Selling Distressed Investment Properties: Strategies for Success
Distressed properties are sold for various reasons, occurring more frequently in a changing market. Those distressed properties are out there for you to find and work on in a property market like this.
Why is this important? They are a good source of listing activity for commercial real estate agents. When the property market is in a state of change and churn, there are many good opportunities to explore and find distressed properties that require sale or repositioning.
Understanding the reasons behind ‘distressed properties’ is essential. These reasons can be related to the property market, location, asset condition, and the owner/investor’s pressures and priorities in the property.
By asking the right questions during client contact and inspection, you can uncover the primary motivator of the sale. This knowledge will enable you to meet your clients’ needs better and achieve their ultimate targets.
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Shape the Sale
As a savvy agent, your ability to shape the sale process is crucial. Understanding the local property market and its pressure points can significantly enhance your clients’ marketing, inspections, and negotiations.
The key question with distressed properties is: how can you strategize to achieve the best possible selling outcome for your client and property listing? By basing your real estate marketing strategy on this question, you can be confident that your actions will have a substantial impact.
Selling a distressed property requires some genuine talent and knowledge from the agent. Given that the property market contains many different pressure points, client types, and economic situations, there are plenty of things for you to explore to generate listings with more local clients from the precinct and your allocated territory.
Defining Distress in Property
So, what is a distressed property, and how can you gather the facts about it? Try some of these ideas and then consider how you can sell the property in today’s market.
1. Why are distressed properties out there?
Consider why properties and property ownership situations can become distressed today. It may concern occupancy, rental returns, or property valuations. Look for the leverage points and always maintain awareness of market conditions, inquiry, and the local area supply and demand.
Locally, you can find properties, streets, and locations that would be more attractive and active from a listing sales and leasing perspective. Focus on the real estate territories and precincts where people like to transact and own property.
2. Look around for the pressure points
As you move around your property market daily, inspect other properties and locations, taking notes as you go.
Simple notes and photographs can be entered into an online notetaking system where you can investigate the property facts and ownership details later. That is where your mobile phone and a note-taking app can be valuable as a resource tool and organisation system; you can then capture the facts as you see them regarding targeted properties with some opportunity.
Every trip out of the office can be an opportunity to find other properties and listing situations. Every meeting in a new location is a reason to investigate nearby properties and buildings.
3. Clear Marketing strategies
Develop a marketing strategy that you can use with various types of properties and distressed properties. As part of that, determine what methods of sale and lease would be more successful in today’s property market to get a timely result at a better price. When you take a property to the market, it is good to know that you are using the best method of sale for the target market and the location.
Some methods of sale will be more effective than others, so your marketing strategy needs to incorporate that basic premise and strategic approach. What is the best method of sale for your location and preferred property types?
4. The Buyers are out there
The buyers of distressed properties are always in the market, and you can capture their details from a cold-calling programme that you initiate as part of your daily prospecting.
By talking to other people, you will always find buyers prepared to purchase distressed properties that they perceive will have an upside through a strategic change or improvement strategy.
Create a segment of buyers in your real estate database specifically for those who can purchase distressed properties and are looking for change or growth with their investment outcomes.
5. Reasons for sale
Some property sellers are reluctant to release their property for sale until the market pressures become too great or the market circumstances change. Sellers cannot change the property market, but you can help them deal with a target marketing campaign and solutions to release any pressures they may be feeling about property ownership.
Commercial real estate investment is commonly a cycle of sale and purchase. Every property investor will participate in that cycle differently, given their levels of liquidity, portfolio diversification, and cash flow requirements. As you get to know plenty of property investors, you will find the people needing a change, sale, or purchase strategy.
6. The pressure points to look for
As a special note, distressed properties commonly have specific pressure points, legal situations, and unstable cash flows. Therefore, listing any distressed property should involve extensive due diligence on the agent’s part.
Look for the problems and the threats to property ownership, income, and legal title. Assess all the lease documents for stability and effectiveness. Always look for the pressures and the changes that could threaten the sales situation later.
Experienced agents in the sale of any distressed property will thoroughly check all the facts and title details to ensure that the information they are given and find is correct.
Focus on the people first
These strategies can help you find and work with distressed commercial investment properties.
Talking to many people daily will always lead to real estate situations where you can help people, be they buyers or sellers. We cannot change the property market, but we can change how we help the buying and selling process.
