Terry Coyne, SIOR, CCIM, Executive Vice President, Grubb & Ellis
There are basic elements of marketing a commercial property that may make it seem simple, such as putting sign in front of the property. However, there are many dimensions to a marketing program that inexperienced sellers might not realize.
“You can’t sell real estate like somebody might sell shoes at Nordstrom,” says Terry Coyne, SIOR, CCIM, an executive vice president with Grubb & Ellis. “You can’t create demand. Either people have a need or they don’t, and if they don’t, then there’s nothing you can do about it.”
An owner can be as involved as he or she wants to be in the marketing of a property, and clearly, the more attention paid to detail the better. But by utilizing a broker, an owner will likely get more money on the sale, sell a property faster and be relieved of a lot of stress.
Smart Business spoke with Coyne about what to consider when putting a commercial property on the market.
What are the basic components of marketing a commercial property?
The aspects of marketing a commercial property include a sign in front of the property and postcard mailings that utilize a mailing list that’s well thought out. Sellers should ask their brokers how they arrive at their mailing list. Do they clean them out, use a mailing list service or are they buying a list and throwing postcards out there? Also, make sure that, as an owner, you’re on the mailing list, so every time something goes out, you’re getting a copy.
Other marketing components are print advertising, whether in newspaper or magazines, and online marketing. With a website, you’re getting immediate coverage that extends to the region and across the country. These websites might have virtual tours, one-click scheduling of site tours and an online offer option.
It’s also easy to measure traffic because you can ask a broker how many visitors his or her website gets, how long visitors are staying, where are they coming from and what are they looking at. Also ask your broker about his or her experience in getting people to follow through on their Web visits.
While it is common for people not to have building plans and site plans, it’s a critical component of marketing. When you’re looking to pay million of dollars on a property, you’d like to know the actual size of the building. A broker can get a fire exit drawing of the building, along with other measurements, and send them to a company that will then turn that into a CAD drawing in about a day and at a low cost. Typically these costs are covered by the broker.
What should sellers keep in mind when choosing a broker?
Oftentimes, people will choose a broker based on the broker’s knowledge of a specific market, but they don’t usually look at the person’s process. So before you hire someone who is the king of a small market, see if that person has a proven process. Ask a broker what steps he or she takes when selling a property. You’ll also want references and examples of similar types of properties that person has sold.
It’s critical that the broker marketing the property is there when the property is being shown because he or she might hear someone say, ‘I don’t like this building because it doesn’t have X’ when, in fact, it does. The seller has got to make sure the broker is at every showing.
What elements of a commercial property should be listed?
List as much as you can because you never know what someone is looking for. A good example is a stamping plant that was sold because it’s on bedrock. Who knew that sitting on bedrock would be a selling point? The more you know about a building and the more you can list, the better.
Another thing to consider is that a commercial building always sells better empty. Owners should do as much as they can to clean it, from getting a compressor and cleaning the ceiling to getting a floor scrubber and making the floors shine to painting the walls.
If you want to move the property up in the line of interest, the cleaner the building is, the better. However, that’s something the seller will have to pay for.
Could building owners market and sell a commercial property on their own?
They could, but it’s hard without a broker to buffer emotions. You can say things to a broker that can be then filtered in a way that is unemotional, but if you say it directly to the seller, it could blow a deal up. Brokers understand how to work their way through the emotional part of a transaction.
What are some common mistakes owners make when selling?
One is that they misprice the property. It’s hard to get good, comparable sale information on commercial property. The assets are very different, so it’s hard for someone who’s not in the industry. Go to a commercial appraiser with an MAI designation from the Appraisal Institute and pay for a formal appraisal.
Another mistake is not making it clear whether they’re willing to work with a broker. If they market it themselves and say ‘brokers protected’ or ‘brokers welcome,’ they could get brokers showing up and saying, ‘Hey, I’ve got a buyer.’ But if you’ve mispriced it and you have no clarification on brokers, then you’re wiping out a big part of your market. In the event that a broker approaches the seller with a buyer, the seller signs a commission agreement specific to that buyer.
Terry Coyne, SIOR, CCIM, is an executive vice president with Grubb & Ellis. Reach him at (216) 453-3001 or [email protected]
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