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These days, multiple offers on well priced, conveniently located commercial real estate are the norm. Unlike the doldrums of a down market where the activity is tantamount to a cricket concert – activity is robust!
So, how do you filter the noise of multiple offers and settle upon the RIGHT buyer – the first go around? That dear readers, is the subject of this week’s post.
Watch how the buyer acts. I’ve observed buyer behavior for many years. The way in which a prospective buyer behaves in a negotiation will speak volumes about the way in which he will behave once you strike a deal. Specifically, the speed with which a buyer responds to requests for information and counter proposals is a great indicator of motivation. If you monitor motivation throughout the transaction, you are less likely to be surprised by your buyer’s actions.
Is the buyer on-time? If he’s late to a showing – chances are the buyer is not concerned with timely performance. Not a big deal with a tour – missing a signing deadline is another story.
What is the buyer’s story. If your buyer is a neighboring company whose employees park in your lot because his parking lot is filled with inventory – chances are the buyer is out of space and needs your building for growth. Conversely, a buyer moving up in size three or four fold could portend a problem with cash flow and financing. Understanding “why your building vs. another” is a solid indicator of what’s to come.
What’s the buyer done in preparation. Has the buyer’s broker blown your guy up with inquiries, requests to tour, and probing questions? When the buyer submitted his proposal, was it accompanied with a lender pre-qualification letter? How many times did the buyer look at your building before submitting his offer? Once again, these are things that suggest motivation and encouraging buyer behavior. If you receive an offer and the offeror has not seen the property – it happens – run away. The offer is not based upon a working knowledge of the facts.
Does the buyer need that “something” your building has. As we discussed in a previous post, there are items for which a buyer will pay a premium – excess land, good cube height in the warehouse, ample loading, modern architecture or remodeled offices, heavy electrical power. Discerning the “something” your building has and matching that to a buyer’s requirement can predict a successful transaction – the buyer needs what you have and will pay to own it.