In commercial real estate brokerage, you will find challenges when it comes to every real estate team. The disciplines and business processes across sales, leasing, and property management will vary, and on that basis you need to know that every member of the team is implementing the necessary skills to serve the client base and improve the business.
Every brokerage principal or manager should be closely interacting with the client base to identify and determine any factors of under-performance or client concern. Invariably most clients suffering the effects of poor agency performance will tell others about their concerns before they tell the relevant agent or brokerage; over time they can do a lot of damage to the brokerage brand. It is common for a client to move on at the end of an agency term of appointment where the listing hasn’t been well serviced or communication with the client has been below par.
Whilst you may spend a lot of time encouraging the agents in the brokerage team to improve personal skills and strengthen opportunities, are they really implementing the necessary skills and habits to move to the next level? The only way you will know that is through tracking results of each agent when it comes to the core factors of the business. Most particularly they are:
The listing refresh process and frequency that applies to current listings with each agent
The feedback that each client may give when it comes to the services provided by each agent with the listing
So there are plenty of things to track here when it comes to identifying performance opportunities, as strengths, and weaknesses. The rules should apply across the brokerage and should delve into the activities of each agent. You will soon see and identify the agents that are under-performing, allowing you to take the necessary steps of adjustment in each case.
The commercial real estate industry can be highly rewarding in so many different ways when appropriate tasks and opportunities are seized in a timely way. Almost every element of success in the industry will be centered on the activities of individual agents. Encourage your people in the business team to do the right things in the right way and to make adjustments where necessary.
To a large degree, the marketing results that you get today in promoting commercial real estate will help you with negotiations and client conditioning. The property market is forever changing.
Seasonal inquiry will reflect in both the time on market for the listing, and pricing strategies. The impact of seasonal marketing should also help you with the correct decisions when it comes to the method of sale.
In receiving the inquiry from your marketing campaign, you will soon know whether you are achieving the necessary volume of inquiry and the type of inquiry. Don’t let a marketing campaign continue for too long without appropriate assessment and marketing or media changes.
You only have a short period of time where you can generate the necessary inbound inquiries to achieve inspections. Here are some further thoughts when it comes to assessing the campaign for your quality listing:
If the volume of inquiry is too low, it will be necessary to recommend modifying and increasing the marketing package to capture more people.
If the type of inquiry is incorrect as to its demographics, you will need to adjust the marketing so that it reaches the right people more successfully.
At the end of the first week of the campaign, you should have seen significant results and obtained buyer feedback which will allow you to understand if you are reaching your marketing objectives and targets. Depending upon the outcome from inquiries, you will make the adjustments as mentioned earlier.
It is important not to allow the marketing campaign to proceed without monitoring and without adjustment. In most cases, the optimized promotion of a property will be for a period of six to eight weeks at the very start of the campaign. Beyond that time the property listing will soon become stale and unattractive. If the property has not sold during that initial promotional period, it is better practice to remove the property from public promotion for one or two months and then start again using a different strategy or method of sale.
It is standard practice with commercial property to seek vendor paid advertising with any quality listing. This then gives the agent some guarantee that the client is serious about selling the property; it also helps the agent when it comes to controlling inquiry, creating inspections, and negotiating directly with the client.
It is essential to seek payment from the client for the advertising campaign prior to its commencement. Many a client has delayed or avoided payment at a later time when it comes to marketing funds. Don’t start to advertise until such time as the promotional money has been paid by the client and is held in the bank account.
As a basic strategy, keep in contact with the client on almost a daily basis from the start of the campaign to keep them fully appraised of promotional activity.
In commercial real estate you need seller paid marketing funds to spread the word about the property and its upcoming sale. Without that marketing approach, it can be very hard to get the message around the industry about the pending sale and the suitability of the property to the target audience.
If the client will not contribute towards property promotion, you have to ask yourself whether the listing is worth having. Think about all those other exclusive listings that you have where the clients have already spent good money on marketing. Shouldn’t you spend more time on those listings?
Some agents will decline an exclusive listing without vendor paid funds and I tend to agree with the practice. If you have a motivated client then you have something to work with and promote. Marketing funds helps reach out to the right buyers of the listing.
Here are some principles behind the process of vendor or seller paid marketing:
Get the advertising money upfront before you spend time and effort in the campaign. Don’t start the campaign without funds in bank. Many a client has stalled on paying marketing funds later on, especially when buyers are hard to find or if inspections are slow to create.
When it comes to advertising on the industry portals or websites, ensure that the client is prepared to pay for premium placement or elite type listings online. Given that there are plenty of local listings on the market at any point in time, your quality property has to stand out above others.
Your brokerage is likely to have a website for the promotion of listings in addition to the industry portals. Develop a ‘premium strategy’ for quality listings where they feature on your home page for a number of days. The client should pay for this extra service on your website.
Every exclusive listing should be promoted in your email newsletter. Those newsletters should be going out to the market every 7 or 14 days and should be property type or zone specific. You can charge a special rate for this despatch. If you have a large database, you could charge $150 per email database send. To sell the concept to your clients show them the size of your database and its relevance to the listing. Show them the shortlist of people you have already identified as potential buyers.
Let’s assume you have an exclusive listing; that listing should be the subject of 3 or 4 different types of advertisements all separately worded to minimise repetition. You can also use a selection of professional photographs to attract the eye of the reader.
To help sell the concept of seller paid marketing funds, tell the client exactly how you will be personally contacting directly the property owners and the business proprietors locally. Most agents won’t leave the desk to promote a property locally. That is an amazing opportunity for those that do. Physically take your quality exclusive listing to the surrounding property owners and business leaders.
Communicate continually. When the client has spent good money on marketing, it is up to you to tell the client every 2 or 3 days how things are going in promoting the listing. Give them plenty of feedback on website hits, email click throughs, and direct call enquiries. If you take an inspection at the property, tell the client what you found in the inspection.
You could say that this is not ‘rocket science’ and that most agents should do these things. The fact of the matter is that most agents do not market a listing specifically. Those that do however reap the benefits of better inbound enquiries and commission opportunities.
When it comes to commercial and retail property services today, the fees and commissions that we negotiate are critical to the performance of our property agency business, and its stability over the long term. Whilst discounting fees and commissions may be an option, it should not be a normal activity when it comes to working with clients or taking listings.
Far too many agents provide discounts as a factor of encouraging the listing. The fact of the matter is that discounts do nothing towards helping the client with a satisfactory sale or lease as the case may be. When it comes to a competitive situation between agencies in attempting to win the listing, it is better to provide real strategy and points of difference as part of your service offering, than any discounting for the client.
Here are some rules that can apply to the commissions and fees in your listing processes.
Establish a significant and comprehensive marketing campaign that is funded by the vendor. Give the client a number of alternatives to consider when it comes to marketing. Invariably and in most cases, you will see the client select the middle ground when it comes to marketing costs. Show the client a number of alternatives when it comes to the marketing of commercial and retail property today. Tell them what works, and show them the results that they can achieve. Drill down on the facts so that they know exactly what the recommendations are.
Do not discount your commission to attract a listing. The fact of the matter is that property commission is a reward based fee. If the client wants a successful outcome, they will understand the value of a fair fee for service. If they still want you to provide a discount, and you still want to take the listing, then discount your available services as part of the process. Lower commissions deserve less focus and marketing activity on the part of the agent. Does the client really want a sell or lease their property? If they do, discounting the commission is not part of that process. Show them the real savings and service that they will achieve when they have your total focus as a specialized local property agent. If they still want a discount, then you have not successfully and comprehensively sold your experience and relevance to the client when it comes to the particular property.
Consider the other fees that will be incurred as part of the transaction preparation. It may be that certain fees will need to be recovered prior to any marketing effort and promotional activity. This is certainly the case when it comes to preparing an information memorandum for the particular property. Many agents recover the cost of the information memorandum up front, given that it will take them a few days to put the document together. It is not unusual to see a fee between $1000 and $2000 for this document preparation.
Do not be too eager to provide discounts. Be focused on your specialised value as a local commercial or retail property agent. Top agents do this all the time. It is hard for a client to ignore or walk away from a top agent. In the end result, the client wants a satisfactory property outcome within the earliest possible time frame. That should be the focus of your listings sales pitch or presentation.
Advertising and marketing is the only way of getting many people interested in a commercial property in a short period of time. The more that people know about the property, the greater the chances of someone liking it, and wanting to buy. When you can get people to like a property, the higher the asking price can be, and the greater the potential for genuine enquiry.
Although some Commercial Real Estate companies pay for the advertising themselves (and the vendor gets what he or she pays for; little or no advertising and poor results).
Anyone could put their property to auction for a free market valuation, with an impossible reserve price and no intention of selling.
Getting the Marketing Message Right
Selling a commercial property is a business transaction and a joint effort. A vendor who spends money to make money is a genuine seller. The newspapers get the advertising money, in return for which the vendor receives AGENT SERVICE, EXPERTISE, LOYALTY AND BEST EFFORTS.
If a commercial real estate auction company paid for the cost of advertising for each property on their books, (say 200 properties) their classified and display advertising costs would be over $50,000 per month! They would quickly go out of business.
Know Your Marketing Requirements
In choosing an advertising budget, the vendor should carefully consider what the advertising is required to achieve. The more advertising that can be done the better for the client; more people will know of the property and its availability. Give the client some marketing campaign choices as you pitch for the listing and ask for vendor paid marketing funds. When you take the comprehensive approach, it is hard for a client to ignore the marketing story and the need for them to commit to the promotional campaign.
THE CHIEF CONCERN OF A VENDOR SHOULD BE TO FIND A SOLUTION TO THE PROBLEM OF HOW TO GET FULL EXPOSURE IN ORDER TO ACHIEVE THE MAXIMUM PRICE FOR THE PROPERTY.
Individual advertising budgets in Commercial Real Estate are tailored for each property. Agent’s commission, legal fees and advertising costs are often paid for in just one higher bid at auction. (As a guideline, adequate advertising costs should be approximately 1% of the value of the commercial property being offered for sale).