Finding a qualified buyer starts by understanding who your prospective buyers are and what they’re looking for. Commercial real estate owners fall into one of two categories: business owners, who seek to run their own business out of an office building they own; and investors, who seek to own property based on the returns it can generate.
Highly qualified buyers will look different in each of these categories, and depending on whether they are new investors or experienced ones. Business owners may have highly specific needs, such as a certain number of square feet. Experienced investors may have highly specific parameters for evaluating their investments, such as a certain desirable location or a minimum return.
As a seller, you can tailor your listings to attract the kind of buyer you want most. Whether you want to make a quick sale, fetch top dollar for your property, or just ensure that a deal goes through, segmenting your audience based on their experience in the commercial real estate space can help you find the right qualified buyer.
How to Sell Commercial Property to Business Owners
Business owners are looking for places, first and foremost, where their companies can grow and thrive. The success of their own business in that space is paramount. The ability to generate additional revenue from the building is an important consideration as they consider how owning their own space will affect their company’s cash flow, but as business owners transition from renting their own space to owning their own space, their own needs will likely take precedence.
Every business owner is different, but generally speaking, business owners value a property’s location and its potential to help their business grow. Medical office space owners, for example, will seek offices that are convenient and comfortable for their patients and well-suited to their current and future needs. Secondarily, they’ll likely consider the ease or difficulty of leasing the building’s other space to similar tenants.
Business owners may or may not have experience in real estate investing. Those who don’t may need guidance to understand how owning real estate could impact their cash flow. How much will they need to invest in the building to get the lease rates they want? How much will they need to spend on property management, marketing, and other support services? How much do those costs compare to the rental income the commercial building will generate — and the equity they’ll build up over time?
Qualified business owner buyers are those whose finances are set up to make a large capital investment. They can access the necessary credit to purchase and renovate the building, and they have enough proven cash flow to meet their future obligations.
Additionally, when seeking qualified business owner buyers, focus on those who are actively looking at commercial real estate. Many business owners consider the possibility of owning their own space, but if you want to maximize your time (and that of your real estate agent), focus on those who plan to purchase space imminently.
To find qualified business owner buyers, start by optimizing the property’s marketing. Focus on niche listings and marketing to segmented email lists. Leverage your local networks, like Chambers of Commerce and networking groups. To reach additional leads, your marketing team may consider purchasing access to online databases.
How to Sell Commercial Real Estate to New Investors
Buyers who are new to commercial real estate investing are often ambitious and hungry to get started. New investors can range from young buyers looking for fast-growing investments to older buyers seeking additional revenue streams in retirement. Some of these new buyers might have deep industry experience, including professional experience; others may have never been exposed to commercial real estate investing before. Generally, however, new real estate investors are seeking to diversify their investment portfolios and are willing to assume more risk than the average investor in financial markets.
New commercial real estate investors probably prioritize the returns a building will generate, followed by how much it costs up front. Because these investors may not have access to the high levels of financing that their experienced counterparts do, they often start with smaller Class B or C buildings. They’re also more likely to purchase one property at a time rather than taking on a portfolio.
New investors often enter the commercial real estate market through local investing clubs or with the guidance of an experienced broker or mentor. If a broker you trust brings you a new investor as a potential buyer, that’s probably a vote of confidence in their ability to do the deal.
How to Sell Commercial Property to Experienced Investors
Experienced commercial real estate investors know what they’re looking for in an investment property. They may specialize in a certain neighborhood or a certain type of property. They likely have established relationships with lenders, contractors, and real estate agents. In short, experienced investors should know right away whether or not your property is a good fit for their portfolio.
That said, experienced investors understand a good investment when they see it. If a seller can market a listing to narrowly targeted lists of investors and communicate its assets clearly, they’re likely to reach a pool not only of highly qualified buyers, but also buyers who are ready to commit to a sale quickly.
Reaching experienced buyers requires sophisticated niche marketing. Building a segmented email list of commercial property owners can take time, but will benefit you when you need to make a quick sale. Developing relationships with a large network of commercial real estate brokers, and sending each person targeted listings based on their clients’ needs, will help you make quick sales as well.
Experienced investors are the most likely type of buyer to be highly qualified, but they can also be the pickiest. New investors may be most willing to take a chance on a property, but they may struggle to get the necessary financing in place. And business owners often have specific needs that a property may or may not satisfy.
To build highly specific lists that allow you to reach qualified buyers early in the real estate marketing process, work with professionals who specialize not only in commercial real estate, but specifically in marketing. WindWater’s team can help you build a list of every type of buyer so that, as soon as you or your client lists a property, we can get the listing in front of the buyers it’s best suited too — and make a quick and effective sale.