It's no secret that the commercial property market is under some pressure in many locations. This then says that any method of sale used in promoting a property for disposal needs to be carefully planned relative to the local property market, the property, and the types of enquiries available currently.
Here are some tips from our Newsletter for you.
Property buyers are in short supply in most locations. Therefore the chosen method of sale should be something that attracts the buyers to the advertising and to facilitate a decision to go to contract or make an offer.
There are various methods of sale available however in this market some are much more effective than others.
Here are some alternatives to consider:
· Selling a property at a price may seem sensible to the property owner and reduce the risk factor to them. The reality of the situation is that buyers will judge the property price prior to making any enquiry. If the price is too high, they may not make themselves known to the agent concerned and any offers may not be forthcoming. When it comes to selling commercial, retail, or industrial property, marketing and selling a property at a particular price should be regarded as the choice of last resort.
· Offering a property for sale at auction in this market can be a wise choice providing the property is of quality and suitably packaged for the target market. The auction method will usually flush out the buyers and encourage them to make offers or bids (as the case may be) as part of the auction system. The auction process should be supported by vendor paid marketing funds up to a value of approximately 1% of the expected sale price. In very large properties this budget can be trimmed backwards below 1%.
· Offering a property for sale by the tender process is also quite successful in this market providing the property is ready for sale and of a type that attracts a wide variety of purchasers. The tender process is a timed method of sale similar to that of the auction process. The timing of the sale tends to flush out the buyers and encourage the compliance to the established tender documentation. The advantage with the tender process is that the other tenderers do not know who they are bidding against and on that basis the property owner can achieve a better price than that which they would get through the open public auction process with public bidding.
· You will see some commercial properties offered for sale by expressions of interest. This is an alternative to use when you believe there are some limitations or uncertainties in regard to the successful sale from the property owner point of view. The property owner may have no idea as to the price that they should sell the property for and may be willing to consider alternative contracts and conditions of sale subject to the offers made by the relative buyers.
· Lastly, something should be said regards the method of sale involving exchange of property or exchange of goods. Invariably you find that the owners of each particular property or valuable asset involved in the exchange have great differences of opinion regards price and value. This is resolvable, although this method of sale is fraught with frustration and extended negotiation problems.
So these are some alternatives that can be implemented when it comes to selling commercial property today. The property owner and a specialist commercial agent can implement strategies that best suit the asset and the local market conditions.
Make the right choices with regards to the successful outcome that you require. Understand the local market and the pressures that currently apply; choose the right method of sale.