Posted: April 12, 2017 by Paul Cohen, Regional Director
SELL PROPERTIES LIKE STEPHEN GOSTKOWSKI
I know what you’re thinking. Have I lost my mind? Why is the kicker for the New England Patriots selling real estate? Did he just get fired by Belichick and get picked up by the local Remax affiliate on the waiver wire? Not even close. Stephen Gostkowski is still alive and kicking (punt intended (that was intended too)) and getting ready for another 87.1% season.
One challenge with sellers is they want to believe the broker who forecasts the highest price not the broker who tells them the most realistic outcome. It’s all too easy to start a bidding war with other brokers and before you know it you have just landed a listing for 20% above your original valuation.
As a former broker, I liked to use the field goal analogy when speaking with sellers about their properties. I would put the price that even the most conservative investor would pay at the 1 yd line – about the equivalent of an extra point – and the highest price imaginable at the 45 yd. line (meaning a 62 yard field goal which has an approximate success rate of say 10%) and explain to the seller that the higher the price, the lower the success probability, but also explain that I was the best field goal kicker in town.
In fact, commercial real estate has different values depending upon who’s buying it. Take a suburban office property for example. To an investor, it will have a value based upon a cap rate range. An owner/occupier may be willing to pay slightly more if they view it as their office and have different economics, emotions, and maybe even different financing. A developer may value the property even higher if there are potential zoning changes and increased time to get said rezoning.
Selling to an investor at a market or slightly above market cap rate is like an extra point. Most brokers should be able to kick that. Only a bad snap or hold will stop you making a sale.
Selling at a premium cap rate or to an owner-user is a little tougher and requires wider reach. Most competent brokers can get the equivalent of a 25 yard field goal utilizing their broker and investor network but you need to have a more targeted approach if you want to hit from further out. The success rate dramatically drops off unless you have Gostkowski accuracy.
Getting maximum pricing relies not only on accuracy but range. Only the top brokers have this.
A top Broker has deep relationships in the market, knows how to approach investors, owner users, and developers to structure a deal that makes sense and then strike at the right moment. They will use the best tools to help them reach the right buyer and then run a tight process to get the deal closed. Many of them have made CREXi part of their team for it’s ability to enhance their range and accuracy!
Are you the Gostkowski in your market? How do you drive pricing and help get that extra point or three?
Paul Cohen is a Regional Director with CREXi based in the firm’s Miami office and focused on business development in the southeast. Prior to joining CREXi, Cohen was a Managing Director specializing in investment sales and equity raises at Cohen Financial, a national debt and equity advisor. Prior to Cohen Financial, Paul owned and operated his own independent real estate firm following a 12-year tenure at CBRE where Cohen was a Senior Vice President and led the Private Client Group in Miami-Dade County with a specialty in office and industrial investment sales. Email Paul