Solving problems with a commercial investment sale
Every so often, a difficult commercial real estate transaction comes along that tries the patience of even the most experienced, veteran real estate professional. You planned your work and you followed your schedule to the letter. For all that, you draw a big zero: zero contracts, zero offers.
Further, your seller is smiling less and has even mentioned the expiration date on your exclusive listing. Your sales manager is smiling less and is sure to bring up the problem in the general sales meeting. The salesperson who can continue to face constant rejection is one of a rare breed.
There are two types of problems- it’s either a problem with the marketing or a problem with some aspect of the transaction. When you have a listing that is tough and your first instinct is to avoid working on it, it’s time to consider the following steps to solving your problem. This will help you determine where your problem is. Is it with the marketing or do you have plenty of investors but can’t close the deal?
There is no magic to these steps. They simply direct your attention back to the planning stage; back to the marketing plan. A salesperson will continue to work a listing for which he/she has exciting prospects but when they become burned out, it becomes hard. The best way to break a slump is with a sale and the best way to get a sale is to get the marketing program moving again. Here is what I do:
– Define the problem. Define it and write it down. Ninety days into the listing the commercial real estate agent has enough market experience and information to make some assumptions about why they think the property has not sold yet. Ask yourself:
• Is the problem seller inflexibility on price or terms?
• Is there an access problem?
• Are prospects turned off by the topography?
• Is parking a problem?
• Is finding a customer to show the property to a problem?
Most problems are either people problems or physical property problems.
– Determine the cause of the problem. Once the problem is identified, the next step is determining the cause of the problem. For example, a problem with the price or terms may be the result of a poor appraisal or an error in an appraisal. Determine the cause of the problem and write it down.
– Determine the alternatives to solving the problem. This is where a commercial marketing team can work for you. Toss the problems out on the floor, then sit back and make notes on possible solutions and ideas. Never respond, “That won’t work because…” Listen to your team and offer feedback. Free association uses many minds to create solutions.
– Evaluate alternatives to solving the problem. This involves determining the alternatives that will most likely lead to a successful conclusion based on time and money. For example, with a problem of price, calling the appraiser to tell him/her they were given the wrong size on a tract of land may solve the problem caused by an error in the appraisal (provided such an error had been made).
Evaluate the solutions and determine the pros and cons. Evaluating the alternatives is really a grading process used prior to selecting the best alternatives.
– Select the alternatives. This selection is generally based on many factors, including the personalities of the people involved. Choose the two alternatives that best fit your solution. You may want to approach the problem from two or more directions and then select the right alternative.
– Choose the optimum solution. What results are you looking for? For example, if you choose the alternative of showing the appraiser an error, what is the expected solution? You want the seller to realize that the price reduction on the appraisal is necessary. After that, you can choose a path and make a judgment as to the desired results and the expected outcome.
– Adjust marketing plans, schedule, targets and budget. Often the problem is identified, the solution is selected and it all ends there because there is no follow through. Someone has to pay for the cost of consulting a sewer engineer for a sewer problem. Is it the brokerage firm’s or the owner’s cost? When the owner absolutely will not pay, the broker may see that incurring an engineering cost is a valid marketing expense.
The successful broker does what has to be done to consummate a sale. This is where the marketing budget comes back into the picture. More dollars may be necessary to sell the property. These dollars are for problem solving, not just promotion. Once you’ve identified appropriate alternatives, schedule the new marketing plan.
Finally, go back to the prospects who rejected the property based on pricing or terms and back to the developers who said, “We need a sewer.” As you can see, we have gone full circle in our marketing plan flowchart. The creative commercial-investment salesperson plans programs, studies responses and persistently looks for solutions.
Usually, most problems can be solved by using new, creative approaches, especially when the buyer is a “taker” and the seller is a serious “don’t wanter.” It’s also helpful to study various problem-solving tools on a regular basis just for reinforcement. This may seem complicated, but the problems we solve are quite complicated and require great perseverance.
Gary Tasman is executive director of Cushman & Wakefield’s Southwest Florida office. For more information, please contact him at (239) 489-3600 or gary.tasman@cushwake.com.