Congratulations, you successfully signed up a new listing, now you have to perform and sell the listing. If you are looking to perform quickly, to the best of your abilities, and acting in the best interest of your client you should be open to cooperating with other brokers. This can have some drawbacks, as brokers have overlapping clients, but overall the more people working on a listing the greater the chances the deal turns into a transaction and closes. Also, half of a commission is better than no commission. In today’s market buyers are coming from all over the place, not just other states but outside the country as well. In order to reach more buyers and increase leverage as a seller’s agent you have to reach a large audience and create buyer demand.
Here are our Top 10 Suggestions for Selling Commercial Real Estate:
- Understand the seller’s position- Often times seller’s agents are so excited to sign the listing and start marketing the property, they fail to fully understand what is motivating the seller. Is the seller just feeling out the market and letting you run around like a chicken with your head cut off, or are they committed to selling the asset at a reasonable price? Understanding the seller’s motivation will allow you to better understand what will drive a deal while, working in your client’s best interest. This can also lead to you realizing you don’t have a “real seller” and it may be best to decline taking the listing. Once you have worked with a few unrealistic sellers, the warning signs become a lot more recognizable.
- Understand the listing- Read the leases, spend time learning the comps (rent comps and sales comps). Is your the listing’s leases above or below market? Be able to describe the tenants’ businesses and have an idea of their level of credit (are they Credit tenant, boarding chapter 11, rapidly expanding across the US, etc.). Know the condition of the asset, recent capital improvements, and/or investments into to the asset. Interested buyers will have questions on your listing. If you are well prepared and able to answer questions quickly and honestly you will score credibility points with buyers and/or their agent(s). If you are simply forwarding the seller’s summary on their listing and don’t do any work on the listing it will become apparent to potential buyers and/or buy-side brokers that you don’t care enough to do your own homework on your listing. This can turn people away from the listing and from working with you in the future.
- Quality pictures- Take the time to compile quality photos of the exterior and interior of the asset. At LDCRE we receive 2,000+ new commercial real estate listings every day. We see a lot of listings and a lot of images, some are great and some are so bad, you think the broker must be doing it as as a joke. The main image has to invite the person to “swipe right” and entice them to want to learn more about the offering. If you are skipping the image, or putting up a crummy image just to check the box of having an image you are drastically decreasing your buyer pool right from the start. Stealing images from other listing platforms will result in having your listing blocked and possibly you blocked from using LDCRE and other listing platforms. This can bring legal and financial penalties for the agent, their firm, etc.
- Full description of the offering- When you place your listing into a listing platform, or even on your own website it is important to have a full listing description with “Key Words” in the body of the listing offering. You may have a write-up on the offering in an attached offering memorandum, or executive summary and feel this is redundant, but it is not. The reason for adding a description into the body of a listing platform, or on your own site is this increases the likelihood your listing (the website page it is hosted on) will be indexed by search engines making it more accessible to persons performing a searches on said listing platform and across search engines (Google, Yahoo, Bing). This is more relevant for listing platforms that are open network, meaning listings on the site can be searched for free and are not behind a paid wall (meaning persons have to pay to search listings, thus blocking the listings from search engines). By adding in a full description of your listing into the listing overview you increase your listing’s Search Engine Optimization (SEO). Which is another way of saying you are increasing the listing’s “findability” by persons performing searches within a CRE listing platform, or on third party search platforms. For instance if you are marketing a single tenant net lease asset for sale- in the offering overview it is valuable to write a full description on the property, tenant, lease highlights, the market, and use keywords like “STNL for Sale” or “NNN for Sale.” When potential buyers type in “STNL for Sale” or “NNN for Sale” in Google your chances of coming up in those search results drastically increase.
- Financing- Reach out to Commercial Real Estate Finance Brokers to understand what type of senior debt is available for you listing. What are soft quotes for leverage and rate for these debt options? Is there non-recourse debt available? Having debt solutions lined up for your listing can be enticing to buyers and save due diligence time. A big portion of Due Diligence is working through financing solutions. If the debt quotes are not attractive (low leverage, high cost of capital, few interested lenders) sharing this with your seller should shine light on the market value of their property, if the seller’s opinion of value is above market. Majority of buyers use debt to acquire assets, and their investments need to produce a minimum yield in order for the investment to make sense. If the debt options are low leverage and/or high cost of debt your buyer pool will thin out.
- Identify likely buyers- Create a short list of potential buyers for your listing. It is a good idea to call these parties and talk through your offering, rather than only sending an email. If they are active it never hurts to ask what they are looking for and/or if they are looking to sell any assets. Often times one deal can open the door to another deal. Below are two suggestions for targeting potential buyers.
- Persons/companies who have bought similar assets in a different area, but similar size, tenants, property, price range, cap rate, etc. If you have a listing in a secondary market look for buyers/owners of similar assets in other secondary markets.
- Persons/companies who are actively buying in the area, or already own assets in the listing’s area.
- Network with other brokers- Everyone is busy, your deal will never be the most important thing on any one’s mind, but yours. Make an effort to call, and email other brokers they may have the buyer you are looking for in their back pocket. Some brokers and brokerage firms are adverse to cooperate, but it is foolish to pass up a quick nickel to chase a slow dime. This can open up other opportunities as another broker may have a property for sale that can work as your seller’s upleg (the 1031 exchange property they will purchase with the proceeds from the sale of their listing in order to defer capital gains tax).
- Syndicate your listing- The greater your market reach on your offering the better your odds in creating buyer demand. Depending on how you/your firm manage commercial real estate listings online there are a number of options for syndication. You can manage your listing information via a CRM like Apto, or Buildout which is a CRE Marketing Firm. From these firms you can syndicate your listings to CRE listing platforms (Both Apto and Buildout allow users to syndicate listings to LDCRE). LDCRE is a free commercial real estate marketplace and CRE listing distribution platform, which syndicates all CRE listings in its platform to 500 news websites allowing agents to drastically increase their local and global market reach. Agents can also enter their listings into LDCRE directly.
- Be proactive- Often listing agents expect a buyer to surface from their “new listing email blasts”, or stumble across their listing online. Increase your marketing efforts and not only will you increase your odds of closing, but you can reduce the lifespan of the deal and drum up additional business. Having a tired old listing that goes nowhere doesn’t do you, or your client any good. It pays to follow up on calls/emails. People have other things going on, and many times your new listing email, or call can be missed or ignored simply based on bad timing. Action creates action, the best way to get another new listing is calling potential buyers hearing about what they are looking for and telling them about your listings you.
- Ask your seller what their plans are with the proceeds- Are they cashing in and paying the capital gains tax? Are they buying something new, if so have they identified their upleg? If they are planning to roll their proceeds into a new acquisition, that they haven’t yet identified ask what they are looking for and represent them in identifying their upleg. While you are making calls to potential buyers to sell your client’s asset, ask these potential buyers if they have any assets they are interested in selling as your client is looking for an upleg. Showing your client you understand the bigger picture and you can provide additional value to them helps further develop the relationship.
About the author:
Brendan W. Hotchkiss is Co-Founder and CEO of Leavitt Digital (LDCRE). LDCRE is a free commercial real estate marketplace and CRE listing distribution platform. Over 5,500 commercial real estate brokerage firms market their listings via LDCRE. LDCRE powers commercial real estate listings in 500 news websites increasing listings agents’ local and global market reach. Brendan has been in commercial real estate for 17 years. To learn more about Brendan and/or connect: Brendan’s LinkedIn Page, or email him at: bhotchkiss@LDCRE.com.