Discomfort Points in Selling Commercial Property Today
In today’s commercial property market, the sale of commercial property can be a challenge. The availability of money from the lending institutions, and the price expectations of existing property owners can restrict the marketing and sale of commercial property. Let’s face it, the property market has changed and commercial property owners should know that buyers are more selective in what they will pay for a property today.
Make no mistake, in most locations the prices of properties have fallen to more sensible levels based on passing income from the leases and the tenants in occupancy. Properties still sell in this market but the real estate agent on behalf of the property owner needs to take specific steps to achieve a satisfactory marketing campaign and generate suitable buyer interest.
The pain points in selling commercial property in most locations currently are as follows:
- Competing against other properties in the local area of similar type and possibly lesser price
- Generating sufficient enquiry from available buyer interest
- Finding a buyer who can purchase a property within the nominated price range
- Finding a buyer who can qualify for property finance if required
- Getting the property valuation to align with the price that is paid for the property
In dealing with these particular factors as a real estate agent, the following strategies can apply.
Identify all the other properties in the local area that directly compete with the subject property. Further to that and in each case, get details of prices, leases, improvements, and time on market. These elements will have impact on the competitive price factor against your property. Essentially your property has to be of better value across the board to the purchaser; the marketing campaign should be based around that.
In today’s property market, generating sufficient enquiry from limited buyer interest can be real challenge. To work with this, it pays to understand the points of difference that the property can provide to the purchaser and achieve a competitive edge with. That should normally be based around the location of the property, the quality of the improvements, the tenant profile, the stability of the cash flow, and the potential for a new property development and or a change of use.
There is no doubt that the higher the price range of the potential property sale will limit the number of enquiries that you can get. The more expensive the expected value of the property, the more restrictive the buyer enquiry. In many locations, there is still reasonable property enquiry up to about two million dollars from property investors. Above that point, there are limited available funds for lending, and the banks are very selective on the type of property that qualifies for a loan.
That being said, there are still property investors out there who have cash capability and are looking for excellent property investments. The trick is to market to these purchasers in the appropriate way. That is where the real estate agent brings high value to the property owner through a dedicated and directed property advertising and marketing campaign; the established database of the real estate agent can also significantly short circuit the time on market and the potential marketing costs.
The experienced real estate agent today should have a qualified and up to date list of active purchasers and high wealth individuals interested in commercial property at this time. Vendors should question this before listing a property with the relative agent.
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