Selling a commercial property might be completely new to you.
“There’s no standardization of anything the way there is in MLS,” reports Lynn Drake, president of Compass Commercial LLC in Troy, Mich. “In commercial, buyer and seller beware.”
She cites a broker, awaiting two offers from prospects, who refused to show an active commercial listing with no pending offer.
“So we submitted an offer without a showing,” Drake said. “He didn’t submit the offer to the seller. In residential, the agent could have lost his license.”
You’ll find other significant differences. Will Curtis, Realtor at Nankani Management LLC in San Antonio, points to a different mind set in the investor buyer pool. “They’re looking at cap rates,” he said. “They’re much more numbers-based.”
Expect a longer selling time, too. Commercial pricing in Drake’s market varies from a set fee to as high as 10 percent. The strictness on Anti-Trust Compliance in Texas keeps Curtis from quoting a percentage, but he said residential and commercial fees are similar.
Drake and Curtis stress the importance of having your building available during the day.
SEARCHING AND QUALIFYING
If your building is worth more than $200,000, Drake said comb your network in search of “a team, a senior with five to 10 years and a junior person, who sells the building.”
No network? Build one quickly. Contact the National Association of Realtors, real estate attorneys, insurance agents, bank officers and certified public accountants. Comb friends and colleagues who may be members of business groups. Check listings in your area. If not many are commercial, contact residential agents for referrals. Listen for the same name two or three times.
Curtis suggested exploring big-box residential firms with commercial departments where agents may specialize in commercial or handle residential, too. He advised looking for two or three transactions per year in your specific area. Drake says multiple factors — “size of the deal, number of team members, experience of the agent, plus the market they work in — influence the number of transactions a year.” Beware of bulldozing price-droppers.
Drake cautioned against agents covering residential and commercial who might lack training. She and Curtis agree that one of three designations should indicate that you’re on track: Society of Industrial and Office Realtors, Certified Commercial Investment Manager or Master of Corporate Real Estate.
Successful representation requires a well-qualified commercial agent, but don’t overlook synergy, a viable marketing strategy and the vehicles to promote.
“Will the person send out emails or fliers to prospects or to the other (commercial) brokers in the market?” asked Drake. She also asks how the building will be positioned and to which target groups. Are the marketing materials well-done? What about cold calls? Does the agent list on popular Internet sites? Monitor the listings for the agent to update, as necessary.
Dr. Mildred L. Culp of WorkWise® welcomes your questions at firstname.lastname@example.org. © 2014 Passage Media.