How to Prepare Your Property for Sell
December 26th, 2013 by Alisa Sava
Selling commercial property is a longstanding process which requires patience and clear understanding of the main selling techniques. Here, we endeavor to create a guide to help you to optimize your selling process.
The principal difference between residential and commercial property is the way they are valued. Commercial property is seen as an investment, that is why, its value depends on the income. In order to determine the home’s value it is enough to compare the prices in the neighborhood area. Moreover, selling commercial property means higher commercial appraisal expenses as well as environmental reports and more complex documentation.
Baked cookies, warm atmosphere could help to sell your private house, but these rules won’t work when you’re selling commercial property. Unlike buying a home, where emotions often play a defining role, when you purchase or lease commercial property you are not focusing so much on the building’s appearance and other aesthetic stuff.
However, there are a lot of common factors that determine the selling process for both residential and commercial property. Like a potential home buyer, a tenant for commercial real estate wants the property to be ready for purchase. Both of them are willing to buy/lease tidy and well-equipped space and have as few problems as possible during the selling process.
One of the most effective strategies in selling the property is staging. “Staging your property” means set up your home in the way that attracts potential buyers. Presenting your commercial property as an appealing building is essential. As a minimum, landscaping and cleaning should be put in “to do” list.
Try to stand in front of your property and inspect the view. What stands out for you will stand out for the potential tenants as well. Thus, be impartial and check the following things before put your property up for sale:
- Building Exterior
Create an outdoor appeal before selling. Organize a powerful cleaning service to refresh the building’s look, make sure that there is no any graffiti or other inappropriate signs on the building. It could be also a good idea to make photos of your property. When you remove the color from the photos and look in black and white it will be easier to see the problems.
- Parking Facilities
Parking area should be clean and good-looking. If the parking lines are hardly seen, consider repainting them. If the parking area itself has some defects, have it resealed. Make it spacious and convenient for usage.
- Windows and Roof
Remember to clean the widows and replace broken glass if needed. The overall condition of property depends on the roof. So, if the roof needs some repairing services, hire the crew that will help you to replace or renovate it. Try to have this work done before selling the property.
- Landscape Design
Be sure that the bushes are well trimmed and the grass is fresh and neat. If the landscaping is poor it is better to invest some money into the new landscape design. These measures will raise the property price and make the building more appealing for the future buyers.
In order to sell commercial real estate successfully you should have a good knowledge of market, good planning and time management skills, a highly-qualified commercial real estate agent, a lawyer and, of course, a little bit of luck.
More often commercial property is leased or rented to a third party and is rarely purchased by big corporations or your partners. These difficulties as well as high prices policy for commercial real estate makes the selling process more challenging and complicated. Here are some basic steps you should start with before selling:
Gather all Necessary Documents
You should have all the documents and permissions ready before starting the selling process. A full set of documents made in advance will show the buyers that you are serious and responsible. Usually, the following list of documents is needed:
- Rent roll
- Copies of leases
- Previous appraisals
- Environmental reports
- Copy of mortgage information
- Permits for any work done during your ownership
- Copies of taxes and utility bills
In some cases this list can be expanded, but even this minimal documentation will give the tenants a chance to receive a mortgage approval faster as well as give them confidence.
Identify Your Potential Buyer
As selling anything is always about fitting supply and demand, first thing you should do is to identify people or businesses that would be interested in buying your property.
Study the commercial property you are going to sell. It may be an office building, a shop or a piece of land. Make a pros list for your potential buyers. Create a brochure listing all the details about the property, its amenities, footage as well as some recognizable landmarks situated in this area.
The location of your property will help you to identify the business niche that could have advantage of such commercial property. For example, if you are selling a space for shop in the city-center, you could make inquiries to know whether any fast-food company needs a space for rent in this area.
Setting the Right Price
You have to research the real estate prices in the area to determine the adequate price for your property. Learn all the necessary information about the real estate appraisal process. Appraisals on commercial property are more complicated than on the residential ones.
It is good to have a clear idea about the price before you start negotiating with potential buyers. Decide on what your starting selling price is going to be and how much are you able to climb it down if the buyer take a tough stance.
We advise you to list your commercial property for sale when the market is active. If you sell it during financial uprise you will receive much more profit than if you start selling during financial lull.
Advertising Is Crucial
Advertising is an irreplaceable tool to make people familiar with the product you are selling. You can place your advertisements both in local newspapers and Internet. Business magazines are fertile ground for potential buyers.
Your advertising text should include all the vital details about the property indicating its location. Include a catchy title. Let your advertisement be noticeable, appealing and influential. It is a good idea to put you ads at the real estate websites that have a national or regional exposure. Don’t forget to advertise your property through Facebook and other social networks.
Publicizing through sales billboards is another great option which can help you to find more tenants. If you want you can also create brochures to be mailed to prospective businessman and other people and companies that may be interested in buying your property.
All above-mentioned advertising techniques are more effective if using them all together. So, if the financial conditions allow you to spend more money on ads, have no doubt doing this.
It is all About Relationships
The relationships are equally important for both residential and commercial real estate. The relationships you build with your potential tenants will definitely determine the selling success. Expand the list of your contacts and try to create trustworthy and mutually profitable relations. Facebook, LinkedIn and other social networks could help you with it.
Hire a Commercial Real Estate Agent to Assist You
You don’t have to sell your property without help. But choose carefully. Make sure that you have interviewed at least three agents in your area in order to realize that you are hiring a person who perfectly knows how to do selling. Research the agent’s profile before handing over your property to that person. Some agents will sell your property for less that it is really worth to get their commissions faster, while others are doing their job fairly. So, be sure to find the latter one.
Prevent the Lowball Offer on Your Commercial Property
Selling property is an emotional process. In case you receive the lowball offer, try not to take it personally. Be a professional; discuss this issue with the potential buyer or your agent.
“Lowball offers for property are not uncommon in current soft market and hard for vendors to swallow.”
There is nothing you can do to prevent yourself from the lowball offer, but still there are few things you can do to protect yourself:
- Set the adequate price: overpricing on the first stage of selling process could count against you
- Find the right real estate person and make sure that he/she has a good reputation and will fairly act in your interests
- Try to hide that you too eager to sell your property: do not be hurry and avoid showing the true nature of your complicated circumstances
Thus, selling commercial property is a complex process, but the one that can end with a very good payoff. Take time to choose which selling strategy best suits your needs and then make sure that your property is attractive both esthetically and financially.
Planning throughout all selling stages and finding the right real estate professional will maximize the property sale price and help to avoid hassles.