The pressures of the property market will always flow into commercial real estate transactions. Sales, leasing, and property management transactions are all impacted by prevailing market pressures and conditions. (NB – you can get our commercial real estate course on marketing and client connections right here)
So you are the agent or broker looking to convert the business, listings, and commissions. You have to be ‘street smart’ for the known and unknown factors of the property and the client in your location. Look at the strengths and weaknesses in each case and develop your ideas and recommendations based on facts.
Get ‘Tuned’ into the Local Property Market
Here are some ideas to help you become more attuned to the property transaction and the factors of the deal:
- Competing buildings – always understand the competing sales and leasing listings for the location. There will be other prices and rents that the tenants and buyers will look into. You have to be across those numbers. You have to be prepared for a response when the tenants or buyers use another property as leverage in any negotiation.
- Adjoining properties and owners – talk to the adjoining property owners and business proprietors as part of any listing activity and or marketing campaign. You will get plenty of ‘free local facts’ as part of that process. You will learn what people are seeing locally and saying about the properties that could be coming up for sale or lease.
- Time on market – during the year, time on market for any sale or lease will change based on the business ‘seasons’ and the prevailing supply and demand. Understand what you have to work with and then shorten the potential marketing time with exclusivity and vendor paid marketing. Get involved with your listings to move them faster than those controlled by the competing agents or brokers locally.
- Client conditioning – many clients have to be ‘conditioned’ to the existing market conditions. You will need evidence from recent sales, leasing, and negotiations to help any client see what they have to adjust to and why that is the case. Use 3rd party evidence for your client recommendations. It is hard for any client to refute real and accurate market facts.
- Inspection skills – establish the process of inspection that you want to apply to the property listing and or the client’s asset. Understand exactly how you can show the property in the most positive way. Tell the client your reasons for the inspection process and how your strategy is important to the sale and or leasing process. Get them to agree to what you are saying and endorse your ideas.
- Property improvements – some improvements in a property are critical to the target market. You should do that assessment before you take the listing to the market. Build your marketing efforts around the critical improvements that are of the most interest to the buyers and tenants you are targeting. List the important improvements in your brochure and in your advertising.
- Small closes – every property transaction is usually a reflection of a number of small closes or negotiations. Understand the priorities of the tenant or buyer and use the ‘small close’ strategy to move them to a final and significant decision.
- Hammering out differences – there will be points of difference between the parties, so prepare for them. In the first instance look at the parties to the transaction, and review their alternatives if a deal is to fail. What do they want to achieve, and what would happen if they failed? You can move through the transaction ‘hurdles’ when you look at the bigger picture for how people will ‘need’ to get an outcome.
- Reaching an agreement – every property transaction needs accurate documentation to hold it together to the very end. The strength of your lease or sale rests on the documents to be created. Your commission also sits in the accuracy of the documentation. If you don’t know how to correctly and legally put a property transaction together on paper, then ask before the transaction reaches finality.
So there are plenty of good things to do here with improving negotiations and deal momentum in commercial real estate.
Perhaps you can add to this list by including the issues and hurdles that are property specific in your area, your town or city. Either way, take the time to prepare yourself as a broker or agent for ‘street smart’ negotiations. Control the momentum of the transaction to the very end. ‘Luck’ has nothing to do with your property career; practice your skills in negotiation to ensure full control of the sale or lease to the very end.