Maximizing Your Commercial Property’s Sell Potential
Determining what is unique about your commercial property and advertising those factors to potential buyers is the best way to maximize not only your profit margins but to encourage buyers to buy your property quickly. This advice works for both individual sellers and commercial real estate brokers alike.
The longer a property sits on the market, the better its chance of selling goes down. Effective marketing practices not only get your property in front of the right potential buyers but it gives them reasons why they should purchase your property over a different location. The key factors that buyers look at are price (of course), location, zoning, visibility, existing site improvements, average daily traffic count (ADTC), site access, environmental issues and at any existing or planned surrounding commerce.
To encourage your commercial buyers to get out their checkbooks, get your real estate broker to do the homework or you do it yourself before placing the property on the market. Many of these factors you can supply the answers upfront to potential buyers, saving them the time and effort of having to do it themselves. This also allows you to price the property competitively from the start (often a good idea, instead of dropping it during negotiations).
Key Considered Commercial Property Factors
Look at each factor closely and make sure you include the answers for all in your property details. It is all about making things convenient for your potential buyers.
· Location and Visibility. One of the main fundamental considerations (followed by price) for purchasing a commercial property is the location. Location includes more than the basics of city, state or country. It also includes traffic arteries, surrounding commerce and future area development plans that could impact the business. Always include site maps and aerial photos showing the location and surrounding areas (Google Earth is a great tool here). Find out if the local government is offering any incentives for companies to more into the area such as tax rebates; can make it much easier to get asking price.
· Existing Site Improvements. Sometimes existing structures, especially those in deteriorating condition actually hinder both the property value and the potential sale. The buyer will need to consider if the existing structures are something he or she wants to deal with or if they will have to be removed. If the structures are something that needs removing, consider incorporating this cost factor into your initial asking price instead of using it as a bargaining chip for a deduction. Your potential buyer will gain respect for you and be more willing to purchase when he or she does not have to absorb the costs (all or in part) of removal.
· Average Daily Traffic Count. Supply these upfront, they are a great selling point. These are especially helpful when trying to attract a national or global entity such as a gas station, hotel, chain restaurant or business that relies on volume.
· Site Access. Access is the legal right of ways onto the property. There are two kinds of access: the first is full-access and the second is “right in, right out” access. Full-access means that traffic can access the property from both directions while “right in, right out” means traffic can only come and go from one side of the road. Your buyer may be interested in knowing if “right in, right out” can be changed or if either choice will require turning lanes, traffic signals or more. Contact your local municipality to find out the answers to these questions and have them ready.
· Utilities. If the property already does not have utilities, consider adding them before marketing the property. This increases the value substantially because the buyer will not have to deal with getting the permits and having utilities installed and gives you more advantage of getting your asking price. Try to make sure the utilities use modern infrastructure, which is another big selling point instead of well and septic system (unavoidable in some locations).
· Environmental Issues. Pay to get an environmental assessment done before marketing the property. Whether you know of the issue or not, you can be held liable if one is detected after the sell. Protect yourself by finding out ahead of time. Any known issues do not necessarily make the property undesirable but the cost of cleanup can make or break a deal. Consider including some or all of the cleanup costs in the asking price.
· Surrounding Commerce. Any one moving a business into a location is going to want to know what is currently going on or future plans to assess what the competition is or going to be. It also helps with having an understanding of the local community, to help judge how the new business will be received. Include the details with your market listing.
· Price. Price will always be an important factor for selling any property. By researching the other key factors, you can set a fair price right from the start which is more likely to entice buyers right from the start instead of starting high and reducing at a later date.
A competent commercial real estate broker will use all of these important aspects about your property as part of their marketing campaign. The best way to sell any property is to have all the data available and use it to your advantage. It’s better to give the potential buyers as much information upfront, rather than have it come as a surprise later on and ruin a deal. Everyone loves easy, especially commercial real estate property buyers, so make things easy by providing them with the best data and details for helping them make a sound decision.
Guest post contributed by Steve Shanahan who is the Executive Managing Director at Real Capital Markets, a company that provides cost-effective solutions for Commercial Real Estate Sales, bank REO, non-performing/performing note sales and more.