Boe Clark, Senior Advisor

The supply/demand equation has clearly shifted to favor Sellers in the NNN Single Tenant Asset universe, so what else is there for a Seller to think about?  Cap Rates are compressing and national credit leases, rated BBB or better, are in strong demand.  What are the factors to consider as an investor evaluates harvesting some gains and doing a little crop-rotation?

Consider if you will the degree to which “friction” is involved as you plan to harvest your gains.

Major national brokerage firms all provide reach and frequency of exposure in the digital age.  But do they position your asset in the market in an efficient, transaction-friendly way?  How much “friction” (anything that inhibits an economically efficient transaction) do your partners introduce to the process?

For NNN transactions, let’s consider friction anything that:

1)       Inhibits price discovery

2)       Increases transaction cost

3)       Dis-incents transaction participants (Buyers/Sellers and their advisors) from purchasing/selling an otherwise attractive asset

Perhaps the most egregious and controllable source of “friction” in NNN Single Tenant Asset transactions stems from a Listing Firm’s commission structure.  While this is not immediately apparent to infrequent Sellers, many have experienced the effects of this friction via protracted selling cycles, higher Cap Rates and their asset(s) staying on the market, while less attractive assets sell.

There are national market participants (brokerages) that, having secured a listing, insist that Buyer’s broker receive a small fraction of the Selling broker’s total commission.  In a national marketplace, with high volume market participants, Sellers often overlook the effects of this tactic and focus exclusively on Listing Brokers transaction volume.  This is a mistake, and often a costly one.

When Sellers brokers insist on cooperating brokers receiving a disproportionately small percentage of total commissions (retaining the lions share for themselves) Buyers brokers may seek out alternative properties which pay equitable commission splits.  As we have learned, compensation drives behavior.  In firms where Sellers brokers hoard brokerage ‘splits’, Buyers brokers are incentivized to seek out alternative properties.

Putting client’s interests first requires developing processes that support client objectives and minimize transaction friction.  At Sperry Van Ness, our firm policy is to always split commissions on our listings 50%/50% between Seller/Buyer brokers.  This means that Sperry Van Ness assets gain maximum competitive advantage relative to assets where Sellers brokers seek to retain all or a disproportionate share of brokerage commissions.

Have you noticed how it’s often the little things that ultimately result in success or failure in life? At Sperry Van Ness, we align our culture and processes to support Client objectives, to minimize friction, and to do what is right for our clients and our business partners.

To learn more about how we work for your best interests, check out The Sperry Van Ness Difference video at