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.
In commercial real estate agency today, it is essential that we take all necessary steps to understand the potential of the property transaction and the client. A complete and comprehensive understanding will help you when it comes to a successful outcome for both you and the client.
This then says that you should really take the time to know the key facts that relate to the particular property situation and the requirements of the client. Here are some questions to help with that process:
Define the property from a legal perspective so that any listing and negotiation process can be correctly implemented and documented. Copies of supporting documentation, titles, owner representations, deeds, and conversations will be central to the accuracy of the listing. Look for any missing documentation or confusing circumstances. Resolve any of these challenging issues as part of the listing process. Review all of the property ownership documentation prior to any marketing campaign commencing.
Many properties will have extended issues to investigate. They could relate to rights of way, easements, encumbrances, orders or notices. The leases on the property may also have an impact on any sale or property investment situation. This then says that you must be accurate and detailed in the property listing process. Any errors made in documenting the listing can come back to ‘haunt you’ later during the negotiation or due diligence process. Learn how to interpret property documentation, leases, and factors that relate to the tenancy mix.
The local property planning process will have impact on building usage, improvements, tenant occupancy, future developments, and capital growth. Take the time to understand the local property development plans as they apply in your region and for any particular listing. Look for any changes in the development plan that could have an impact on the property in the future.
If you review the history of the area, you will see certain trends that relate to prices and rentals. You will also see factors that have impact on marketing, listing, negotiations, and time on market. Stay ahead of the current trends in property activity and the history of prices and rentals as they apply for each property type.
Every client or prospect will have factors of focus when it comes to property ownership and portfolio development. Some clients will own a number of properties or seek to do so over time. This then says that some clients can be very valuable from an ongoing business perspective for a real estate agent. In saying this, the cycle of activity in commercial real estate is relatively long. It can be many months if not years before a client is ready to take the next step in their property investment and ownership plan. You need to stay with the client for the long term, nurturing the relationship wherever possible with relevant and real information.
A client or a property investigation can be quite complex. Look for the potential that the client or a property can offer you as real estate agent. Position yourself for ongoing service and support to the client. The business, new listings, and commissions will soon be easier to attract.
Many agents today struggle to provide a relevant and interesting sales presentation. Generic presentations seem to be the order of the day, and in most cases the client will be meeting with four or five agents before they make a decision. You simply cannot do a generic sales presentation. Your pitch or presentation has to be interesting, relevant, and useful. It must relate to the current property market and the subject property.
Here are some tips to help you focus your sales or listing presentation:
The first stage of the presentation should always be to connect with the client and restate their need or interest when it comes to the particular property matter. The client needs to see that you are on the same wavelength and fully understand their current situation.
Next, you should summarise the attributes of the property as you see them. Explain the factors of the property that are critical to the potential promotional campaign and marketing process. Some of those features will be fed into the advertising and media material to attract the target audience.
Given the previous point, explain to the client the target audience of prospects as you see it and then relate to the current levels of enquiry from that group of prospects. The client needs to understand exactly what enquiry is out there and how it is coming to you at the moment. Have due regard for the time on market factors for the property type and the prevailing market conditions. Tell the client exactly how you will be attracting those prospects to the property.
Given all of the three points, you can now move into a summary of current and prevailing market conditions. Tell the client where the competing properties are currently located, and how they are being marketed. Give the client a summary of the time on market factors as they apply to those other properties still on the market.
Give the client some clear solutions relating to marketing. Vendor paid marketing should be the norm and not the exception when it comes to listing. Give the client three alternatives when it comes to vendor paid marketing and marketing costs. Invariably they will usually choose the middle solution.
The firm and resolute when it comes to the type of listing and the method of marketing. Exclusive listings are required to help you attract the necessary enquiry over the marketing period. All of your listing sales pitch should be geared to the dedicated focus and action generated from an exclusive listing.
In most listing situations, you can give the client a summation of price or rental as it applies to the listing process. Current market evidence and existing other properties will support your logic and recommendations.
As you move through all of the five stages, you can ask questions of the client to see how they relate to the information you are providing. Always make your presentation or pitch a two way conversation. Keep the client with you through the presentation logic and property recommendations.
Lastly it should be said that the typical property presentation should not go for an excessive period of time. In most cases the presentation should be completed within 20 minutes. If the client shows further interest or raises a extra questions, then the time can be extended to 30 minutes.
Keep to the point, and provide the right information for the client to make key decisions. Top salespeople do less than 40 per cent of the talking when it comes to a sales pitch or presentation. They get the client involved at all stages of the process. At the end of the presentation ask for a commitment. Most agents are afraid to ask for the listing.
In commercial real estate you will be inspecting many different properties for many different reasons. Over time this can become second nature, however complacency in the property inspection can see you overlooking an important item or fact that can have a real impact in your property transaction.
Given that there are a few different property types that you will work on, you can have a checklist approach to all of them. In other words you can a specific checklist to work on each property type. For example:
Office property single level and or single tenant
Office property high rise with multiple tenants
Retail property single shop
Retail property multiple shops on single level
Retail property medium to larger size with multiple tenants
Industrial property of various sizes including warehouse and office configurations
All of these property types can be quite specific when it comes to inspecting and listing. Respect the differences and have a selection of listing checklists and questions that you would ask relative to the property type. When you do this it sends the right message to the client that you really do know what you are doing and that you have the knowledge to handle this property well.
In many situations you will be inspecting the property with the client in preparation for potential listing. For this very reason it pays to have a comprehensive approach to documenting and questioning as you move through the property.
Here are some things to incorporate into your inspection checklist:
Get the title search and legal property description before you meet with the client. This will help you will the facts of what the property is and how it is positioned in the location.
Check out the zoning and the permitted use of the property relative to the existing local development plan. If you are going to sell or lease a property, it pays to know that it is ‘legal’ in its function.
As you move through the property with the client, take notes of what is said as you may have to fall back on those notes later in evidence or in support of key negotiations. Some clients are well known for selectively telling you things about the property, and not all the issues that you should know that could impact the sale or lease. Look at the property with a questioning mind; look for the issues and the problems that a property presents to you in marketing and negotiating.
Take digital photographs as you move through the property as this will help you remember the conditions and configurations of the improvements.
Services and amenities should be documented as tenants or buyers to the property will want to know those details.
As a general rule, you should not ‘price’ a property until you have had time to consider the property detail, reviewed the competing listings, and looked at comparable sales or rentals. If you do this effectively it will help make the listing of the property more relevant to the market and the current levels of enquiry.
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