It’s my theory that most of the misconceptions surrounding the process of selling a commercial property are rooted in the over-generalization that selling a commercial property is like selling a house.
Most people have sold a house before. The process probably seemed simple enough. It probably hurt to pay the commission. Now you’re ready to sell yourr commercial property and your confident you know enough to get it done. The goal is to save yourselves some transaction fees…most notably the brokerage commission.
So lets work through the reasons why selling a commercial property “for sale by owner” is a terrible idea. Where appropriate, we’ll also contrast the process with that of selling a house.
You Don’t Know Much (you also don’t know that you don’t know much)
Selling a commercial property without a professional broker is a lot like handling your own legal matters. You know enough to be dangerous but you don’t know what you don’t know.
What you don’t know can absolutely hurt you in the commercial real estate business. It happens often – you just don’t hear about it. There are easily a 100 ways to screw a deal up. Negotiating a credit following the inspection, what to do when the buyer can’t get financing, the importance or unimportance of earnest money and how to handle the tsunami of anxiety that’s experienced in the days leading up to the closing – are just a few simple examples.
You can have the internet if you want. Feel emboldened if you choose. But the moment you realize someone like me is on the other side of the negotiating table – it’s going to become clear that you’re at a significant disadvantage.
Assume you’ll be at a disadvantage and have your own “super team” ready to fight for you.
You must consider the time, energy and endless follow-up necessary to sell a commercial property. Every commercial property sale is hard. It really is. Everyone is trying to buy back their time right now. Outsource to a professional and do whatever it is that you do.
Whether you like it or not, people judge you the moment they meet you. The way you present yourself matters. The same goes for your property. You only get one chance to make a first impression. Don’t screw it up in a silly attempt to save a few pennies.
For brevity’s sake, we’ll present just two technologies that I’m guessing you don’t know are important.
Buyers love 3D Virtual Tours. The average person is busier than ever before. As a buyer, how great would it be to tour the property without the two hour commute or full day wasted flying? Answer: It would be glorious. Serious buyers want to tour virtually first. Then once they’ve confirmed their interest – they’ll tour in person. This technology is impressive. We shoot all our own virtual tours with our own equipment.
Drone aerial video is also a big deal. High definition aerial video allows a buyer to get perspective on the surrounding area. They can quickly and easily understand how the property location lays out with major landmarks, roads, etc. We think the view from above significantly speeds up the due diligence process for the buyer. Buyers want them so we provide them. To sell for the absolute highest price the market will pay you must give buyers the tools they want.
This is a huge topic but let’s keep it short and interesting. How are you going to get a likely buyer’s attention in the most distracted era in human history?
Did you say put a yard sign out front? I hope not because the universe probably just zapped you with a lightening bolt for being ridiculous.
You must first know who your likely buyers are. That means understanding the highest and best use for the property given current market conditions and knowing the availability of financing, primarily.
Then you must have access to the likely buyers contact data. What are their names, addresses, phone numbers, email addresses?
Then you must cut through all the noise of everyday life. How will you get their attention? Calls, emails, social media, text, direct mail? How are you going to efficiently reach hundreds of likely buyers directly?
If your plan is to put up a sign and post an ad online – you have a rough road ahead.
I’m a professional negotiator. Are you? What if the buyer is?
Most sellers think the march towards closing day is a very stressful experience. If you’re feeling stress you aren’t going to negotiate the best deal for yourself.
We’re battle tested. We’ve seen it all before. We don’t feel stress. We know which levers we can pull at every stage if needed. We know where your exposures are. We’re always 3 moves ahead of the novice.
Most buyers consider inspections to be an opportunity to renegotiate the deal. Probably because of the obnoxious and unnecessary repair requests they’ve received when selling their own home.
The key here is setting expectations before the inspection even occurs. This is usually done at the time of offer acceptance. This is nuanced but crucial.
Never in history has a buyer ordered an inspection and the inspector found nothing. Inspectors must find something to justify their fee. Don’t “hope” for a positive inspection result. Understand reality and handle it before the results are even in.
Legally binding paperwork, contingency deadlines and lawsuit avoidance. Which part are you qualified for?
We live in the most litigious country in the world – by far. Cover your ____.
A deal is not done until it’s done (thank you Sam Zell for that one). Done means closed. The key here is understanding the process and where the pitfalls lie. Deal with issues before they happen. Be proactive, not reactive. You can’t do that if you’re learning as you go.
No One is Protecting You
In the commercial real estate business we don’t have many rules to play by. In contrast, the residential real estate business has all kinds of rules that are set at the state level. The reason for this is homeowners are not considered professionals. Therefore, they need protected. In the commercial real estate world you’re considered a professional that can protect yourself.
Accept responsibility for protecting yourself – and then put your super team together so you can win.
How Buyers See You
There is a reason that sophisticated buyers are always on the lookout for “off-market” deals without a broker involved. Those sellers are easy prey. Buyers will pick away at you over and over until they feel like there is no more meat left on the bone. Then they’ll close and you’ll agree just to stop the misery.
This isn’t a touchy feely residential transaction. No fresh baked cookies required. This is the big leagues. There are real financial, legal and quality of life consequences at stake.
In exchange for (potentially) saving on a relatively small transaction fee – you’ll usually be putting yourself in a position to make uninformed decisions and costly mistakes. Your time will be wasted. You won’t be giving buyers the tools they want. You won’t have a great first impression. Most likely buyers will never be aware of your property. The deal is less likely to close. The sale price will likely be lower. The whole process will be unnecessarily stressful.
Sometimes saving a few pennies just costs too much.
Thinking of buying or selling Commercial Property in Florida? Visit PinellasCommercialProperties.com or fill in the contact form on this page and we will contact you quickly.