When it comes to you as an agent marketing and selling commercial real estate, it is wise to condition your clients at the very start for the issues and challenges that will arise. One of those conditioning processes is with the price for the property; tell them to expect low offers initially as part of the inspection and marketing processes.
The fact of the matter is that most buyers will ‘try on’ the property owner to see how firm the price is and to gauge what movement or price reduction can be obtained. It is a fact of negotiation when it comes to selling any parcel of real estate. The client likes to start ‘high’ on their price and the buyers want to start ‘low’ on any offer made.
Here are some rules to help the negotiation and offer process:
- The client’s price should be within ‘the realms of reality’ when it comes to the prevailing market conditions. If the price is too high then you will not get any offers coming in. The buyers that may have an interest will just stay away.
- If the client wants too much money for the property then use a process of sale ‘without a price’. The market can then dictate the offers coming in, and you will have to negotiate using market evidence.
- Remove emotions from the negotiation and use logic as a base for bringing the parties through the offer and acceptance negotiation.
- Support the offer and acceptance process with a valid and valuable monetary deposit. A low deposit will do nothing to protect your client in the case of buyer default.
- Remember who your client is in the offer and acceptance process. Whilst you may eagerly want a contract for the property, the client will have instructions and concerns that you will need to address and negotiate through.
- Any offer should be in writing no matter how low the figure of offer is when compared to the asking price. It will help the client see reality of the property market conditions.
- Wherever possible present offers to the client personally. You can then discuss the situation and see how the client responds.
- A low offer will still give you the chance to lower the asking price for a counter offer situation. You then have something to work with in bringing the parties together to a final contract.
- Ensure that the parties are legally identified on the contract and committed to the offer. This means that the offer process should be correct in every respect with the property laws that exist in your location and property market. When in any doubt see a property solicitor.
- A ‘heads of agreement’ between the parties is not usually binding. On that basis you must move the seller and buyer in any property sale to a final and valid contract as efficiently as possible.
- Make sure that all the correct and comprehensive facts of the property have been conveyed between the parties as part of the negotiation and contract process. You don’t want some undisclosed fact to derail your contract prior to settlement.
Accuracy in documentation will help you keep your contracts together in selling any parcel of commercial real estate. If you are in doubt on any point of property detail or contract, do not ‘go to paper’ on the offer until all facts have been investigated and explored.