Are you afraid that selling your commercial real estate yourself is too complex and tedious?
In 2019, the National Association of Realtor in 2019 Profile of Home Buyers and Sellers reported that 58% of sales by property owners sold in less than two weeks.
A few years back, Jake, my friend, was furious. He just sold his car through an agent but later learned that the agent made more money than him even though it was his car.
It happened that he had gone to this agent asking him to help sell his car. The agent said the car would go for between $800-$1000. For weeks, the agent didn’t sell the car and kept telling him that people were unwilling to buy the car because it was too pricey. Jake then asked the agent to sell the car for between $600-$800.
The agent called a week later to tell Jake that the car had been sold for $700. This news gladdened my friend’s heart.
Coincidentally, the car was bought by my friend’s colleague at work. He was surprised to learn that he bought the car for $1350. Jake felt cheated and sought legal action against the agent.
We later discovered that people had been coming for the car for the initial price of $800-1000 but the agent refused to sell because he wanted more money for himself and made $720 while the owner made $630.
This is true about most realtors; they waste your time and try to cut corners to make more money for themselves.
Hope you don’t want to make the same mistake my friend made?
In this article, we’ll show you why you do not need the help of a realtor to sell your commercial real estate property.
But before we go deeper into this, let’s show you what to expect from this article:
- If you understand how to sell commercial real estate properties already, we can help you get more profit from your transactions.
- Carrying out the sale of your property by yourself also attracts faster sale closures, no issues with middlemen, and an ability to negotiate with any buyer directly.
- There are 8 major ways you can practice how to sell commercial real estate without a realtor.
Read on to find out more.
4 Important Notes for Selling Commercial Real Estate Without a Realtor
Before walking you through how to sell commercial real estate without a realtor, you need to know the importance of selling your commercial real estate by yourself.
(Source: The House Shop)
The following are 4 importance of selling real estate without a realtor:
For maximum profit
If you are looking forward to making maximum profit from selling your commercial estate, then a realtor is not a good option. If you use the service of a realtor to sell your commercial estate, then expect to give away 3-6% of your total sale as commission to the realtor.
Note that this 3-6% is not from the profit made but from total sales.
What if your profit is between 3-6% or even less than 3%?
Selling without a realtor will help you save thousands of dollars or even millions, depending on the size of the commercial property.
You sell faster
Also, it is a known fact that homes sold by FSBO (for sale by owner) sell faster than homes sold by a realtor if done correctly. So, aside from making more money from selling your commercial estate by yourself, you can make that money in less time.
One reason why this is true is that you are not the only client a realtor has. This is even worse when they have bigger clients that they can make more profit from after selling their commercial estate.
Many have complained of their realtor not returning their calls on time or missing deadlines.
Agent credibility is almost always in question. It is quite difficult to distinguish a trustworthy realtor from a dubious one.
Most of the real estate agents are in it for their share of the money. They don’t care if you made a profit from the sales. Customer satisfaction is not their priority.
Sometimes, agents would advise you to sell even when it’s not a good deal because they are in dire need of money or are tired of your calls.
So, cutting out the realtor is a good thing. It’s better to put your destiny in your hands than putting it in the hands of a total stranger. As a plus, you will save time you would have spent looking for a trustworthy realtor.
Issues with middlemen
Multiple middlemen is also a major challenge. A realtor is automatically a middle man between the seller and the buyer. Sometimes, both the seller and buyer hire different realtors for the transaction. Both realtors may end up fighting back and forth to defend the interest of their employer. This is usually time-consuming.
The seller’s realtor will call the buyer’s realtor for information; the buyer’s realtor will then call his employer for the information. When he gets it, he then calls back the seller’s realtor, who then calls the seller.
Isn’t this tiring and time-wasting?
When you cut off the realtor, you reduce the middleman and deal with your customer directly, thereby saving valuable time.
How to Sell Commercial Real Estate Without A Realtor
Have you ever tried selling something by yourself before?
Do you still remember how difficult it was to convince people to buy?
When it comes to selling commercial properties, the difficulties are on a whole different level, but you don’t need to worry because we are about to share with you the easy steps you can take to make the process an easy ride.
Because you can yield high returns from selling commercial estate without a realtor, many people have now resorted to selling their commercial estate by themselves.
In 2019 alone, the National Association of Realtors reported that 11% of property owners decided not to sell their property with multiple listing services (MLS) but chose for sale by owner (FSBO) instead.
If you want to sell commercial real estate in the shortest possible time without a realtor, just follow these steps:
1. Be willing to make some expenses:
Selling your commercial estate doesn’t just come for free, although it is far cheaper than using a realtor when you are doing it yourself.
Before selling your commercial estate, it would be best to make sure that the property is in good condition – free from maintenance problems, dirty or damaged flooring, appliances in working order, etc. You can’t know this if you don’t employ the services of other professionals, like appraisers, contractors, maintenance personnel. If the professionals certify that there is a need for some repair, then it is strongly recommended these repairs are done prior to listing the property on the market for buyers to view.
2. Employ the services of an inspector:
The next thing to do after setting some money aside for expenses is to employ the services of a certified inspector.
The responsibility of the inspector will be to inspect the overall estate to check for any damage to systems such as electrical, plumbing, sewer and also specific items throughout the property like air conditioning or HVAC units, lighting, flooring, and especially hazardous items like loose wiring or dangerous substances on the property, before putting the property on the market. This is important because nobody will pay top dollar for a building that is not in good condition, and if they do, they will ask for severe discounts in order to take care of the items themselves.
Some buyers even go to the extent of getting the services of an inspector to inspect the building they want to buy before buying it.
Having the inspection report for any potential buyer would put a lot of concerns at ease and will allow for a much smoother transaction with a lot less surprises.
3. Make all the necessary repairs as suggested by the inspector:
After the inspector has finished inspecting your commercial real estate, you will be told what parts of the building need repairs or a general face lift.
Depending on your budget, you will be advised on which part needs the most attention and which parts can be overlooked.
After all the necessary repairs have been suggested, you will need to spend additional dollars on getting the services of a professional contractor to help with the necessary repairs suggested by the inspector.
It is important you don’t attempt to do the repairs yourself (unless you are a licensed contractor) because if the seller has issues with items after sale, they can always come after you in a lawsuit. Your buyers will want professional repairs on the damaged parts of the building and for the seller to provide documentation (invoices) of the work done properly.
4. Get the services of an appraiser:
After repairs have been carried out, the next step is to get the services of a professional and independent appraiser.
The responsibility of the professional independent appraiser will be to conduct a thorough walkthrough all over the building so that the value of the property can be determined. This is very important. Sometimes, in trying to avoid giving commission to a realtor, commercial real estate owners end up selling their property for far less.
The appraiser will look at comparable sales of similar properties and also the income of the building currently (if any) between these two metrics they will use one or the other to determine the value of the building most closely.
In 2019, properties that were sold by owners were $80,000 less than those sold by a realtor. To avoid this mistake, you need the service of a professional appraiser. The overall money spent on these professionals is a few dollars compared to giving out 3-6% of your overall sales.
Aside from the number of repairs that have been carried out, other factors that determine what the value of the property will be is the location of the estate, the price of other properties that have recently been sold in the same location, the amenities within and around the estate, and lots more.
5. Prepare the property for the unveiling:
After all the repairs have been done, the property appraised, and the sale price fixed, the property needs to be prepared for the unveiling.
To do this, the services of a professional cleaner are needed. The responsibility of the cleaner is to make sure every nook and cranny of the commercial estate is neat and presentable.
It is important to note that the need for the services of a professional cleaner depends on the size of the property but also the type. If you own a small commercial property that you want to sell, you can clean it yourself but it is always recommended you use a professional cleaner. This will save you additional expenses.
6. Advertise your commercial estate:
If everything listed above has been duly followed, then it will be time to advertise your property to prospective buyers. Advertising online is free depending on where you list and how much exposure you wish to have. Depending on the type of property and sales price, there are different online avenues that one can enroll to get the most eyes on it. One of the best national marketing tools (also free) is Loopnet. Loopnet allows you to list the property for free, but only Costar (parent company of Loopnet) subscribers will be permitted to see the property.
Thanks to social media, you can advertise your properties almost for free using the many social media platforms available. All you need to do is have some high-quality pictures of the property, which you can push out to the marketplace. There are also many websites where you can advertise commercial estates for free or pay a few dollars.
Aside from social media, you can verbally tell friends, neighbors, and family members about the property and they will help get the message around. If you have some extra money to spare, you can make sale signs, posters or advertise them in a newspaper.
When advertising is good, you can go ahead to review the property for the best time to start a promotion sale. Some types of commercial estates are in more demand during a particular time of the year than others. This also helps in determining your price; the higher the demand, the higher the price of the property.
7. Prepare yourself on how to negotiate and close the deal:
This shouldn’t be a big feat if you have ever bought properties before. You already know the value of your property, as well as the intimate details of the subject property. When you receive an offer that is satisfactory, review carefully with an attorney and open escrow.
It is important to brush up on your negotiating skills so that you will get a fair price. Iron out the important terms such as – purchase price, due diligence time frames, escrow period, repair costs if any, etc.
Once you get a fair offer, go ahead and close the deal.
8. Get your real estate attorney ready:
When your advertising pays off, the next important step is to bring in your real estate lawyer to help draft out a sale contract.
One thing the lawyer will do is to ensure that the sale complies with all the state and local laws. In addition, make sure that your rights as the seller of the property are protected.
So, What’s the Next Step?
It is cheaper to sell your commercial estate without a broker. However, it is important to be adequately prepared because it needs extra time and work. If not done correctly, you could sell for less than market value, be legally liable for not disclosing items on the property, and have a multitude of other additional costs.
If you have any questions about selling your commercial real estate, our commercial real estate experts are standing by 24/7 to help you. Commercial Consult can guide you through sticky situations and transactions to ensure you get your desired results. Contact us.