What is the best way to sell commercial property?
- Thread starter belleran
- Start date
It will vary from city to city. The yields would be combined but analysed separately for the resigned & commercial portions and based on areas etc. Would be difficult to ballpark without knowing the mix etc.
for cash money : )
sorry could not resist
Auction might imply a "need to sell" rather than want to sell
That need may be much greater for the agent than for you.....................
ta
rolf
Belleran, if you tell what yield you base your 2.5m on, then you might sell it here, or not.....and simultaneously clarify whether your need is greater than the agent's.
EOI is probably a better way to sell commercial property as you can pick and choose your offers and it is not as transparent as an auction. Having a property passed in at auction provides an anchor-price point for potential purchasers, regardless of true value, which can hamper your negotiations and people try to screw you if they think you're desperate.
Are you using a specialist commercial agency or just the local?
Who came up with $2.5m?
Agents will often use the auction approach to provide you with a timeline. Very few commercial properties are sold individually at auctions but are negotiated beforehand. It gets the commitment of the vendor by paying advert costs.
Who has the agency identified as the buyers?
Have you gone out to other agencies?
Who came up with $2.5m?
Agents will often use the auction approach to provide you with a timeline. Very few commercial properties are sold individually at auctions but are negotiated beforehand. It gets the commitment of the vendor by paying advert costs.
Who has the agency identified as the buyers?
Have you gone out to other agencies?
What great input. Thanks everyone.
EOI? Sorry to be so ignorant Aaron.
Agent is only a local. His valuation is based on previous sale in the area 2010, land area and rents. Really appreciate your insight on the auction process in this instance
Sylvester the agent is using 6% yield
Scott - three/four retail and two resi
EOI? Sorry to be so ignorant Aaron.
Agent is only a local. His valuation is based on previous sale in the area 2010, land area and rents. Really appreciate your insight on the auction process in this instance
Sylvester the agent is using 6% yield
Scott - three/four retail and two resi
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EOI Expressions of interest
One previous sale is a small sample, was it postcode 2010 or was that the sale date?
EOI. I'd seek out another agent for another opinion.
Try calling a local valuer or two , find out what cap rates they are applying in the area. I'd also call a few agents to get cap rates or recent sales. Commercial is pretty well number driven , so make sure that you know the exact income and outs to give you the real net income. i did have a mate who undersold his property because he thought he was getting less income than he actually was.
Auctions are great because for $5-10,000 you can market the property to a much larger range of people than a Private Treaty sale would reach. It will effectively bring all interested parties to the table, and they will determine the property's worth. Don't think an Auction is what you see on TV - a property can be sold before, at, or after the auction.
In the present market, many are sold after auction. It is very hard to gain finance when you don't know how much the property is going to go for - whereas if the property is passed in, a prospective purchaser can then go to the bank and get a loan approved for the desired amount.
Expressions of Interest campaign is much the same without the Auctioneer. However, a good auctioneer will provide an outstanding result. And you also know that if someone requests the contract and turns up to the auction, they are probably quite serious about purchasing the property.
Investors will basically care about 1 number - the net return on the property. They will be looking for a specific return rate on their investment so do anything you can to ensure there are long term existing leases on the property at the highest rates possible. A lease with less than 6 months left on it is close to worthless to most investors.
For example, if an investor is looking for a 7% net return and you're able to squeeze an extra $10,000pa net rental out of your property, that is an extra $142,857 value to them.
I hope this helps somewhat.
Jonno
In the present market, many are sold after auction. It is very hard to gain finance when you don't know how much the property is going to go for - whereas if the property is passed in, a prospective purchaser can then go to the bank and get a loan approved for the desired amount.
Expressions of Interest campaign is much the same without the Auctioneer. However, a good auctioneer will provide an outstanding result. And you also know that if someone requests the contract and turns up to the auction, they are probably quite serious about purchasing the property.
Investors will basically care about 1 number - the net return on the property. They will be looking for a specific return rate on their investment so do anything you can to ensure there are long term existing leases on the property at the highest rates possible. A lease with less than 6 months left on it is close to worthless to most investors.
For example, if an investor is looking for a 7% net return and you're able to squeeze an extra $10,000pa net rental out of your property, that is an extra $142,857 value to them.
I hope this helps somewhat.
Jonno
Isn't Commercial value also based a lot on the tenancy when selling?
There are so many valid and varied exceptions to this, that the statement quoted couldn't possibly be considered a rule.
1. A neighbour will obviously pay over the normal odds to extend his property. The value the property being sold is worth more to them than anyone else in the market.
2. Length of lease - for the identical nett rental return, an investor is likely to pay waaay more for a secure 15 year lease, than one that has only 1 year to go.
3. Quality of Tenant - a Govt Tenant or a big multinational will attract a large premium, as to some small 1 or 2 man band outfit.
4. Quality of Lease - there are some quite patheticly written Leases that have holes all through them which undervalue the property and undermine the security of the income. On the other hand, some Leases are absolutely water tight and pin the Tenant squarely to the wall.....these are worth waaay more.
5. Size of the Bond / Guarantee - some Tenants provide a huge 12 month Bond, which adds alot of comfort and value. Some smaller Tenants pay nothing at all, and the Landlords, desparate to have someone in their building, allow them in on a "wing and a prayer". These properties obviously don't give the Buyer much comfort at all. Lenders usually place quite a bit of emphasis on this factor as well.
6. Land component - this one is huge - it can be the difference of millions and millions of dollars. Obviously some strata stuff has no land at all, and other stuff can be a vacant block, so it ends up being 100% of the value and the Lease becomes irrelevant. A commercial block of land with no Lease obviously is a very valuable commodity indeed.
7. Age of construction - a lease that generates 100K pa for some rusty old sheds will have a vastly different sales price compared to a snazzy new strata construction also generating 100K pa.
8. Vendor Leaseback - this is where the Seller becomes the Tenant - these are normally really horrendous for the Buyer who becomes the Landlord.....and they normally come with horrible conditions imposed upon the Buyer, but young chumps fall for this type of stuff all the time. These types of leasebacks affect the price the Vendor is prepared to accept if they can secure the property themselves for a long time with favourable conditions. Sometimes they pump the rent up by say 50K pa to squeeze another 500K out of the Buyers.
Anyway, as I said, there are a multitude of exceptions to the straight "how much nett rent are they paying.....therefore that translates to a certain price".
6% return too low for me 
ive had some success with facebook pages in finding tenants,so can use for property sales as well, you can do some target advertising as well that does'nt cost to much, really it is a quick and easy web page.
Sell to China
Serious
Serious
selling to china
there is a new website thehomepage.com.au that has Chinese site as well, Im trying it out at the moment. Ill post here if i get results
there is a new website thehomepage.com.au that has Chinese site as well, Im trying it out at the moment. Ill post here if i get results
