Spending time in endless self-education
If you go to Google and type in the term “sell commercial property” your search will return 587M results. On page 1, your search will probably include links to LoopNet and several residential real estate agent websites that are piping commercial MLS listings into Google. Unfortunately, neither of these results are going to be helpful — more on LoopNet below.
If you continue to scroll, you’ll find an abundance of free information in the form of commercial property market data, investors blogs, market reports, and online commercial real estate owner’s opinions on what’s happening in the market is available.
The danger with this type fo self-education is trying to fit incomplete and dated market information into your commercial property valuation conclusions. Oftentimes, sellers overprice or don’t structure financials correctly, and end up missing the best buyers in the market.
Here’s a video about how this happens:
Relying too much on the advice of friends, family, and advisors
It’s common that when you aren’t sure how to find the right buyer to get your commercial property sold, people often consult friends, family, and non-commercial real estate advisors for input. Unfortunately, these people will not want to be the ones to say sell because it is easier to say no and risk being wrong than to say yes and risk not being right – especially if you end up with a failed commercial property sale.
Plus, most of these folks will not have the data that you have seen here. These people are more likely to share anecdote based advice like “My friend made a killing in real estate. You should hold on, it will come back.” Remember, people who made this mistake experienced low or failed sales in 2008-2010.
Hoping LoopNet will get your commercial property sold
A search on Loopnet shows how easy it is to post a commercial property on the market for sale.
That is one of the reasons why LoopNet boasts being a marketplace where you can sell commercial property and be one of the 500,000 commercial property listings that are available worth nearly $240B. The truth is, LoopNet’s reputation among commercial real estate brokers is of being a poor quality lead source of high quality commercial real estate investors.
Hiring a traditional commercial real estate broker
It is easy to find a traditional broker. In fact, you probably already know one, given that 1 in 164 people in the United States has a real estate license. According to the National Association of Realtors, there are about 2 million active real estate licensees in the United States.
The problem is that most traditional brokers will rely on the rule of the 3Ps.
Put the property on the market on Loopnet.
Post a for sale sign in front.
Pray that someone will buy it.
What’s more, in the 2017 National Association of Realtors Commercial Member Profile, the experience is not lacking, production is.
- 59% of traditional brokers have been in business for 26 years or more with an average age of 60 years old.
- 12% focus on investment sales.
- 74% belong to LoopNet.
- The median annual transaction volume is only $4 million, which in the Greater Boston commercial real estate market is equal to 1.5 transactions.
Failing to stop buyer negotiations
Nothing is worse than disappointment when a buyer agrees to a purchase price and re-negotiates again. You think you have a deal, the price is set, and you’re on your way to closing when your buyer nibbles at your agreed upon price, terms, and conditions, making your commercial real estate sale a frustrating experience.
Here’s a video on how to stop commercial real estate investors from dragging down your price.
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