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Let’s now talk about the processes involved in getting to the first meeting with the commercial real estate prospect, and how you can take the right steps towards the listing in that meeting.
From the outset you must have good market intelligence from your region and most particularly you must:
- Know the Owners
- Know the Tenants
- Know the Property
- Know the Competition
- Know the Deals
These are the essential tools in your toolbox, and without them you cannot intelligently talk to anyone about commercial real estate opportunity. We have spoken about these elements in other parts of the program (hopefully you have a copy of that) so today we take on the other steps in the listing process.
You need to know who to call in commercial real estate and why you are doing it. Your preparation processes for daily calls should occur on a daily basis. The names and telephone numbers you need for this come from a variety of sources including the newspapers, telephone books, internet, tenants, businesses, walking or driving past properties, professional and service related people (solicitors and accountants), and title or deed details.
When contacting the prospect for the first time, it should be on the basis of introduction only and to seek a meeting. You cannot push for a listing over the phone because the industry and service is complex and built on foundations of trust. The best trust foundations are set in face to face meetings with the commercial real estate client or prospect.
One essential and key skill for you to develop in the industry is the ability to make lots of cold calls to prospects and to introduce yourself professionally in the process. Practice this on a daily basis as it will open up significant opportunity.
Let’s presume that you have made the initial call and you have your meeting with the prospect. This is the time where relevant questions and information will set you apart in the industry. Hence you must know what questions to ask and information to provide that are ‘prospect relative’; without these you will waste the prospects time and loose all the positive momentum from the first telephone contact.
Generally you should establish an understanding of the prospects wants and needs so that you know how to match your services and dialogue to the prospect. You can achieve this by adopting a mindset of being a ‘consultant’ that helps commercial property owners and tenants with the complexity of choices in commercial real estate. It is well proven that this mindset creates better attitudes and questions with the key people that you meet with.
Asking the right questions will help you know if you even want to have a particular listing. Not all listings are good listings. The last thing you want is a listing book full of over-priced or un-saleable and un-rentable properties. Time is your major resource in commercial real estate and it must be spent wisely. Walk away from listings if they do not ‘feel’ good to you.
In most cases the time needed to sell or rent a listing would be no longer than 12 weeks even in a tough market. After that time a listing becomes stale and a waste of your time. Choose your listings and the time on market with care.
A couple of essential rules need to be set here:
- Always seek vendor paid advertising – you are not the source of advertising funds to promote property no matter how good you think the property is. Vendor paid advertising sets the foundation of vendor commitment.
- Always seek exclusive or sole listings when you can – controlled stock is the only way to go. A seller of an open listing cannot be trusted and is likely to ‘shift in the wind’ on who they deal with. It should also be noted that exclusive listings are much more desirable than sole agency listings. It is your choice as to whether you would take on a sole agency.
- Always seek to list properties for sale on the basis of a ‘time driven’ method of sale such as tender, auction, or expression of interest. Properties that are listed for sale at a nominated price are likely to be undesirable listings or over priced listings with little momentum.
These 3 rules above infer that you are the driving force that creates the quality listing. Nothing could truer. You must drive the quality of the listing appointment that you want. If you let the owner of the property dictate the rules of engagement, you are likely to suffer poor results. Remember that you are the consultant to help people with commercial real estate needs; you are not the agent that lists everything and anything that comes your way at any price or rental.
In every listing know what you are doing and why. Focus on the outcome that you want. Understand that your time and expertise is precious.
When meeting with the owner of a property, you must to ensure that you have the correct critical mass of information to match the meeting and the property. We have split this topic into separate sections below. Focus your attention on the information that is really needed the meeting and how you can best use that information.
- Critical Property Data –first and foremost, you need to know everything about the property that your prospect owns. This may be a building, land, or development site. When looking at a building, you need to understand the physical details of the property, the area of the land and premises, the rental so achieved within the property, tenant profile, floor plans and plates, car parking facilities, age of the building, and the improvement history. These elements of information are just the start for you to sound intelligent in the meeting with the building owner. If you are lacking any information, you can question the building owner appropriately and with focused comments. They will appreciate professional questions relative to their property. They will also however expect your professional knowledge of the marketplace as this is the reason they are talking to you.
Typically building owners want to talk about the property in reasonable detail given the opportunity. There is a process called ‘Freudian slip’ in negotiation, where a person will divulge almost any information you want when you ask them sufficient well directed questions.
- Critical Ownership Detail –the owner of the property needs to be explored for critical information. Ask them about the ownership structure, timing of ownership and disposal, hurdles and challenges they currently face, tenancy detail, lease tenure and structure, and their perception of the market. It is common for property owners to have an inflated view of their property in the current market. You need to identify this difficulty from the outset and shape their attitude appropriately as you proceed.
In most cases, you will be able to tell the property owner as to where their property sits in the current market and your opinion of relevant price or rental. We again emphasise that there is no point taking on an overpriced listing. The only situation in which this should be done is where you can see reasonable chance of sale through price adjustment and owner flexibility.
- Critical Market Detail -whilst we need to understand the greater market fully, we also need to understand what has happened to the subject property in the current market. Most particularly you need to know if the property has been marketed by other agencies in recent time. There is no point taking on a stale appointment to sell or rent a property unless there is a significant adjustment of price or rental. People watch the market and the new listings coming and going through it. The only way you will reactivate interest in an old property listing is through a price adjustment. Do not be afraid to ask questions about the owner’s relationship and results with the previous agency to direct them towards a fresh property price adjustment.
When a property has been unsold for some period of time you will find that the property owner can start to think that an open listing method of sale is preferable using a number of agencies. If this becomes part of the clients focus, you do have the choice of taking the open listing or remaining firm on your policy regards taking only exclusive listings. The reality is that an open listing is not actively worked in the marketplace by any agency. A property owner needs to understand this fact.
- Essential Information – when meeting with property owners, give them information which supports your expertise and activities in the marketplace. This will include details of essential staff, recent sales, market intelligence, evidence of good marketing programs, evidence of buyer and tenant prospects that are desirable for the subject listing, and anything else that can reinforce the reason they should select you as their agent.
Moving to the Next Meeting –regardless of whether you have achieved a listing or simply information from the client, you should always close your first meeting with an agreement to move to the next stage of contact. Momentum and decisions are the essential elements of success in commercial real estate. Keep your clients and prospects moving ahead in the direction you desire. The most successful people in the industry will move forward to a set contact plan and structure of meetings with the right people owning the right property.
A good CRM program is foundational to this process. How many people should you be actively contacting on a regular basis? The answer is about 1000 contacts across an equal balance of businesses, investors, and tenants in your region. You need to contact them at least every 90 days to set up a professional contact cycle.
One useful strategy in moving towards the next meeting is to tell the prospect or client that you would like to undertake further specific study of market trends relative to their property type. This will allow you to formulate a specific report that they will find useful in their future decisions and discussions. The complexity of commercial real estate commonly needs market investigation, consequently you can use this strategy successfully is a leverage for more time and further contact.
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