When you have met with the commercial real estate prospect you’ll have a reasonable understanding of their needs and demands. At this point you need to understand whether you really want to work for them and take on the listing.
What to Consider?
You will now need to consider the attractiveness of the property and its liquidity factor to buyers. Most particularly the liquidity factor is the ability to move the property quickly in the current market. To achieve this awareness, ask yourself the following questions –
- Are the tenants in the property attractive to an incoming purchaser?
- Are the leases in the property supportive of rental growth and opportunity?
- Are the leases in the property professionally prepared by a solicitor and registered on the title?
- Is the property located in an area where tenants want to be located?
- What do the neighbours think of the existing property?
- What rental types and levels of rental are acceptable in the market and does this property provide them?
- What comparable properties existing in the area and remain unsold or vacant?
- What is the future of the other developments in the area and is there an abundance of development land nearby which will soften the potential price you can achieve?
- What are the supply and demand factors for lettable space in the region?
- What is the history of the property and the building?
- Are there any environmental issues that can jeopardise the sale?
- Has the building been on the market before and if so for how long and at what price or method of sale?
- How would you best market the existing property given the business sentiment and environmental and economic conditions?
- What is the best time of year to sell the property?
- Are there any vacancy factors or short term leases in the property which need to be rectified before moving towards sale?
- Given the current building, what is its future life cycle and who will therefore be attracted to the building in its potential sale?
- What is the best way to sell the building in a timely fashion that will achieve the best price?
- What amount of vendor advertising will you need to impact the market?
- What is the existing time on market for current sales stock?
- Have you been able to fully inspect the property and the precinct to completely understand what you are dealing with?
- Have you identified and inspected all property documentation including leases, and titles that are relevant to the property selling?
- Are there any existing incentives with the current leases on the property which will need to be handled and extinguished as part of the sale settlement?
- What is the target market for the property?
- Do the leases for current tenants generate any weaknesses for the sale?
- Are there any encumbrances on the property or in the region that impact the property in any way?
Given all of these issues, you will be able to establish a reasonable opinion as to the saleability of the property. The most important question you then need to satisfy his whether you really want the listing. Can you see that the listing will really sell? Do not waste time on stale or unsaleable stock.
Preparing for the Listing Meeting
Assuming you have satisfied yourself that the property will likely sell and that you really want to sell the property, you will need to prepare for the next meeting with the client. The next meeting will be focusing on closure towards a signed exclusive listing appointment. Let us now look at some issues which need preparation before the second meeting with the client.
Given that the ultimate outcome you require is a signed exclusive listing, you must work backwards through the key client issues as part of your planning process. This will require you to work to a checklist and an agenda for the meeting. This checklist and agenda will be for your purpose only and to keep you on track; the best commercial salespeople know exactly what the meeting is to achieve and have a plan for the process.
What Hurdles Exist?
From the previous meeting with the client or prospect, what were the identified hurdles that are likely to need attention in the second meeting? The most common hurdles are –
- type of agency appointment
- advertising and marketing funds
- method of sale
- method of lease
- details of comparable properties
- elimination of tenancy and vacancy issues prior to sale
There may be other hurdles for you to consider so be alert to the hidden messages and focus points of the client. For the moment, let’s assume that the client’s situation is relatively standard and the items above are typical for your consideration in the second meeting. You will need to structure at least two positions of logical argument that support your strategies or decisions on the above matters. When required in your meeting with the client you will need to table and explain your logical argument.
You can now channel the focus of your presentation processes and documentation, and to do this there are three essential client criteria to be considered on your part.
These are the 4 important issues for you to get organised in your proposal.
Product Alignment – your property needs to be aligned to the current market and economic conditions. This will include a review of existing lease documentation, tenancy occupation, building presentation, rental structures, and occupancy costs such as outgoings. Any weaknesses in these matters need to be identified and rectified before moving to sale.
Pricing Strategy – it is well known and proven fact that a commercial property placed on the market at a fixed price will not attract as much interest as the same property offered for sale by auction, tender, or expressions of interest. These alternative methods of sale offer more momentum in the sale process to focus both buyers and sellers to an action plan and timely result. As a direct comparison, properties that are offered for sale at a predetermined price generally stay on the market for longer and are harder to negotiate towards sale.
Marketing Strategy – the marketing of property today is shifting heavily towards Internet based promotion. In most cases, your marketing should incorporate the following initiatives; Signboard, Internet, e-mail database, direct telephone contact, direct mail, local papers, regional papers, contact with the owners of neighbouring properties, contact with businesses in the area. The balance that you apply to these initiatives in your property marketing plan will be driven from the type of property and the market in which it’s located.
Method of Sale – the method of sale has been spoken of earlier, and most particularly the best way to sell commercial real estate is by a timely method of sale that promotes momentum and decision. In almost all cases, this will be sales campaign designed for auction, tender, or expressions of interest. It should be noted that the tender process can provide better prices given that the bidders to the process do not know who is competing for the property and at what price. The auction process is however a public event and provides a lot of emotional pressure on both the seller and the buyer to the property. You make your choice. The method of sale for the subject property is essential your choice to which you will need to structure sound and solid reasons around why the seller should accept that method of sale.
After considering all of the above matters, you will be in a better position to approach the owner of the property for the listing closure meeting and allow you to put the best case forward to list and sell the property with your agency.