How do I Sell this Property?
Selling a commercial property takes careful consideration. To sell well, you can’t rush things. You also can’t wait around forever. And you need to know a lot about your property and situation.
It can be a little intimidating, but with the right help, it doesn’t have to be. Here’s a brief overview of what you’ll need to do to sell a property well.
1. Understand What You’re Selling
To make the sale fair, both for the seller and buyer, it’s imperative that you have an accurate understanding of what you’re selling. If you don’t, you may as well set your price with a random number generator – any guess you make will be just as well-founded.
There are countless factors to understanding the value of a commercial property (location, square footage, neighborhood, amenities, and the list goes on and on). But one essential factor that’s perhaps less obvious than others is the property’s state of occupancy.
An unoccupied commercial building is generally a lower value, but it’s ideal for move-in should the buyer be looking to occupy the space themselves.
A building that’s about 80% or less occupied is considered a value-add; the price point is often lower than it would be if the property were fully occupied, but a buyer can supplement tenancy after purchase.
A building that’s fully leased is typically at its most valuable as long as the rents being paid are at or close to market rates.
That’s only one factor, of course. Realistically, to fully understand the value of a property, it’s best to get market statistics from somebody you trust. Doing that will help you to set a fair anchor point for value.
2. Make It the Best Version of Itself
Once you have an understanding of the property’s value, it’s time to make the property the best version of itself so that you can generate the best possible return on investment. A few ways to do that:
Ensure Tenants Are Happy
Potential buyers are likely going to walk through the property and speak with tenants. If tenants aren’t happy, that’s bad news; the potential buyer might perceive them as more likely to leave, and negativity could seep into the sales process. If the tenants are happy, that’s good news, they will be more inclined to speak well of the building, which cannot hurt the sales process.
So, do what you can to ensure tenant happiness. That may mean making a minor upgrade a tenant’s been asking for. It may mean simply checking in. It may mean sending somebody an edible arrangement – who knows?
But the bottom line is that ensuring tenant happiness is a good way to put a property’s best foot forward.
Enhance Curb Appeal
Another way to contribute toward your property’s value is through enhancing curb appeal. Curb appeal is a reference to exterior aesthetics – so, components like outdoor signage, landscaping, and the building’s parking lots and façade all come into play.
Often, spending a bit of effort on those aesthetic components can benefit the sale, because these small factors can make oversized impressions.
Make Selective Improvements
On a similar note, making selective interior improvements can help the sale, too. A new coat of paint can go a long way toward shaping the perception of a space. New carpet, new flooring, or updated interior lighting can be impactful, too.
3. Compile Documentation
A third crucial step to selling a commercial property is compiling all of the necessary documentation associated with the property. When a purchase offer is accepted by the seller, the buyer will generally have an period of time to review the property’s documentation to ensure that everything is up-to-speed, properly maintained and generally in good working order.
That will include things like service agreements on the property – HVAC, cleaning, maintenance, etc. It will also include summaries of all the costs to tenants and basic financial statements including income statements and expense budgets. Essentially, documentation should be compiled on all of the activities it takes to keep the building running.
4. Make the Sale
The last step is simple: find a buyer and make the sale!
Sounds easy, sure. But obviously there’s a little bit more to it than that. The truth is that finding a potential buyer whose needs and expectations align with your own can be difficult. Often, commercial property owners value their property differently than the market does. A property owner has an emotional attachment or some escalated perception of value; the market doesn’t.
But that doesn’t mean you can’t find a great buyer. If you’re struggling to do so, it’s nearly always due to unrealistic property pricing or terms. If that’s the case, it’s time to review and adjust.
And here’s the reality: at the end of the day it is impossible to be 100% certain you’re getting the best value for your property. There may be a buyer somewhere waiting to come out of the woodwork and make a dream offer.
But you can’t wait forever. If you are in fact ready to sell you property it is better to sell your property at a fair price today than to hold out for three years for a better price that may never materialize.
On some level, selling a commercial property simply comes down to trust: trust in yourself, trust in your buyer, and trust in your commercial real estate broker.
Next Steps to Selling Commercial Real Estate
Hopefully, this overview has been helpful as you consider the steps toward selling commercial real estate.
If you’re ready to sell your commercial property and you’re looking for consulting you can trust, let’s talk.
At Blackwolf Commercial, we take pride in serving clients around Frederick with trusted brokerage services. We can walk through the selling process with you, ensuring that you have the information you need to get the value you deserve. Get in touch with us today online or at 240-578-4220 and take the first step toward a great sale.