I routinely work with commercial property owners that attempted to sell their office building, retail strip center or industrial space on their own. What I’ve found over the years is that they don’t know what they’re doing when it comes to selling commercial real estate. Let me explain… Property owners want a price that is way over market value or they’re selling it at a price that is under market value. Either way, they’re losing money because they lack knowledge.
Unlike residential real estate, commercial real estate is more complex and if you lack knowledge then you’re going to make big mistakes.
I can show you a better way to sell commercial real estate.
Common Mistakes in Selling Commercial Real Estate
Commercial property owners love to overprice their properties. The knock-on effect of this is that it will sit on the market with no activity and brokers will avoid it like the plague. Who wants to deal with an overpriced property and an owner that has no idea what they’re doing? If you price the property so high that buyers are reluctant to even start that conversation, then you lose.
Some of the worst commercial real estate marketing is done by individuals that try to sell their own buildings. They use short term tactics in an industry that demands longer-term marketing efforts. On top of that, they lack the funding and industry connections to truly market commercial real estate correctly.
No property financials
Most property owners have the appropriate paperwork on their investment but they don’t compile the data ahead of listing the property. This leads to issues when they speak with an interested buyer because they’ll reveal that they don’t have their act together and the buyer will move on to another property because they don’t want to wait 30 days for the seller to deliver the requested documents.
Highest and best commercial use
Sellers lack the knowledge and expertise to know the highest and best use for their commercial real estate listing. This lack of knowledge leads to underpricing a valuable asset and the buy-side broker won’t educate you but will take advantage of your cheap listing price.
Again, sellers lack the knowledge and expertise to determine if the offer they’ve been presented is the best offer. Plus, they don’t know how to determine the creditworthiness of a buyer. Not all buyers are the same even though they offer similar purchase prices.
Commercial real estate contracts are full of hidden clauses and the buy-side will probably have legal representation. Since you’re the seller and you’re looking to save money you’ll allow the buyer’s lawyer to write up the contract. This puts you at a huge disadvantage because you won’t read the contract and if you did, you probably don’t understand legal ease.
Benefits of Hiring a Commercial Real Estate Agent
You’d think that all real estate transactions are the same, but they’re not. Quite a few differences exist between single-family homes and commercial markets. While there are many qualified real estate brokers who can help you sell a property, it’s to your advantage to hire a specialist when dealing with commercial or investment property. Here’s the shortlist on why.
Commercial agents with direct experience
Most real estate brokers conduct residential transactions which is why you should work with a commercial real estate agent with knowledge of your type of property. Selling a commercial property involves a multitude of variables such as financial strategies, market analysis, fiscal viability, and income potential.
a commercial Realtor has tools available to them to perform an audit on past, current, and future market conditions which influences a pricing strategy. As mentioned above, uneducated sellers wind up ruining the sales process because the pricing is way off and no legitimate commercial broker wants to deal with a seller that doesn’t have their act together.
Commercial property buyers will see you as fair and trustworthy if your asking price isn’t too high.
The goal is to price is as high as you can without turning off buyers.
Local commercial broker network
In Texas, there’s a private broker network that allows brokers to email each other new properties. This gives the broker the ability to put your property in front of thousands of brokers with a single email.
If your commercial real estate agent doesn’t leverage Adwords, social media, a private broker network, search engine optimization, listing directories, brochure, and signage then you should interview others. In today’s commercial market the agent needs to be leveraging every tool available to maximize the sales price and push the most views.
Don’t forget CRE marketing is a long-term process and not a one-off event.
Commercial contract negotiation
The art of negotiating in a specific industry is perfected with experience. This should come naturally for a seasoned commercial real estate agent who will handle the often tricky negotiations, acting as an advocate for the client, resulting in both lower stress and a better deal for you. In addition, proper deal structuring can save you hundreds to thousands of dollars.
Zoning and development
If zoning is critical to the sale of the property then you should move this to the top of your list when interviewing commercial real estate agents.
There are many reasons you may not want others to know you are buying or selling commercial real estate. Commercial brokers understand that business deals need to be handled with care and discretion.
Time and money
A commercial specialist will minimize the time it takes to complete a transaction because they know the market and are familiar with the ins and outs of closing a commercial deal.
Selling Commercial Real Estate Can Be Simple
Selling commercial real estate can be hard, but it doesn’t have to be. As long as you prepare accordingly and remember things like not setting your listing price too high, long term marketing initiatives and negotiating a strong contract with penalties if the buyer backs out, you should be able to sell with success.
When selling commercial real estate there are two types of sellers. Ones that are educated and work with a seasoned agent and one’s that wind up leaving too much money on the table.
Whether you’re buying or selling commercial property, our market savvy commercial real estate brokers are here to help you. We can handle the sale or purchase of office, industrial, retail and flex properties (buildings as well as undeveloped land).
Hire a commercial broker who is familiar with high-value commercial sales and is local to the area in which you’re trying to sell.