Friday, September 8, 2017

4 Ways to WIN a Commercial Real Estate Deal

Image Attribution: Original art created at www.canva.com
The commercial real estate market in Southern California is as competitive as I've ever seen it. And, by the way, email didn't exist when I started in the business - so, that's a long time.

In a classic economic sense, an imbalance exists. We have too many buyers chasing too few availabilities - akin to a giant game of musical chairs - someone will be left standing when the music stops.

So, how should you position yourself and your company to win when the right opportunity comes along? Allow me to discuss a few ways.

Financial qualification. Your bank will gladly loan you money to buy a building - they've told you so. But, have you allowed your lender to peruse your current financial statements and tax returns? You are best served securing a pre-qualification letter. But, not just any pre-qual letter - one that included a complete review of your current financial snapshot.

Remove any contingencies. Do you have a property to sell before you buy? If so, your deal may be overlooked for another that is ready to go. Does the occupancy for which you plan to use the building conform to the zoning? If not, plan on 6-9 months of city approvals - once again, you lose because a compatible use will avoid the lengthy approval process. Is the source of your down payment liquid? Are the members of your team in place - legal, architect, contractor, CPA? Any unchecked box here could result in your loss.

React swiftly. In order to quickly mobilize, you must have a ready source of new and off-market availabilites. Our residential counterparts have made on-line searches easy for you - we commercial agents have not. Therefore, you will need to team with a commercial real estate professional to search. Sure, you can check Loopnet, but the reliability of the data is suspect. Regardless, your professional should create alerts for new buildings which match your requirement. When you get the call - regardless how late on a Friday - REACT!

Don't TELL your story, SELL your story. Recently, we competed against four other offers for a building. We believed our buyer could pay the highest price and perform. We encouraged our buyer to offer at the asking price with a very quick close and a limited amount of due diligence time - our buyer complied. Now the task was to prove our buyer's credibility. We did so in person vs an email that could get overlooked - in effect, we sold our story. Our strategy worked and our buyer won the deal.