Helping Sellers Understand Realistic Commercial Property Value

Commercial real estate brokers need to have a lot of skills, but perhaps above all, they need an abundance of patience. Every broker has had a client who sets unrealistically high expectations for their commercial property value, and this post is for you. Here are four strategies to help you help your seller set realistic prices for their property:

Compare what similar properties have sold for in the neighborhood or region.

Comparables, or comps, are always the best indicator of what your property is worth. Particularly for the first-time commercial property seller, this tactic should resonate because that is what is done in the residential real estate world as well.

Explain the cost to the seller of having the property languish on the market.

• Properties that sit too long become harder to sell and often eventually require a drop in price for it to move.

• Every minute the seller remains the property owner is another minute he or she is responsible for expenses, such as: utilities, taxes, landscaping, cleaning, maintenance, etc.

• Until the property is no longer owned by the seller, he or she will remain on the hook if something breaks, cracks or leaks; and if it is sitting vacant the property is more likely to get vandalized.

• Every day a business asset ages is another day it depreciates.

Holding out for every nickel you wish to receive for your property can wind up costing more in the long run.

There is an opportunity cost of having funds tied up in the property. In addition to continuing to pay for operating and maintaining the facility, the seller is losing out on cash in hand that they could be investing in their next venture or begin earning interest on.

If the seller has truly dug in his or her heels, the broker always has the option to pay some ancillary costs as a means of getting the deal done.

As a last resort, in a final effort to get the property sold, brokers can offer to pay for some, or all of the closing costs: title service fees, recording fees, document or transaction stamps or taxes, survey fees, etc.

Selling real estate can cause people to be emotional and sometimes irrational. People become attached to the buildings they live or work in, so they might set a price that doesn't match its actual commercial property value. Sometimes you can present the most logical argument for a price point - and still not help your seller set realistic prices. Remember, there is one more strategy a broker can employ: walk away!