How can you close more property presentations and sales pitches? The pitches that we do as real estate agents in the one transaction are numerous. Think about these to name a few:
- Pitch to get a meeting with the property owner
- Pitch to get a listing opportunity
- Negotiate on the listing creation
- Sell the advertising package
- Attract the right enquiry
- Present the property to the buyer
- Negotiate and close on the buyers offer
- Negotiate with the seller regards the offer from the buyer
One of the real secrets in pitching your services or offering is to help put the client or other party in some degree of perceived control. In simple terms you give the client some options to consider around the key decision. When the client has options, they do not feel like they are being closed. The key decision becomes simpler and easier. I call this the ‘Option factor’.
The nature of the human mind and psyche is that it does not want to be forced or manipulated. You can use this ‘Option factor’ as a tool of negotiation in commercial real estate sales and leasing.
You can get more free tips and articles online for real estate agents at http://www.commercial-realestate-training.com/
When you work in commercial real estate sales and leasing, the territory dominance that you achieve is largely created by your own personal endeavours.
There are far too many ordinary salespeople out there today. When the property owner wants to sell or lease their property they really do need the agent with territory dominance. That is the agent that knows:
- Where the enquiry is coming from
- What the enquiry is looking for
- The limitations on finance in the local market
- The marketing campaigns that really work
- What deals are being done and on what basis
- How to draw in the right target market for the property.
- When to close in on a genuine enquiry from a buyer or tenant
- Has the majority of quality property listed in the local area
Whilst every agent should know and provide these things, the reality is that many do not do well on the performance specifics.
Looking at these simple issues, they are all related to things that you as the real estate agent can and should take to the seller or property owner as part of the sale or leasing campaign. This is where value and service stands alone as the best way to attract the client to your specific property solutions. Market and territory dominance supported by knowledge and experience will help you attract more quality listings.
You can see more of my free tips and articles for real estate agents at http://www.commercial-realestate-training.com/
When working as a commercial real estate agent you will see many types of property in many situations and levels of quality. When it comes to selling the property, there is a factor known as the ‘liquidity factor’, and it will impact the sale and price outcome. In simple terms the ‘liquidity factor’ is the time it can take to sell the property.
By comparison to other types of investment, commercial property has a high liquidity factor as it takes time to sell it; usually days or weeks. The share market as an investment type is just the opposite with a low liquidity factor, as shares can be sold almost within the hour. People choose to invest in commercial property as it is relatively stable and less volatile than shares. There is however the liquidity factor to contend with when it comes to property sale time.
It pays to take the seller of the property through the liquidity discussion so the right choices are made when you take the property to the market for sale.
Essentially the ‘liquidity factor’ is all about the time the property will take to sell. It is driven by things such as these:
- Location of the property
- Tenant mix
- Anchor tenants
- Size of the property
- Amount of money required to purchase the property
- Lease profiles and documentation
- The age of the property in the local area
- Changes to the population locally
- Changes to the business sentiment locally
- Methods of sale to be adopted
- Identity of the property in the local area
- Price pressures locally
- Comparable or competing properties in the local area
All of these factors will have positives and negatives when it comes to the time of sale. Importantly it is up to you as the real estate agent to help the seller understand the ‘liquidity’ of the property and how it will impact the choices of property sale.
You can get other free tips and resources for real estate agents at http://www.commercial-realestate-training.com/
Do you want more commissions and listings? You simply have to be great at prospecting and cold calling. The rest of your business will follow.
Guess what? Most real estate agents and brokers are not sufficiently disciplined to do the right levels of prospecting on a daily basis. That is the most significant opportunity that exists in the property industry; you just have to be better than the rest at prospecting. Sure listing, negotiating, and closing are other important skills, but they will come as a natural by-product of prospecting.
Focus on cold calling and prospecting. So how do you do this? You set some prospecting rules and you start practice. The words ‘rules’ and ‘practice’ are another couple of problem words for many in the industry. Many struggle with doing both.
So let’s get away from the negative and presume you have the determination, the focus, and the drive to prospect for new business on a daily basis. Here is a ‘killer prospecting model’ that really works. The rest will be up to you. This model takes 3 hours a day, 5 days per week.
- There are no gaps and Saturdays and Sundays are the only days off in the prospecting process. That is the first rule; probably the most important.
- The second rule in the process is that you must prospect on the telephone in the morning because after that you will be distracted by other things and not stick to it. Without going deeply into it, there are established facts of personal performance in business that show the morning is the right time to do prospecting.
- Get away from setting any meetings in the morning. Tell the boss that you prospect at that time and that you would prefer to set meetings with him and anyone else in the afternoons. Even meetings with clients and prospects should not occur in the morning unless it is an absolute necessity. The only reason to break the rule is if the meeting is for an active deal that is closing.
- The 3 hours of prospecting each day in the office is done from the telephone. In commercial real estate you are predominantly dealing with business people and they generally will take your call if commercial real estate is an issue for them. If it is not an issue then you simply move on. Do not set up a meeting with someone who has no interest; remember that your time is precious.
- Drop the cold calling scripts and use your own words; that will be the way you will feel comfortable with the process. Use trigger words to flow the discussion, but do not use scripts as the listener will sense the processes and turn off.
- Know that it takes you about 20 minutes of cold calling every day to get the process into momentum. Once you are through the 20 minutes you must keep going and not stop for 2.5 hours. In that way you will make progress.
- Find a quiet place to make your calls so that you can focus without distraction. Your success in tele-prospecting depends on it.
- Research your call list the night before so you do not waste critical call time in research. This is critical to the call process.
- Create a series of simple forms to use in the call process so that you can capture the results later in the database. You must not stop the call momentum.
- Try to contact 10 new people on the telephone each day. If they are not in the office when you call then simply make a note to call back. You should be able to make 50 calls in 3 hours.
- Your only reason for calling prospects is to see if they have a need or an interest in commercial property. When you really understand that yourself, then the calls will be easier and the quality of the discussion will be higher.
- Have a great database to record everything. Use something that you are comfortable with. At the basic end of the database alternatives you can use Microsoft Outlook, or Access. Both are useful, low cost and user friendly. When you want to move to something more relevant to the property industry you can spend many hundreds dollars; personally I believe you can do very well with the basics providing you know how to use a computer well (in that you have no choice).
These are the rules that you need to set in your cold call prospecting. After you set the rules, you start the practice and you will need to do that for a couple of weeks until things are moving well. To your success in commercial real estate prospecting! You can get more detail on prospecting and cold calling in real estate here at http://www.commercial-realestate-training.com/
In commercial real estate you have to make many cold calls every day. The people that make the most income and take the best listings are the ones that make the calls. Everyone else, and that is the majority, are earning smaller commissions and getting less listings. You have a choice.
It is interesting that many salespeople avoid the cold calling process and rarely do it every day. There are some averages which show that you need to make about 100 calls to get one good listing. The calling process creates a funnel of opportunity that revolves every day. Without you making it happen, the business will not come. If only more salespeople had the discipline to make the calls.
Taking the 100 call number, I recommend that the salesperson has a system of calling that allows them to call about 50 people a day. It will take about 2 to 3 hours if you are organised. Understand this, you will not be able to get to 50 people on the telephone, in fact you will only get to about 15 to 18 people, however of those people you are likely to get 2 or 3 appointments. That is where the business starts to grow. It’s all up to you.
When you get good at the calling process, and that will take about 2 weeks of struggle, you will be converting more appointments, and that will lead to listing opportunity.
To make the calling process work for you there is a base plan which should be considered:
- Plan your calls the night before so that nothing holds you up in the 2 to 3 hours
- Start your calls at the same time every day regardless of any other pressures.
- For the first few weeks of making the cold calls, do some practice each morning before you leave for the office
- Do not use a fixed script, but use your own words.
- Find a private area with no distractions to make the calls
- Choose a simple group of words that guide your conversation
- Get used to people saying ‘no’, as there will be a lot of that
- Make the call simply to see if they have a need, not to push where there is no need
- Only make appointments with people that have an interest in what you are saying – your time is too precious to do otherwise
- Keep a tally of calls made and appointment converted as you proceed, the numbers will encourage you
- Businesses in the area are a great source of call targets and you can get those from the telephone book
So if you are new to commercial real estate and you want to generate market share the best way to do that is to talk to many people each day on the telephone and then later in face to face meetings. Use the technology that sits on your desk to its fullest capability. Good hunting.
As the opportunity for listing commercial investment property arises, we can sometimes be too eager to take the listing without getting all the important facts that effect price.
Check the leases on a commercial investment property before you talk about price on the property as the leases may assist or hinder the sale. They can also dictate a sale strategy. This says that a good commercial real estate broker or agent must know the structures of a lease and what makes a good lease.
Depending on the age of a property, the next phase of its lifecycle may be refurbishment, demolition or remix of tenancies. Every phase is different. The demographics of the region in which the property is located will also have something to do with the future of the property.
A property that has a majority of leases that are soon to expire may be attractive to a purchaser that wants to owner occupy the property or a developer that wants to change the site and create a new building. On the other hand the same property in such circumstances will not be attractive to a new investor unless they want to undertake refurbishment works and re-position the property with new tenants. Decisions are based around strategy needs and timing; as agent or broker for commercial property you need to be the ultimate strategist.
When looking at the potential sale of the property, the lease aspects requiring future awareness and understanding in the sale include:
- Rent review profiles – are they strong and well timed or do they just gear to the consumer price index? Also look for the market rent reviews and see if they are well timed or
- Lease expiries – these are always a concern if the property requires stable cashflow, so look for multiple lease expiries that are close to each other and that may consist of a majority of the lettable space in the building.
- Option periods – from a landlord perspective, lease options are not always a good thing to have as they can frustrate the future of the property; it really depends on what the landlord thinks that they want to do with the property. It is of note that many large shopping centres and malls do not allow lease options for that very reason.
- Details of any current incentives with existing tenants – some lease incentives carry on impacting the property for some months or even years. When the property is to be sold, these incentives must be offset or discharged at settlement as the future purchaser may not want to take over the burden of such.
- Outgoings recoveries – leases and most particularly net leases will allow the landlord to get back some of the building operating costs. It pays to check the leases to see exactly what those recoverable items may be as it can impact the property sale or buyer interest
- History of income and expenditure performance – I always go back at least 3 years to check these numbers and to see what have been the major changes in the outgoings. What you are looking for is overly large imbalances in outgoings from year to year that indicate that something major has impacted the property or a strategy has changed. Get reasons for any changes of this type so that any astute buyer can be given logical explanations.
- Current budget of income and expenditure performance – every commercial investment building of any type should function to a budget each year and the details should be available for your review. Parts of the expenditure that impact greatly on the property are the rates and taxes as they take up on average a full 33% of most building expenditure. You need to know that these rates and taxes are on average with other properties in the region.
Property performance elements such as these will affect the potential income from the property well into the future and will also dictate the best time to sell the property. In an ideal world you would time the sale so that the income is optimised and the outgoings are controlled to acceptable levels. This cannot always be done especially in markets like that which we have today, but you should know where you stand on the property performance before you proceed into a sales program. Strengths and weaknesses of cash flow should be identified and logical reasons provided before any sale campaign starts.
The neighbourhood shopping centre is the first level of retail investment property and is closely integrated to the community. The tenant mix should be of a convenience shopping nature. That will be the key to its success.
When designing your tenant mix strategy for the neighbourhood property, think about convenience and basic needs of the immediate community. Is the surrounding community growing and in what way? What do they spend their money on and how frequently? Are they younger families or older retired families? These questions dictate how they will spend their money.
Sometimes to really answer these questions you need a survey undertaken from the surrounding homes and families. They know the neighbourhood better than you do and can usually tell you what the community thinks about the property and what it is missing.
Once you have your answers to these basic questions you can then move on to finding the right tenants. As you do, give due regard to nearby competition properties and new property developments as they will have an impact on your property.
Once you know who you want for your tenant mix and property, it’s time to pursue them:
- Set up your target businesses by type. Given that your property is convenience in nature you will likely need tenants in the categories of fast food, fruit and veg, baker, newsagent, chemist, hairdressing, liquor retailer, smaller supermarket. Choose your tenants well with due regard to established trading history from other properties.
- Cold-call the small family businesses in the area and particularly in competition properties as they will likely be interested to talk to you about your offering. They will also tell you about the performance of the other properties. This market intelligence is invaluable.
- Follow up with the property managers and franchise managers or retail franchise chains. Cracking into a well known retail chain might take several letters and follow-up phone calls. The seeds of interest you plant today may take weeks or months to germinate but consistency and persistence will get you through the door.
- Follow up with the supermarket chains for relocation or new premises opportunity. The supermarket industry is highly competitive and most chains would like to keep the opposition away from getting into their ‘patch’. The rentals on the supermarket anchor tenant are lower than the specialty tenants and they will be selective on paying their share of outgoings for the property, but you will get an anchor tenant for a long lease term to support your property. Choose well.
- Pay attention to the local media in new ways, with ears and eyes open for business prospects. Even in a slow economy there are businesses that are successful. Convenience shopping does not disappear; it just changes priority and offering to the shopper. Read the newspaper daily, listen to the radio and watch your local TV stations not just for business news, but for ads from retailers that seem successful. You’ll find out who’s growing, who’s moving and who (by their absence) is almost dead in the water.
- Use local telephone books, the internet, industry groups, chamber of commerce directories and publications from local economic planning offices to tell you who’s who in the marketplace and who might be interested in moving. Make the calls and ask the questions. It is the secret to building a great tenant mix for your property.
- Visit other shopping centres at different times of the week to examine the operations of potential tenant prospects. Learn to think like your targeted retailer, understanding the operation’s strengths and weaknesses. Know what it’s like to turn the key in that shop and what it takes to stay in business.
- Always return every phone call from a prospect or an enquiry. A potential tenant with a dynamic operation may be prospecting you and your property. It doesn’t matter how off the wall or strange a person or idea sounds. You might find some gems of occupancy among the strange and different ideas.
- Know your trade patterns for the subject property, and that is peak trading days, traffic patterns across the property, popular established tenants, how the community uses the common areas, how the car park supports quick access to the property for the convenient shopper.
- What is the branding of the shopping centre and do you need to do any face-lift upgrades of common areas? Tenants will not move to something that is degraded, lacks identity, and is poorly maintained. Poorly presented properties are a common problem in owner managed premises where the owner is inexperienced or at the smaller end of the investment scale. You must spend money on the presentation of retail property, otherwise the rental, customer interest, and tenant base will diminish.
- It is likely that existing tenants and potential new tenants to a property will talk before any decision is made to accept a new lease offering. Tenant harmony and relations is therefore critical to future property occupancy and rental success. Happy tenants usually mean good property performance.
Understand how real estate leasing brokerage can fit into the overall picture for the shopping centre. The leasing broker or property manager can always open the door to valuable prospects, but it’s up to you to also sell the shopping centre and its future in the community. When you know the community well, you have the keys to a great tenancy mix and property performance.