Why isn't your Commercial Property Selling and What do You Do Now?
Did you know there are basically 2 reasons why a property doesn’t sell? The first is that the property in question hasn't been priced correctly, the second is that your broker may not be doing their job. In this post, I'm going to discuss these two possibilities and give you some questions you should ask to determine if you're being properly represented. While my goal isn't to unfairly point fingers, I want to present you with the information you need to take the next steps. So, let's dig in and discuss each of these factors in turn.
Reason 1: The Property Isn't Priced Correctly
The pricing of your property is by far the most important task to be undertaken at the beginning of your relationship with your broker. Discussions about the price of your property need to be undertaken with all of the factors that affect it's value clearly in mind.
After all, if the recommended list price is too low, you'll end up leaving money on the table. It's your agent's job to ensure this doesn't happen. Conversely, if the price of the property is set too high the property won't get sold.
When I begin my work bringing a property to market I invest thousands of dollars worth of time and services into ensuring we list the property at the correct price.
During this process, I forensically create a sales grade which isolates the 5 metrics associated with creating real estate value. I compare these metrics for the property in question to a) all properties that have sold within the last 6 months - 1 year, and b) to all properties that are currently under contract and are actively being marketed in the surrounding area.
The Metrics that Create Value for Your Commercial Property
The metrics that create value, and that I take into account are as follows;
- Price per Unit (Residential)
- Price per Square Foot
- Capitalization Rate
- Gross Rent Multiplier (Residential)
- Return on Investment
- Other allowances are made for age, condition, and location.
- Rent surveys - these are completed to determine if the subject property's
rents are at above or below market value thus providing the necessary
blueprint for the disposition of the asset.
By utilizing a data-driven approach and carefully looking into these metrics for each and every property I bring to market, I'm able to hit on the RIGHT price for the property in question. I invest the time to do highly-detailed research first so I save my client time and worry. In the end, I'm able to bring a property to market that is BOTH appropriately and competitively priced.
Sum Up: Make sure your agent is taking the time to research the data before pricing your property.
Reason 2: Your Broker Just Isn't Doing Their Job
You want to make sure that your investment is receiving the care and attention that it needs. So when evaluating whether your broker has been working hard to represent your investment, you should ask the following questions.
Question 1: Is the marketing information for your property being presented in a manner which:
- adds credibility,
- provides complete and factual information,
- utilizes third-party evidence,
- allows a potential buyer to make an educated decision
A qualified buyer for your commercial property is likely going to be a savvy investor. They'll look deeply at all the details of your property. If something is unclear or nor being presented correctly, it could scare them away from your property. Remember what kind of information YOU would want before purchasing a property and ensure that your agent provides that same information for your investment property.
Sum Up: Make sure your broker is offering the buyer all the information they need to make a good decision.
Question 2: Is the property receiving ample market exposure? The property should be placed in the following locations to start:
- The MLS,
- The broker's website,
- CREXi and various other platforms
This list is just the beginning, as your agent should be marketing your property as widely as they can in order to attract offers. At my firm, Media Realty, our listings are disseminated through our online partnerships. This means that each listing is publicized to more than 50 cooperating websites. This way, we provide unparalleled exposure for the properties we bring to market.
As a part of answering this question, you should check that your broker is marketing your property to an appropriate audience of potential buyers. After all, the commercial property market is unique. For each property that my firm represents, its offering memorandum will be placed before a database of over 15,000 investors. These are QUALIFIED buyers who are ready and willing to make a purchase.
Sum Up: Ask where your property is being marketed. It should be offered widely, but also to the RIGHT audience of potential buyers.
Question 3: Is your agent providing follow-up and routine status reports? Can they meet the challenges that may arise before closing?
Many challenges could arise between the point of listing your property and the point in which the property closes with a qualified buyer. Your agent should be able to solve problems, represent your interests, and allow you to choose your course of action at every step of the way.
Not every agent has the necessary experience and training to provide you with appropriate guidance and updates in the process of the sale. When this happens, you'll end up with "surprises" or "problems" that should have been anticipated. This makes for a stressful, nail-biting sales experience. It simply shouldn't be that way.
In my 25 years as an owner/broker for Media Realty and as a property owner, I've seen it all! Not only do I have experience navigating the waters of commercial sales, but I've also acquired training as a licensed real estate appraiser. With this combined experience and training, I can typically anticipate problems before they occur. This allows clients of Media Realty (by firm) to pause reflect before meeting challenges. They can address problems in the most meaningful way without unnecessary stress or worry.
Sum Up: Make sure your broker can meet unexpected challenges and is committed to keeping you informed at each step of the way.
No Need to Feel Stuck - Let Me Help
Please note that within my network I have more than a few investors who are looking to purchase in your area.
I hope that this blog post has allowed you to feel confident to take next steps for your listing. If you're in the Miami-Dade County, Broward County, or Palm Beach areas of South Florida, I'd love to help out. With my firm Media Realty, there are never gimmicks, catches or strings attached. Every day I'm helping my sellers achieve their goals. I'd love to see how I can help you.
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Call me today for a no obligation expired listing consultation. I'd be happy to discuss your situation and help you reach your goals.