When you systemise the listing process in commercial real estate today, you can improve the quality of the listing, the marketing, and the future negotiation. The best listing process involves a checklist procedure. Commercial real estate agents should optimise the listing process in this way.
Today we find that most listings are competitively tendered between several agencies. This means that your sales pitch for the listing may be the only opportunity for you to convert the business. Everything has to be prepared and aligned for the sales pitch and presentation process.
A good listings system will involve questions, checklists, and a gathering of the relative facts. When this is professionally done, the client cannot help but be impressed with your thorough and detailed approach.
Clients like to choose the agent of skill and experience. The only way you can help them do this is through displaying your comprehensive property procedures as part of the sales pitch and listing presentation.
Here are some ideas to help you establish the listing process and improve on your listing conversions. This can be the start of your listing system.
- The gathering of property facts will be the start of the entire process. That will be the information relating to the property itself, improvements, the property owner, the general precinct, and any leases or tenants in occupancy.
- Inspect the property prior to the meeting with the client. If you can meet the client on site, this will be even more productive and help the eventual sales pitch or presentation process.
- Get the history of the property and ask the client about their reasons for sale or lease today as the case may be. They will have specific needs in taking the property to the market today, and you need to know what they are. This will then help your final listing pitch and negotiation.
- Most properties today will be impacted by encumbrances, property interests, rights of way, leases, adjoining properties, tenants, risk, permitted use, and other things such as property improvements, design, and building compliances. Many of these facts will be influenced by the property type and the property location.
- Some precinct or geographical issues such as flooding, services and amenities, highways, transport, car parking, and raw materials may also have an impact on the property occupant for the property owner. It is important that you observe and question everything relating to the property.
- When a client takes their property to the market they will have an ultimate goal or target to satisfy. That fact will influence the listing process, the marketing, and the negotiation when it occurs. Work through these issues with the client so you can get to the real facts of the property as it is today and their needs.
The listing process should be highly professional. This will then help your ongoing business opportunities.
The commercial property presentation today for sales and leasing has to be quite specific to the challenges in the property market. Every client that we present to should be under no misunderstanding when it comes to the prevailing market conditions. It is your job to tell them exactly how the market reacts at the moment to properties similar to that owned by the client.
The property sales pitch or presentation therefore needs to be comprehensive and specific to the property type. When you do this correctly, you will achieve a listing that is matched to the market and a client that is receptive to the required ongoing marketing and negotiations.
Here are some tips to help your property presentation process today.
- As a first stage of the client connection, it’s desirable to meet the client on site and go through the property together. This then allows you to ask questions of the client relating to the property history, the usage, and their motivations for sale or lease today.
- Following that property inspection, ask the client for at least 24 hours of time to allow you to research the prevailing market conditions, and provide the best recommendations to resolve their property challenge. Use that time to correctly structure the strategies and recommendations that should be put to the client. Be quite specific and not generic when it comes to those factors and your final proposal or recommendation.
- At the start of the actual presentation, explain to the client the prevailing market conditions as you see them relating to the property and it’s location. Provide evidence from competing properties on the market today as to time on market, pricing, and best methods of sale or lease as the case may be.
- Over the last two years, there should be some market evidence relating to the achieved prices and rentals for that property type. Whilst each property result will depend on improvements and location, it is worthwhile graphing the property market trends when it comes to results, prices, and rental. Make sure you have inspected each comparable property so you can relate the facts to the client from a personal level.
- Be prepared to tell a few stories relating to other clients and market situations. It is surprising how stories will gain the attention of the client and help your presentation overall.
- As part of the presentation, use plenty of digital photographs on your laptop computer. Those photographs can be rolling automatically as a slide presentation whilst you talk to the client about their property. Most of those photographs should be of the clients property, the surrounding locations, and competing properties. In this way the client will be connecting with their property and your conversation. Avoid slides with any words. Pictures will help grab the clients attention.
Top agents today take deliberate effort when it comes to the property presentation and connecting with the client. Everything needs to be specific in content and accuracy. Expect the other competing agents to do their very best to derail your property presentation. You will not have a second chance to meet with the client, so every presentation needs to be the best.
When it comes to weigh commercial real estate listing, presentation, or inspection, it is quite likely that the parties will give you a few objections in the negotiation. Objections tend to be a testing process to see if you satisfy the necessary factors that the other party requires in making a decision.
Top agents in commercial property know that practice is always required when it comes to negotiating and handling objections. You can never do enough of this type of practice when it comes to commercial and retail real estate. Build some of those topics into practice and role playing in your team meetings on a once a week basis. Current market conditions will always give you lots of factors to work with and debate as part of offsetting objections.
So here are some strategies to help you handle the objections that will arise from property sellers, landlords, buyers, and tenants.
- When the objection is raised, you need time to think about your response. Some agents will take notes as part of the negotiation and response process. As you take the notes you can consider the alternatives in responding. Solicitors do this all the time as part of working with difficult clients and customers.
- Some agents will go for the strategy of a pregnant pause. This may only be a few seconds, but in reality it will seem like half an hour. When the client has given you the objection, consider the response before you come back with the comment.
- If you need more time, you can ask the client to qualify and explain their position further. Again, this is a strategy of delay allowing you to consider your response. When you ask more questions, the client can invariably give you some leverage to respond. This process is called a Freudian slip. It is used by the top agents all the time; it is simply a matter of asking questions and digging deeper. As you get the greater levels of response you can interpret the answers from the other party.
- If the client or the customer has particular concerns, you can acknowledge them and then restate them in your words. In this way the client or the customer will then understand that you can relate to their situation.
- Break the concerns down into single factors and matters. One big problem or objection is actually a number of issues, some of which can be resolved easily.
- Respond to the other party with confidence and local market knowledge. It is very hard for the other party to refute or reject prevailing market conditions and market evidence.
- Give the other party some clear stages of resolving the problem. Show them how you can move ahead and help solve the overall situation. Determine what their best fallback position may be if it exists. Tell them that they may only have one chance to close on the transaction. If the chance passes them by, they may lose the property enquiry or the initiative entirely.
In commercial real estate today it is incumbent on us to be confident and connecting when it comes to negotiating and handling objections. This process and practice takes time to perfect. Learn as much as you can in this specialist part of the sales and business environment.
In commercial property today, just about every listing will go to some form of competitive pitch or sales presentation process. This then says that you will be up against a number of other agents in the process. You will only have a short period of time to convince the client that you are the best agent of choice and relevant to their property needs.
There are some key factors to incorporate into your sales presentation to ensure that the client really appreciates the value that you bring to the process. Here are some of those key factors to help you structure your next sales pitch or presentation.
- At the early stages of the presentation, ensure that the client can see that you totally understand the property and or their current situation. Go through the elements of the property as you see them today, and restate to the client the focus or the requirement that they currently have.
- Every property will have distinct features and improvements that are relevant to a target market. Be quite specific in establishing that target market to the client, and give them some solid recommendations relating to how you will attract the enquiry from the market.
- It directly follows from the previous point that the property marketing campaign should be quite specific to the listing and the prevailing market conditions. Give the client some distinct recommendations and alternatives when it comes to property marketing. Get away from the generic advertising and promotional campaign. Give them something specific that they can see that is different and unique to your approach.
- Every client likes to be ‘special’ when it comes to engaging your agency and services. They like to know that you are committed to them in the listing, marketing, and negotiation process. They are three distinct stages that all have elements of engagement and specialty.
- You cannot achieve the levels of commitment to the client without having an exclusive listing. Make sure the client understands how an exclusive listing works and the types of feedback and interaction they will receive. If they still choose an open listing, then it is really just a matter of whether you really want the listing. Open listings will detract your focus from other exclusively listed properties. The client needs to understand that. If they are genuine in the listing process, they will choose an exclusive listing.
- Any strategy involving an open listing is really a waste of time for both the client and for you. Top agents will walk away from open listings. You cannot control your market, the enquiry, and the property promotion when it comes to an open listing. It is no secret that today most properties take time to sell or lease. The commitment and the marketing effort can only be directed through an exclusive listing.
- When it comes to connecting with the client as part of the presentation, some elements are not negotiable. Most particularly they are your market knowledge, confidence, and enthusiasm for the property situation. All three of these factors need to be correctly conveyed to the client so that they know that they will be making the correct choice when it comes to signing off on the listing with you and your agency.
At the end of any presentation, it is critical that you ask for the business. Top agents always ask for the commitment from the client as part of the close of the sales pitch. Don’t give the client an opportunity to avoid the process and seek further time to call and connect with other agents. Ask for the business.
In commercial real estate today, every service that you offer should have specific value related strategies. It doesn’t really matter whether you sell, lease, or manage commercial real estate, but it does matter that you understand the valuable outcomes that you provide to the clients that you serve.
Every person in your agency should understand the values that are provided by your agency and business. In this way every sales pitch and presentation can be improved and optimized. Consistency in your message is really important.
To win a listing in today’s property market, your services are to be of the highest value and of great relevance to the client. The generic approach in commercial real estate will give you poor results. There is no point in being like every other agent.
Why are you the best agent in the local area? It’s an interesting question. When you know the answer, it will be very easy for you to pitch and sell your services in sales, leasing, or property management. Top agents know how to do this and you should also understand the process.
When you look at the differences in service that can be provided, you can see specific values that are real and relevant to the clients that you act for today. Here are some cases in point.
Commercial Real Estate Sales
- The ability to tap into some comprehensive database that is real and up to date. That database will help you minimise time on market and create property inspections conveniently and effectively.
- The right methods of sale to attract the appropriate enquiry in today’s market. The method of sale should be relevant to the property type and the levels of current property enquiry. The ways in which you take a property to the market will send a message to the local property investors and business owners.
- The marketing systems that can help spread the message into the target audience for the particular property. Those marketing systems should be specific and not generic. They should reach the target audience effectively and comprehensively over a well-directed marketing campaign.
Commercial Real Estate Leasing
- A comprehensive list of all the business owners and business proprietors through the local area. That list could be updated continually to ensure that you know when those businesses need to expand, contract, or relocate into other premises.
- Tenant advocacy services that can help tenants to find the right properties in the right location. Tenant advocacy is quite a specialised service and it requires the services of a highly experienced leasing professional. They understand the lease strategies, rental types, and occupancy costs. They know how to put good leases together and can serve their tenants well. That being said, the tenant in such situation is the client.
Commercial Real Estate Property Management
- Commercial property management is quite a specific service and should not be undertaken in your agency unless you have the right people. A good property management service will include income control, expenditure management, risk management, property compliance, maintenance strategies, lease documentation, and tenancy mix management. Make sure that you have at least one highly experienced commercial property manager on your team that knows what to do and how to do it. They can then train other more junior people that come through the ranks.
- Retail property management is distinctly different than commercial property management and to a large degree is more intense. In retail property and with shopping centres, you will find that the intensity of management service is higher and therefore the fees are higher. You need the right people that have experience in managing shopping centres with large numbers of tenants. The fact of the matter is that a good retail property manager will help build your business due to the experience and relevance they apply to the properties that they manage.
So these are some points of difference that can be built on. Specialisation in the industry will always give you leverage. Make sure that your people provide the specialisation that your clients need and then send that message out into the market at every opportunity.
In commercial and retail property management, you do need some strategy behind the fee process. It is simply not a matter of just charging a fee based on the percentage of the income received. There will be certain activities in your property management services that require specific attention when it comes to the fee calculation.
I prefer to calculate a fee based on the amount of time to be applied to the particular property under management. This then says that you will need to know the cost factors that apply to your property management services. When you can achieve that awareness, you can understand where you are spending too much time on a particular property under management.
So let’s look at some different ways to calculate property management fees.
- There may be some local industry trends that apply to the management fee process when it comes to the different property types. Survey your competitors to ensure that you understand the fees that you are competing with. For smaller properties under management, the typical fee is approximately 5 to 7 per cent of the gross income received. As the passing income for the property gets larger, the fee tends to get lower. That being said, the fee still needs to cover the amount of work required to manage the property successfully and professionally.
- Be aware that the complexity of property management in retail property is far more significant than that which applies in industrial or office property. For this very reason, the fee to manage a retail property is much higher than the other property types.
- So the fee calculation will be based on the property type and the time input to provide management services. It is simply a matter of knowing how many hours you will spend on the management services for that particular client each week and for each particular property. You can then see where you are spending far too much time for the fee being recovered. What should you do with the property where the fee is too low? The client should be approached regards fee modification. It is best to do that across your entire property management portfolio at least once per year.
- Interview the client at the commencement of management services so you know exactly what they require from the property manager and your agency. List the services and the frequency of those services to be provided. This will remove any misunderstandings relating to ongoing services.
- There are different management duties to be provided as part of the typical property management service. Income collection, lease management, maintenance management, property inspections, and disputes are all separate services to be provided in managing a property. They may very well attract separate fee activity.
- The same can be said for leasing commercial property and minimising the vacancy factor across the tenancy mix. Specific lease strategies such as options and rent reviews will also be quite time consuming during the average property management year. Allow for these processes as part of your fee structure.
- There will be a different lease fee structure for leases negotiated with outside tenants vs. sitting tenants. There will usually be a 25% discount for leasing fees undertaken with sitting tenants.
Commercial property management services are detailed and specific. They demand a special fees strategy.
In commercial or retail property management today, there is no point in making a fee loss. Many agents look at the alternative fees that can be achieved from the property management portfolio; those extra fees being sales and leasing related. They then minimise the management fee to attract the ongoing property management business. The strategy is not good and should be avoided.
Unfortunately it is a long time before the average property will go through a sale and or a lease transaction. That means that the loss factor of the property management division will become a significant cost burden on the agency business. Get the correct management fee from the start, understanding that your property management services are of high quality in every respect. Sell your specialised services and get a good fee.
In commercial real estate agency today, we tend to overlook the value of the lists that we have in our office or in out possession. Lists can help focus our efforts when it comes to new business and commission.
When talking about lists, it is interesting to note that many commercial real estate agencies have a database that is well out of date. The results of any marketing into the database are therefore quite sporadic at best.
If you want results in our industry, take a look at the lists that you are working with and the accuracy of the information contained therein. Develop a good list process yourself, and work it on a daily basis. It is essential that you develop a habit when it comes to maintaining your lists and your client relationships.
The problem with databases and lists is that they need to be maintained. Many salespeople prefer not to do this work themselves. The result is that no one person then takes ownership of the database and the value of the process falls away.
Whilst I may be generalising, I would say that at least 75% of the commercial real estate salespeople that I have made contact with over time have databases that are sporadic at best, and in most cases quite random. You cannot build your commercial real estate business around a sporadic database.
Top agents tend to have lists that are completely up to date and worked on a daily basis. They know the people in the list and make sure that regular contact is maintained. After each contact process, the list is updated with accurate information.
Here are some ideas to help you build momentum and accuracy in your list process:
- In most cases, your personal list of contacts should be no more than 1000 people. Beyond that point it is very hard to keep contact with the right people at the right time. It is the quality of the 1000 people that makes all the difference in your career and industry. When you focus your connections into a group of this size, you will generate commercial real estate business. The key point is to focus your efforts of connection and communication on a regular basis to the right people. They need to know you as the expert that you want to be. In this way you can build your top agent profile over time. Regular contact sends the right message.
- You do not need to have a complex software program to support your cold call prospecting or client networking. You simply need something that works for you. Certainly there are some great software programs out there that can help you build very productive customer relationship models. When it comes to choosing the right program, I would prefer something that is simple to use and convenient. Access to the database anywhere by the mobile telephone and or a laptop computer would be an essential part of the list building process.
- It has been proven that a regular contact process to the right people will produce significant new business opportunity. That contact cycle should be at least once every 90 days. After that time people tend to forget you. When you make contact with clients and prospects, have some simple connection process and information that you can send on to them as part of the connection follow-up. You are the property expert, and they need to see that.
Leverage is one of the most important things to work with in commercial property and investment real estate. It is a people based industry and your success will be based on the size of your network, and the relevance of your skills. That is why your list is so important. If you are struggling in the property market now, take a serious look at your database and its relevance to today’s market. Start working on your database and the industry will open up for you.
When it comes to your career in commercial real estate, commission will always be important to you as you move through the year. In any given sales year, you really only have 10 months in which to create the necessary listing bank and completed transactions.
January is usually a difficult month when it comes to property enquiry and completed transactions. Most clients and prospects take holidays in this period. That being said, some agents will come back to the industry early after the Christmas break so they can find the right people that are active and looking for commercial property in that quiet time. The strategy does work if you decide to adopt it. They say that ‘the early bird catches the worm’, and in commercial real estate that rule does apply.
Commission structures change throughout the industry based on property type, industry standards, and industry regulation. When the property market becomes more challenging and slow, there is a tendency for some agents to discount their fees and commissions. The fact of the matter is that discounting fees is a precursor to agency downturn. You are the expert when it comes to property enquiry and property marketing. You do not need to discount your fees. You do need to sell your services comprehensively.
Here are some observations regards commissions and fees structures:
- In many locations you will find that the commission base for a commercial property sale is usually around 3% for properties that will sell up to a price of around five million dollars.
- Over a sale price of five million dollars, the commission structure tends to reduce. The lowest commissions I have seen in the industry were around 1.25 per cent of the sale price. That is based on a property selling for $500,000,000. It is quite unlikely that you will ever find commissions going below 1.25 per cent nor should they. The fact of the matter is that a large and significant commercial property for sale requires significant effort when it comes to marketing. The best people and the best strategies are required to achieve a great result for the client. A totally committed agency team appointed to a significant listing will produce far better results for the client than any reduced commission benefit.
- All of this being said, if you are still going to reduce your commission for some reason, ensure that you get a commitment from the client for an exclusive listing to your agency for a long period of time. That will usually be for a period of at least six months. As part of that process, also get a commitment from the client to vendor paid marketing. That vendor paid marketing should be paid to you upfront prior to the campaign commencing.
If the client expects you to reduce your commission, then you should expect the client to commit to your agency in a well-structured marketing campaign. Show the client that you have the right strategies and people to promote the property comprehensively into the target market. Tell the client what will be occurring over the marketing period. Give them an established process that they can fully appreciate as part of accepting your listing appointment. Use a Gantt chart to display your actions and intentions.
The marketing of commercial and retail property today is not an experiment. It is a very specialised process requiring top salespeople and experienced agencies. Develop your skills and sell them into your client base. Show the client that you have the database and the connections to spread the property marketing message into the industry. They must be able to see that your agency can get the best price in the shortest possible time.
In commercial real estate today, we have to do more with less enquiry coming in. Every prospect that comes to us from a listing or a marketing campaign needs to be correctly qualified and then successfully directed to the right property. This takes skill. Every property enquiry should be optimised.
The property inspection process is therefore critical to moving the transaction ahead. We must ensure that the prospective buyer is comprehensively supported through the property inspection process so that we can get an offer that is fair and reasonable given the current market conditions.
Most property buyers today have little urgency to make a decision. They will look around the market, talk to other agents, and take some time to move to the stage of an offer on any property that they like. Our skills in this market today, are more important than previously.
So What Should You Do?
Qualifying a prospect should be undertaken as part of the initial inquiry. Find out what the prospect is looking for when it comes to property location, price or rental, and improvements. Ensure that they have the necessary financial backing to act in this property market today. Make sure that they have the ability to transact the property at the expected rental benchmark or price. Ask them about the other properties that they have seen and the other agents that they have spoken to. Hopefully they will give you a truthful answer!
Here are some tips to help the inspection process with your prospect:
- Ensure that you have all the facts about the property including income, expenditure, tenant mix, and improvements.
- If required, get the clients approval to undertake the inspection of the property at a particular time convenient to them and any tenants in the property.
- Before you take a prospect to the property (or hand over any information) have them sign a confidentiality agreement. You do not want information making its way to your competitors.
- Have a clear strategy to move people to and around the property. The features of the property should be comprehensively covered in the inspection.
- If the property involves tenants and a tenant mix, have the information at hand as well as the information relating to other competing properties, the supply and demand for space, and the market rentals in the area.
- Always be prepared to take an offer. That offer should be in writing in all cases. You have nothing to work with if the offer is verbal.
- Remember who your client is in the transaction. You are working for them when it comes to the offer, the inspection process, and the negotiation.
To help your inspection strategies when it comes to commercial and retail property, you can use a checklist that combines all the strategies that have worked for you on other properties locally. Be prepared and have your information ready.
When it comes to marketing a commercial property for sale or lease, you can improve the results that you get through some simple steps and strategies. Gone are the days of generic marketing. Every advertising dollar needs to be optimised. Property enquiry just has to be created for the best possible result.
Here are some tips that can be applied to the property marketing process in your area and by property type.
- Review all competing properties before you form an opinion on price, rent, or marketing method. There is no point in repeating problems or errors that others are making in property marketing. Check out those other properties for price, rent, and enquiry. Your marketing strategy needs to be better so decide what ‘better’ means from your new listing perspective.
- The first 3 weeks of your marketing effort are really important, so decide what will be done in that period of time and monitor the results. Use a ‘Gantt’ chart to establish your processes for the client. The chart will help them see what you will be doing and when.
- Keep the client fully briefed through each part of the marketing effort. You should have vendor paid funds for that property promotion, so spend the money as part of an agreed marketing and advertising effort.
- Every enquiry that you get should be qualified and then put into your database. Over time that database will be a key component of your business processes and networking.
- The internet is a really important part of every marketing effort today. Search out the ‘keywords’ on the search engines that are being used for property enquiry today.
- Local businesses should feature in the early stages of the campaign. A quality listing is a great excuse to talk to the local business people and see what they know or may be looking for when it comes to a property move or upgrade.
- A good signboard will help the property effort. Get the signboard onto the property as early as possible. When that occurs, talk the nearby property owners and investors. You will get a lot of market intelligence that way.
- A ‘high end’ property advertising campaign is something that builds brand and identity. Tops agents use ‘high end’ campaigns to create enquiry from the local and regional area. This then says that all of your campaigns will strengthen your identity as a good agent if you let the marketing set a solid benchmark of quality and relevance. ‘Ordinary’ is not a good word when it comes to property marketing.
Commercial real estate is a people based business. When you really understand that fact, you will know what you should do every day as part of building your momentum in property marketing.