If you are not prepared for what the future has in store for you when selling commercial real estate, you are in for a big surprise. However, when it comes to selling commercial land, there are some tactics that you can employ to make this difficult task into a rewarding one.
The first thing is to keep in mind that the sales process consists of multiple steps, and every single trade will be unique.
Regardless of the transaction methods, which have taken a new meaning in this post-pandemic era, the rules of selling commercial land remain unchanged.
In this article, you’ll read the five most essential things you must consider when selling commercial real estate. So, let’s help you find the right way of doing things while making some rewarding choices in the process.
1. Perform In-Depth Market Research
Experienced investors are well aware that it’s never a good idea to time your sale according to the movement of the commercial real estate market. That said, there are strategies you can employ and trends you can follow to know if you are getting the correct value against the commercial real estate you are selling:
— Location, considering nearby properties and ease of access for customers and tenants.
— Documentation for lease and tenant rent rolls, tenant credit history, vacancy history, and market vs. actual rent expectation.
— Subsequent supply and demand figures like new construction in the process and absorption rate.
— Significant changes in the property prices in the present market situation over the period of the past five years.
After completing your research, you will be able to identify the ideal buyers for a particular type of property and the ability to pick the right asking price. However, consider hiring a realtor if you don’t have time to perform all the market research functions. Additionally, make sure to perform a reality check against your property value by examining the latest sales comparables.
2. Inspect Real Estate Sales Comparables
Comparables are recent real estate sales that are more akin to your land. When you conduct market research to determine the ideal price you want to receive for your property, sales comparables help you find the best option available based on the current market situation.
Additionally, buyers employ four main ways to find income-generating real estate. So, when you compare your sale comparables with these four techniques, you find a way to know and better understand buyers’ mindsets and the current market pricing of the land.
— With income capitalization, you can compare the net operating income (NOI) to the property sales price, which is then defined as a capitalization rate, a helpful tool in the land buying process.
— Gross rent multiplier (GRM) allows you to divide the property price by the gross income so it could be referred to in a ratio
— value per door can be used to divide the property price by the number of units. However, it is typically used in the case of an apartment complex.
— Cost per square foot that you want to rent helps measure the rental revenue concluded by the complete number of leasable square footage to make a fair evaluation of the property’s value.
However, remember that real estate comparables may not provide you with the exact information you want. But knowing what’s in store for you will help you make an informed decision during the process of selling commercial real estate.
3. Find the Suitable Representation for Your Real Estate
Hiring a sustainable commercial real estate agent can make all the difference when it comes to selling your property fast at the ideal price. Moreover, it’s a great way to sell your land when you are tired of expecting buyers for your land. Additionally, an experienced and knowledgeable salesperson will make the selling process easier for you, especially when dealing with commercial land. Therefore, when selling commercial real estate, find all the information you need before making the final decision. Some of the advantages of hiring a real estate agent to sell your property include:
— Specifying a realistic and fair asking price based on present market conditions. As a result, you are ensuring a profit-yielding return on your investment.
— Providing your property with needed exposure to an established network of buyers who may be interested in buying your land at once.
— Managing continuous negotiations through closing, including all the necessary paperwork that you might not be able to manage on your own.
4. Use Online Marketing Tools for Best Results
Even before the pandemic, the rise of online marketing tools was transforming the commercial real estate marketing landscape by significantly extending the number of qualified buyers:
— Online Zoom calls, virtual tours, drone aerial videos, and the entry of AI in real estate are now some of the inseparable parts of the selling process.
— Numerous tech tools can place your property against eligible buyers, further helping you understand what the potential buyers look like.
Additionally, when you are trying to market and sell real estate online, it becomes easier for sellers to find information about the prospective buyers and create a database of all the information such as names, contact numbers, and email ids.
5. Set Realistic Expectations
Dealing in commercial real estate takes a lot longer than many landowners might think. However, market conditions can drastically change after escrow is opened. Additionally, costs included in sales like cleaning and staging of the property for virtual showing, repairs, inspections, and legal fees can make the whole process a lot more expensive. Therefore patience is an integral part of the process of a commercial land seller.
To Sum it Up
Selling commercial real estate can sometimes be quite a challenge. It asks for the seller to develop a market and encourage it to buy into what that land could offer them in the future. However, by following the tip mentioned above, there is every reason that a buyer for your property is waiting to be found, transforming your vacant property into a great source of earning. So ensure that you make all the adjustments mentioned above before taking a deep dive into the selling process against your property.