Peter Pays Paul

My wife and I like to go on “dates” to Barnes & Noble Booksellers. Most of the time we do not buy anything. We will just spend hours finding and perusing books that we find interesting.

The last time we were there I picked up Mega-Producer Results in Commercial Real Estate: A Blueprint for Success. I only leafed through the book on my way to other books, but I noticed the author had a section on specialization, a topic I had been thinking about for a while.

Working with an Expert

The author recommended that new agents focus on becoming a specialist in a single type of property. The benefit of this approach is that you become an expert. Now you are adding value to clients because you have studied and know more about the subject than they do. They call you when they want an answer to a problem.

The author detailed an experience he had as a new commercial sales agent after moving to a new city. He was given a camera and the task of creating a “comp book” of all the shopping centers in the city. It took him a while to cover the entire area, but he was able to know the area and to know the product. He also began documenting which properties had vacancies, were sold, were in need of repair, and the property’s sales price.

The author’s knowledge allowed him to interact knowledgeably with potential clients. He could tell them if their building needed repair or the sales price of the property down the road. These interactions established him as an expert, and who doesn’t want to work with the expert?

Financing Specialists

So how does this all apply to the financing side of the equation? Why not become an apartment financing specialist or “The Shopping Center Loan Gal”? Choose not to be “a mile wide and an inch deep”. Choose to have a narrower focus, but a deeper knowledge of that focus.

A narrow focus targets your marketing. You no longer advertise to apartment brokers only to retail brokers. It also refines the list of lenders that you need to know. If XYZ Bank doesn’t do retail loans or doesn’t offer competitive rates, you don’t need to deal with them on a consistent basis. I know an experienced broker that had a handful of clients and only dealt with five lenders but closed over $100 million in loans annually.

Benefits of Specialization

1. Deeper knowledge of available financing options.
2. More efficiency underwriting loans. Well practiced tasks will become easier and easier.
   
3. Higher closing rate due to understanding lenders and what they prefer.
4. Greater likelihood of referrals and repeat customers because of your knowledge and skill.

Disadvantages of Specialization

1. The possibility of greater startup time while gaining market knowledge. It will take time to become an expert.
2. A smaller “pool” of deals to draw from. You must become a bigger fish to survive.
3. If your area of specialty slows, transitioning to other property types may be difficult.

Differentiation by Specialization

Being a specialist allows you the advantage of differentiating yourself from the competition. You will stand out like a shiny penny when you are an expert. Truthfully being able to say, “I have the perfect lender for that” will build confidence with clients and put you on the way to wealth.

For further reading check out: Riches in Niches: How to Make It Big in a Small Market

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