Commercial real estate marketing involves the disposition of your property. And if you have invested wisely, worked smart, and created value – and inflation and appreciation have played their roles – then it’s time to sell your commercial property and harvest the wealth you have built through property equity.
You must now make the decision of what you want to do with the profits. You can take the money, pay your taxes and run. You can exchange the property to push the taxes to a later date. You can offer financing on the property so that you receive an income without worrying about managing the property. Or, if you have your business in the property and you need cash, you might want to consider a sale leaseback.
Whatever you want to do with that equity, your next step is to create a sales promotion that attracts buyers who will pay the price you want. You can develop the strategy on your own or you can work with a commercial real estate broker to come up with a commercial real estate marketing strategy. Either way, you need to be involved in the strategy decisions so that your property stands out and attracts buyers.
The first thing that you must do is to offer your property at a price that your target market will pay and at a price that provides you a profit. You shouldn’t stroll down the path that others go on by marketing your property at a price that accomplishes neither a buyer’s goals nor your goals. Rather, design a value proposition that attracts, persuades and closes the perfect buyer.
This value proposition integrates four essential elements:
(1) the investor; (2) your competitors; (3) the benefits that you will be offering; (4) your pricing and terms.
Which investors should you appeal to? A few types of investors include:
• no cash buyers
• no credit buyers
• first time investors
• lease-option purchasers
• professional investors
• specific product investors
• conversion specialists
Who are your potential competitors? Competitors can include:
• new buildings
• distressed sellers
• sellers who carry financing
You need to understand your competitors’ locations, their features and benefits, and their pricing and terms.
What benefits and features should you emphasize and offer for effective commercial real estate marketing? Examples include:
• special landscaping
• unique architecture
• ability to expand the property
• special touches
• interior improvements
• seller financing
• strong appreciation potential
• positive cash flow
• low cash requirement
• minimal management
• tenant pays all expenses
Pricing and Terms
Here you need to compile your information and then compare and contrast, mix and match the different types of potential benefits, potential investors and potential competitors to arrive at a price and terms that provide the targeted buyer a great competitive value and provide you the profit you seek.
How you answer these questions will determine how successful you will be in selling your property at a realistic price to a targeted investor in a reasonable period of time. You achieve these results by asking players in the market, inspecting, comparing and contrasting properties, discovering the properties that sell fastest and at the best prices, reading articles on property renovation and thinking about what features/benefits/contract clauses will provide you a competitive edge against the other properties and a cooperative edge with your buyer segment.
As you can see, selling your property is not just about putting up a “for sale” sign and taking the calls if you plan to get the maximum for your property in the shortest amount of time. It’s about developing a commercial real estate marketing plan for your specific property. Knowing your property and your market are the keys to success.
Once you have identified potential buyers for your property, gained an understanding of your competition, defined the benefits of your property and determined the pricing and terms that you want, it’s time to develop a real estate marketing plan.
Here are the next steps in the selling process that you need to do to get the maximum price and the quickest close:
Staging the property
Stage the property keeping your potential buyer in mind. If you’re selling a luxury property, then make sure that your property is fixed up to match that buyer. If, on the other hand, you’re selling a lower end property, clean the property up so that it shows well, but don’t go overboard.
At a minimum, the property should be safe to show and cleaned up. Most retail spaces should be put into a “vanilla shell” condition for showings. Office spaces should have the carpets and windows cleaned and the walls repaired. Industrial spaces should be made safe and clean throughout. Landscaping should be free of litter, pruned and spruced up.
Advertising the property
• Signs on the property – Signs should be done professionally and the contact numbers (telephone and email) should be clearly spelled out. Some of your best prospects come from sign calls, so make sure that you return all calls promptly.
• Fliers describing the property, including its features and benefits – Fliers should be printed or designed for internet marketing, and the strong selling points about the property should be emphasized.
• Local advertising – Local advertising can include newspapers and other local publications.
• Internet advertising – Internet advertising as part of the real estate marketing plan can be done through such companies as LoopNet, CoStar, Catalyst, eProperty and a host of other sites for selling commercial property.
• Mailers to potential buyers and brokers – Mailers can include fliers mailed and/or emailed to all potential buyers and brokers in the market.
You can also attend local, regional and national conventions and meetings where you will find opportunities to market your property. Another resource is broker and/or investor meetings which are held monthly in almost every local area.
While you don’t need a loan to close the property, it’s wise to have a couple of lenders review the property to give you an idea of lending programs that might be available for potential purchasers so you can refer them and possibly close the sale faster. Prequalifying the property is always a good idea as part of the real estate marketing plan.
Put all of the information together that will be needed for the buyer’s due diligence. Having this ready to go once you have signed the purchase contract can save you time in getting the property closed and keep things running smoothly.
Have a system in place so you can pre-qualify the buyer prior to getting into contract. Understand their motivations, their ability to finance the property, and their history of closings.
Doing the above items should help you to maximize your sales price and to have a smooth closing.
As I say throughout my blogs, if I may be of assistance with your real estate questions please contact me, I truly want to help. My way of giving back is to give away my knowledge. Thank you for reviewing this blog.