How to Condition a Commercial Real Estate Client

two men sitting in back of cab looking at a laptop computer
Conditioning a client with facts and information.

If in commercial real estate agency today, you need to condition the clients and the prospects that you work with.  To do that successfully, you do need market information and market knowledge.  The conditioning process is quite special and requires practice as well as supporting information.

Most clients will have an inflated opinion of their property in the market today.  As part of the listing process, you will need to shape their thinking in preparation for a realistic price or rental; be prepared for the listing and structure it on terms and conditions that are favourable for the prevailing market conditions.  You will also need to position the property for the correct marketing campaign and negotiation situation.

It is interesting to note that many top agents will not take on a listing that has been overly inflated in price or rental.  Invariably what will happen in such circumstances will be a stale listing, and a lot of wasted time on your part.  Your goal should be to only list properties that are realistically close to the prevailing market conditions; condition the client accordingly.

Here are some ideas to help you with the client conditioning process:

  • Identify the other properties in the local area that remain unsold or vacant.  They will have an impact on your marketing campaign and your clients listing.  Take photographs of those properties and get details of the current prices or rentals.   Show your client the marketing strategy used in each case.
  • Prices and rentals will change throughout the year.  As an industry expert, you should track those numbers and be prepared to show the client those trends through a graphing process.  You can add to that process the current status of time on market when it applies to each property type locally.  That should also be graphically displayed.
  • New property developments will come and go from the local area.  Large and new property developments can have a serious impact on any prices and rentals with existing properties.  On a monthly basis, visit the local planning office to identify any new property developments in the early stages of approval and implementation.
  • The capitalisation rates and yields that are achieved when you compare rentals to prices will be a good indicator of the buoyancy of the investment property market.  When the property market is soft or slow, the yields tend to rise.  When properties are in short supply and in high demand, the yields tend to fall.  That assessment will be a reflection of the condition of the market today.  High quality properties and those that are in scarcity will always attract a higher price when compared to the income cash flow.  Understand what you are looking at when it comes to prices and rentals.  If you are going to compare the yields between properties, make sure that they are directly comparable when it comes to location and improvements.
  • Show your client the different alternatives that can apply in the marketing process.  Give your client at least two or three alternatives when it comes to the marketing approach for the given property.  Whilst you can make your recommendations in marketing, the alternatives will help the client make a choice that they can afford.
  • Every property will have an ideal method of sale or lease.  That decision will be made on the basis of the target market and the prevailing market conditions.  Your recommendations to the client should be quite clear when it comes to the prevailing property conditions today and where the listing will be best promoted.

The client conditioning process should be seriously considered with every property listing.  Be prepared to talk the client through the best promotional strategy and package the listing for optimal enquiry.

If the client will not listen to logic and reason as part of the listing process, your only choice is to whether you should take the listing on, or walk away.  If the price of the property is too unrealistic, it is better to walk away.  You can then protect your professional image and your time.

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Author: John Highman

Commercial Real Estate Broker, Coach, Speaker, Author, Broadcaster.