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Effective Real Estate Strategies For Slow Markets
peeding Commercial Real private investors bidding on a
Estate Sales in Slow piece of prime commercial real
Markets estate in a strong urban market.
In these kinds of markets, all a
Effectively building commercial Seller needed to do was hang up a
real estate wealth requires the metaphorical “For Sale” sign and
ability to spot a great bargain wait for the hordes of buyers to
and the ability to sell that appear.
property well, no matter what the
state of the market. The real Of course, these markets do not
estate market is notoriously last forever. Lately, we’re
cyclical in nature and somewhat seeing some pressure on cap rates
difficult to predict. The market as short term interest rates have
for local and national real climbed in response to the Fed’s
estate can turn quickly and it is tightening. Those formerly “hot”
important for every investor in markets have become “luke-warm”
real estate, from the largest markets and are cooling further.
player to the smallest, to have As prices for residential and
strategies in place for selling commercial real estate spiraled
properties in down markets. ever higher, more and more buyers
found themselves priced out of
In a hot real estate market, of the market. Even the creative
course, little marketing is financing schemes created by
required. We have all heard the mortgage lenders often failed to
stories of bidding wars breaking close the gap. In hindsight, the
out in the residential market at downturn seemed inevitable, but
open houses in California and many failed to see it or prepare
elsewhere. In the commercial for the inevitable slowdown to
world, it’s not unusual to have follow.
30, 40, or more institutional and
Fortunately it is not too late TV’s, vacations, sporting event
for sellers of residential and tickets, and other unique
commercial real estate to get the incentives. What’s important to
most out of their property, even note about these offerings is
in a slowing market. Listed that while they represent a very
below are some strategies for small percentage of the value of
turning that “For Sale” sign into the property being sold, they
a “Sold” sign. create traffic, interest, and
distinguish you from the
• Price the property competition.
properly. The market will tell
you what you property is worth, • Don’t overlook the value
regardless of what you think. of curb appeal. How your
Price the property realistically, property looks from the outside
especially in a down market. It is an essential part of
is important to understand that marketing, called “packaging.”
the value of a particular piece Enhancing your property’s curb
of real estate is derived not appeal can often be achieved with
only from the underlying value of little expense. Consider
the property itself, but by painting, re-landscaping,
market conditions. signage, and minor parking lot
repairs. Between two similarly
• Offer incentives to priced properties, the better
attract buyers. Offering unique looking one will probably get
incentives can go a long way to sold faster.
boost the attractiveness of a
particular piece of property and There is no doubt that selling a
help you stand out from the property in a down market can be
crowd. Some sellers are a challenge, but the good news is
including perks like free plasma that these strategies can help to
preserve those hard earned
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About the Author:
"The Investment Property Insider" is published by Craig S. Higdon, a veteran commercial mortgage broker. He publishes the weekly e-zine and blog, http://www.InvestmentPropertyInsider.com,for commercial real estate investors, developers, and industry professionals.
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