These days, commercial deals are harder than ever to put together. Even if you find a buyer (step 1) who wants the property, your next hurdle is negotiating a price acceptable to the seller (step 2) who may or may not understand that his property is not worth what he THINKS it is worth.
“Of course prices have dropped across the country, but my property is still holding its value, right? What do you mean it’s not worth what I put into it? I can’t sell it for what you’re saying the comps come in at! It’s worth a hell of a lot more than that!”
After the buyer and seller come to a meeting of the minds, then we have the financing hurdle (step 3) and inspections / due diligence (step 4).
It’s a long haul, not a sprint, and many agents don’t understand just how much time and effort all this can take. Residential agents especially see the big bucks exchanged in commercial deals, and think they can dabble a bit in commercial listings, not knowing just how much work they are in for, before the big payback (maybe) comes.
The 11 year payoff
I got an email from one of my commercial clients the other day, praising the patience of one of the participants in a large deal his company just put together.
In this (very large) commercial transaction, the owner of the property worked 11 years before the developer could even start building. Yes, it took 11 years to get phase one of the project off the drawing board and into shovel phase. In that time, the last 7 years were tied up in permitting alone. The last year was devoted to engineering and final permitting, and the deal closed just a few weeks ago.
Talk about the patience of a saint! If you were the agent in that transaction, would you have had the tenacity to keep going? Would you have given up in year 2 or 3 or 10? How many agents who might have started on this would even be in business 11 years later? Do you think you have what it takes to sell commercial real estate?
The next time you have a rough one, or a deal that seems to go on forever, remember this one!
Flickr photo courtesy It’sGreg.