This post originally appeared on tBL member Allen C. Buchanan's blog Location Advice and is republished with permission. Find out how to syndicate your content with theBrokerList.
|Image Attribution: lewishamhomes.org.uk
My VERY best to you for a Happy Holiday Season! Merry Christmas and Happy 2019! As we forge our way into the final year of this decade, I wanted to share with you the ways you can derail any effort to sell or lease your commercial real estate. So, in no particular order, here goes.
Hire an un-cooperative professional. Remember, that name on the sign advertising your listing for sale or lease is your front man. All inquiries are funneled through his phone or email. If he is tardy with follow ups – refuses to answer texts, emails, or calls or is generally non-responsive – you are sunk.
Ignore the offers below your asking price. Our market is changing. The days of multiple offers and frantic bidding are over. Carefully consider every serious proposal from qualified buyers or tenants. I believe you’ll be glad you did.
Market the building while occupied. Generally, vacant buildings are the fastest to lease or sell. Specifically, spaces that have been vacated, properly staged or have received new flooring and a fresh coat of paint are most desired. If your building has an occupant – sure – you get some marketing time while collecting rent. The downside of this? Showings are challenging, buyers have difficulty envisioning their operation in the building, and tenants have to imagine post occupant refurbishment. Plus, folks who need to occupy immediately are forced to consider readily available choices.
Set a ridiculous price. That is so 2017 of you! Now days, emphasis is placed upon a realistic value and motivation.
Don’t do any investigation. If selling – invest a few thousand dollars for an inspection and possibly an environmental report. You shouldn’t wait for your buyer to discover what issues exist. If leasing – assemble all the maintenance records and expenses. Plans or drawings are essential for either buying or selling. These items should really be accomplished prior to marketing.
Do it yourself. Sure. You may save the fee – but are you prepared to generate interest, field inquiries, arrange showings, negotiate proposals and execute the transaction? How do you insure you’re getting top dollar? Are you keenly in tune with the last few deals that transacted? How will you justify your value with a lender’s appraiser? Suddenly, that 6% looks like a post holiday bargain.
Value the property on projections not actuals. In up markets – sellers look to the future, project the next up-tick in rents – even though there is lease term remaining – and create pricing based upon this dream. Buyers happily play along because of the lack of available buildings. Once the market changes – buyers scrutinize the numbers and are unwilling to buy on “maybes”.
Allen C. Buchanan, SIOR is a principal with Lee & Associates Commercial Real Estate Services. He can be reached at 714.564.7104 or [email protected] his website is allencbuchanan.com