Marc—where we break down commercial real estate without putting you to sleep. Powered by NAI FMA Realty in Lincoln, Nebraska. For more, visit naifmarealty.com. 

Transcript

SPEAKER_02 0:07

Welcome to the podcast in the TRE Vault with Mike and Mark. All right, welcome back to the vault with Mike and Mark. How you doing, buddy? I'm doing well. Always good. It's uh beautiful day. It you know what? It's gonna be a beautiful day. It might be a little muggy since we've got a little rain, but that's the sun's just just poking out as as we're talking here. This is great.

SPEAKER_01 0:31

Yeah, it's uh it it is definitely summertime.

SPEAKER_02 0:34

We uh you know, we're we're getting into summer and Mark and I were talking about you know can we call it realistic expectations? Was that fair?

SPEAKER_01 0:46

I think that's fair. Um I I think that's you know, our our job, we have a lot of challenges in our industry, not just with the just the industry, but just even as agents. And and this would include commercial agents, would include, you know, house peddlers, uh you're a home, how you're selling houses. I think we have just general challenges just outside of this, the current market.

SPEAKER_02 1:13

Yeah.

SPEAKER_01 1:15

And you know, I think it's probably a good time to discuss those because everybody thinks that our job is is easy, which I mean, our job is easy, I think, if you love it. And I and I I I love what I do, and I know you do too, Mike, but uh, you know, a lot of agents have struggles. I mean, I think the number one struggle with with being an agent is the pay structure. Yeah. It's it's always commission.

SPEAKER_02 1:39

It's commission, and you're, you know, you and I talk about this a lot, and we've maybe said it on the on the podcast, but something I'm work I'm working on today, I'm not gonna get uh the benefit of it until October.

SPEAKER_01 1:53

I can tell you today, I could tell my wife today if there's gonna be a Christmas dinner. Yes, yeah, there's no Christmas goose, goddammit. I'm sorry, I can tell you now because it we work for today for six months from now. And and uh I think that's the biggest challenge. And you gotta keep your head up sometimes, you know, when it's slow like it is now. I mean, you you just gotta keep the grind going.

SPEAKER_02 2:19

You know, and it's it's a thing where I was just uh speaking to another person about this, and you know, it's it seems like in this economy, and I and I'll just say it, it's it's been slower, but it it kind of makes you it makes you hungry, it makes you do things that um you know you might be a little bit more cold calling. You might you know you just get get more creative on on how you're you're making touches and uh generating business. You know, it's definitely not an environment where you can just sit and wait for the phone to call or the phone to ring.

SPEAKER_01 2:58

You have to restructure.

SPEAKER_02 2:58

Does the phone call? Call me?

SPEAKER_01 3:00

Yeah, yeah, yeah.

SPEAKER_02 3:03

I'm losing my mind.

SPEAKER_01 3:04

You you you know the two the the two things I always tell the new brokers in the office is one, you have to restructure. And it's a good time to to figure out what you what you can do differently. That's number one. And number two is as a I the any long-term agent's gonna tell you this. You you have to be able to speed up and slow down. And when it's slow, you have to be okay with slowing down with it. And so because when it's when it speeds up, let's let's say during COVID, I mean you you know, you might work 18-hour days, 20 hour days, and you you gotta be able to speed up with it.

SPEAKER_02 3:39

Yeah, you got you have to juke and jive um and really, you know, almost prioritize what's what do I need to do first? And sometimes you just gotta write it down on a list. Yeah. You know, like if it's a you know, where am I at on this project versus okay, I got this person looking for XYZ, you know, you you need to focus on the high priority stuff first.

SPEAKER_01 4:03

Yeah.

SPEAKER_02 4:03

And try not to get distracted.

SPEAKER_01 4:05

That's very true. I find during the slow times are is the is when I get to know my clients the best.

SPEAKER_02 4:12

Yeah.

SPEAKER_01 4:12

Because a lot of times I might not even be working on a project. As you know, Mike, you you have your top five clients that you enjoy to work with, and you build those relationships. You might not even be doing a project with them, but you're you're just calling them. Yeah, and you're just saying, hey, what are you what's going on today? And you're just talking about things outside of real estate. And I think that's when you get to know your client the best.

SPEAKER_02 4:33

Oh, I I mean, we've I've got a I'm just gonna drop his name. Wade Kingry, sure. One of my favorite people. You know, I'll FaceTime them while I'm with my chickens, and this will be on a weekend night. Yeah. Because he's genuinely interested and he thinks they're fun. And it's you know, to have that relationship with a client kind of turned into a friendship is just beautiful.

SPEAKER_01 4:54

It is, you know. And it takes a long time to do those.

SPEAKER_02 4:58

It does.

SPEAKER_01 4:58

I have I have my top five list, and these are these are people that um you know I go to Christmas dinner with. I mean, you just you get that close with them. Yep. And so I enjoy those. Um, but I think that's that that's a that's a pro and con, but I uh in in this industry. But um, I think another set of challenges that we face are are client management.

SPEAKER_02 5:21

Yeah, for sure. What is what's the expectation, you know, really in terms, and I'll lay out a few things. One pricing, either uh the selling of price per square foot or leasing price per square foot. Like what's what is their notion versus what's reality? Yes. Um, timeline. Oh yeah. I I I don't uh disagree with the question, but I can't stand it is how long is this gonna take?

SPEAKER_01 5:50

Yeah. I don't know. Well, because we don't have I mean we don't have an out, you know take 10 years. Well shoot the in and how you know the the the on the real on the house real estate side, they have uh what's called a dom is days on market. And you know, back during COVID when houses were selling right and left, I mean the houses, the average days on market was like three days. And but I mean, you know, it might be 60 days now. They can use that as a reference. We don't have that in commercial real estate. Only DOM we have is me and my leather shorts walking into a showing. And that is a DOM. We don't want that. We we do I'll go there. Yes, yes, if I need to. But that question is that is true. I mean, how long is this gonna take? And it could take it could take two days. We've done those projects, it could take two years. Yeah, and we've done those.

SPEAKER_02 6:36

And it's with commercial, I think it's totally unless it's um a smoke and investment deal, or it's like, okay, this is this cap rates 10 is great, bing bang, boom. But if it's more of a um you know, a vacant property, it's all timing. You know, what's are you gonna fill someone's need and use? Are they looking right now? Um it's it's so cliche, but it's all timing.

SPEAKER_01 7:02

Yes, yes. I I remember years ago when I started in this industry, there was a another broker in the office, and he said he he said to me, There's just some clients you don't want. And I remember thinking in my brain, you know, I just want a client. Yeah, I just started, I just want, I just want something. Yeah, and I think that's very true because so often um, you know, you're working with a client that that has got to get the property to move, and you come up with a price scenario and you price you you you you get a market price on it, and then they either they want more money for it. Let's say you say, Well, your property currently with this cap rate, and you throw everything together for them, you say, Hey, it's it's one million. Well, okay, let's list it for 1.2 million. Those are hard conversations because you know the value's one and and they want to sell it for 1.2, and for no other reason, other than they, you know, because our our industry doesn't work that way. You if you overprice it, you might not get any looks. Well, and then what happens? Then then you gotta wait three or four months and then you do a price decrease, and then what the other side looks at it and says, Well, why has this been on the market for so long?

SPEAKER_02 8:10

That's the question we get sometimes. How long's been on the market? Yeah, why it really shouldn't matter, but people take that into account.

SPEAKER_01 8:16

It does. It should just start it at one. Yeah, you should have taken the agent's advice, yeah, and and and just started at one.

SPEAKER_02 8:24

We're playing a song and dance, and now we're at at Cole's outlet store and the dress doesn't fit.

SPEAKER_01 8:29

And you and it doesn't fit, or you know, and then you know, you overpricing is is one challenge that I think all of us face. Yeah, for sure. It does no good um when you do that because it it's just gonna sit on the it's gonna sit on the market. I think some people think, well, then that gives me a little room to negotiate, and that just doesn't work that way.

SPEAKER_02 8:51

Yeah, there's it's so funny. There'll be times where we'll be sitting uh Monday mornings, we always gather around the the bullpen, so to speak, and we look at listings and transfers and all these things, and we'll see something pop up occasionally where it's like, oh, I was just talking to him about that, and I was recommending this, and then it's priced exponentially more. And we're like, well, good luck. Yeah, yeah. Whatever. We get those more power too if you get it. Yeah, but that's true, that's few and far between.

SPEAKER_01 9:22

That's very true. That's very true. I think another another struggle as an agent is when you when somebody's is is getting price evaluations from multiple offices. And yes, and though that's a big, big struggle in the fact of as an office, I think everybody would agree. If our all our brokers were sitting here, we would all agree that when we do a market analysis, we we base it off of actual facts, not off a theory. Um, if we're using a cap rate, you know, we base it off of what the market cap rate is. So many times, I mean, how many times have we seen this, Mike, where the the price is based off the cap rate in 2028?

SPEAKER_02 10:04

Yeah, a forecasted blue sky. Here's what you could get if this was leased.

SPEAKER_01 10:08

Yes. Or even uh this is the these are the best ones, an average cap rate over five years. And then that's how they price it. And those are uh those are just troublesome. And and if if you run, don't walk. Yeah. If if if you have an agent that's saying one of those, because uh you just don't want to be a part of that. And it's uh it it it that that causes us a little bit of heart pain because then let's say they're basing it off a cap rate in two years, and because that just overvalues the property. And then ours is based off a current value, and who's gonna get more attractive, the one that's one million or the one that's 1.5 million? Totally.

SPEAKER_02 10:50

And I think it's especially with cap rates, and I know we've talked about this briefly on other episodes, but it needs to be the then current NOI cap rate, not future expected earnings. Correct. And quite frankly, um that's how a bank's gonna look at it. Yeah. I mean, good luck getting finance for a hypothetical cap rate.

SPEAKER_01 11:12

Yeah. Yeah. So I think that's that's uh that's a big challenge for us. Totally. And I think most of more I think the final um kind of challenge in our industry is just staying motivated and and keep finding the positive and all the deals and and just realizing that we are not so much selling real estate, we're selling relationships.

SPEAKER_02 11:38

Totally. And I think I think all of us in this you know brokerage side do a good job of keeping each other motivated. I think there's you know, some deep friendships developed. Yes. And now now more than ever. Oh man. Our office is very, very close. I could honestly say I'd jump on a grenade for any of you. Yeah. And I think to have that relationship, it kind of keeps us all, you know, it's like a platoon. I would, I would, I would agree with that. And I have no military history, so please don't think I'm like, I have no clue what that's like in the trenches. But there's just it's like a it's like a fret.

SPEAKER_01 12:19

Uh it is on a daily basis. I would say even five to seven years ago, maybe we would have somebody leave, and and I and I would think, oh, that that kind of sucks. But I think there's a our group now, if somebody said, Hey, I'm I'm leaving, I think it would be crushed. I I think I would, and now more than ever. And I think that makes our job um just a little bit easier, especially because we're so commission-based.

SPEAKER_02 12:45

Yeah, and we could bounce ideas off each other. And um, I guess that's something different than most brokerage houses where, you know, we share, if it's not completely confidential, but we'll share ideas with everybody, and you know, hey, what do you think about this? And you know, we're we're trying to help everyone's trying to help each other with business.

SPEAKER_01 13:04

That is very true. And I think our office fills the the CRE uh industry in the fact of everybody just has one niche good thing about them. Yep. That you know, maybe one's good with numbers and then somebody else is good with relationships and and you know, they just it kind of all comes together.

SPEAKER_02 13:26

Yeah, for sure. And I'm the and I'm the watchmaker. So yeah. Well, I think we all just gotta sell our time.

SPEAKER_01 13:32

We all gotta, you know, and I uh you know, somebody has a question about a car. I mean, I get questions daily. They, you know, the mechanics of a car, and and I'm not a mechanic, but I I know my way around them. But I just think as as a as a a group, a hallway group, yeah, we fulfill super tight life. Yep, it's awesome. I'm glad we got a rant a little bit, Mike.

SPEAKER_02 13:51

Yeah, you know, is what day is it? Thursday? It is. God dang. Yeah. I had Taco Wednesday last night. Taco Wednesday. That's great. And I gotta tell you, I am, I am pumped. I had some spicy onions, and I'm gonna, I think we should try to make some money today.

SPEAKER_01 14:06

Let's see what we can do. I appreciate you, Mikey.

SPEAKER_02 14:09

Brother, appreciate you. We'll see you in the vault next time. Have a good week. You too. Bye.

SPEAKER_00 14:26

The views, thoughts, and opinions expressed are the speakers known and do not represent the views, thoughts, and opinions of any high FMA realty. The material and information presented here is for general information purposes only. Any high FMA realty disclaims any liability or responsibility for any individual's views or reliance on the information presented in this podcast.