Crafting Your Message... "Across the country, co-brokered transactions sell for lower capitalization rates. Research proves it." That's David Frosh, president of Sperry Van Ness, speaking.

According to Frosh, private investors buy over 80% of all listings between $1 million and $20 million. Up to 80 or 90% of these sales are handled by a single broker.

Yet real estate brokerage is highly fragmented, with the four largest firms accounting for 13% or less of the market. So isn't it strange that only 10% to 20% of these investment sales are co-brokered? It doesn't make sense.

"It's lame to tell a seller that you'll charge a lower commission because you know all the buyers and therefore don't have to cooperate -- or that you can wait 90 days before cooperating." Wow, that's a bold statement.

And Frosh would be the first to credit consultant Mark McLaughlin of McLaughlin Ventures with helping SVN craft and refine its provocative message. "Mark is terrific -- the perfect consultant for a firm like ours doubling in size every two years."

McLaughlin took me through a compelling SVN training presentation demonstrating the benefit of co-brokerage. His analysis featured multiple screen captures from two principal resources: Real Capital Analytics (RCA) and CoStar.

To demonstrate the percentage of private buyers, one slide showed RCA's transaction breakdown by investor type for dozens of markets around the U.S. To demonstrate the infrequency of co-brokerage, another slide showed CoStar Comps data sorted by broker.

Finally, another slide featured CoStar Comps data for Oregon in 2003 showing that 23 transactions sold at an average value of about $10 million at an average cap rate of 9.21%. Yet the four of these transactions which were co-brokered sold for an average cap rate of 7.7%.

According to McLaughlin, "If you don't actively solicit co-brokers, your seller is likely to leave money on the table." ... What do you think?

Sponsor Profile ... This Dispatch issue recognizes a major supporter of PikeNet, Mark McLaughlin of McLaughlin Ventures. Quite simply, sponsors make possible the free delivery of the PikeNet Dispatch to you twice-a-week. Thank you, Mark.

--Peter Pike