OK so I'm not talking about lions but that title should grab a few more readers...
I wanted to share an experience I had recently with a residential broker that on behalf of a family member, decided to list a commercial property for sale.
The following is a true story although the names have been changed to protect the guilty. Incidents like this are happening every day all over the country and probably the world...Please don't let this happen to you.
I recently met with a fellow agent regarding a property she was listing on behalf of some of her family members. Ruthy Realtor, as she'll be referred, was listing a property for her aunt and uncle. The property consisted of a 3.75 acre commercial parcel containing two single family houses and a small building currently being used as a used car lot. The property is on a pretty busy numbered route in town and would be a perfect spot for a few small businesses within a strip mall or maybe a couple of free-standing buildings like a coffee shop or a small convenience store.
Now in my area commercial land can sell for upwards of $500,000/acre and if it's at a light with a high traffic count, the price can go up to $1M for 1 acre. Typically you would need a minimum of 2 acres to be considered by a national retailer willing to pay those prices. Generally speaking, commercial real estate is nothing like residential which is why not too many residential brokers want to get involved.
Back to my story...
Ruthy is a residential agent who occasionally "dabbles" in the commercial side of real estate. Ruthy has probably seen some of the recent sale figures on commercial land in the area and relayed these to her uncle or maybe her uncle has seen the sale figures and relayed them to Ruthy. I would bet on the latter. Ruthy's listing price for the property is $3.5M. Now mind you, as I pointed out previously, the higher end of the pricing spectrum for commercial land is reserved for the premier properties at lighted intersections. This particular property was not at a light nor was it in a premier location. Unfortunately Ruthy most likely wants to do right by her family but she is being blinded by the $$$
I don't want to bore you with lots of details but there were wetland issues, floodplain issues, right-of-way issues, and a small portion of the land was actually zoned residential so it would require some rezoning...
Point # 1 - Just because you are working for a family member, you are still the expert. Not them.
I don't care how long your uncle or mother has lived in the house and I don't care how well she cared for her fabric wallpaper, you need to be honest with your family just as you should be with any potential listing client. You need to set the price of the listing, not your uncle who you don't want to offend by telling him that his gun collection on the dining room wall isn't going to attract rich hunter guys to the house.
Point # 2 - Don't try and "dabble" in commercial real estate - it's not like cooking
Before taking on any listing that is outside of your usual scope of services, consult some experts. In the case of a residential broker listing a commercial property, call some of the area commercial brokers and bounce your ideas off of them. Get their input before you put your name of a flyer for a property with a $3.5M price tag that is only worth $1.2M. It doesn't help your credibility. The same goes for a commercial agent that is considering listing a residential property. Call a residential broker and ask for some help with the CMA and get their thoughts on the current market. They're your competition but they are human beings and should have no problem helping you. Maybe offer them a small fee for their services. It will be well worth it in the end...
Point # 3 - Know what you are selling before you try and sell it
If you are selling a property with questionable issues such as the existence of wetlands, or zoning issues or environmental issues that may negatively affect the price, before you waste the seller's time, your own time, and anybody else's time, resolve the issues. Make sure the property owner hires the proper experts ahead of time and get the issues resolved. Don't list a property with the assumption that the land can be rezoned and the stream on the property is not actually a stream but runoff from some abutting property. Hire an engineer and have an official determination made.
Don't tell a prospective buyer that you are working on a site plan to determine the property's maximum build-out potential. Do the site plan so at your first meeting with a potential buyer the question can be answered.
Don't list a property that may or may not have an underground oil tank. Find out about the existence of the tank and get a price to have it removed if it does exist. Getting the tank removed is actually less important than having a qualified contractor's quote in hand to remove it. The Buyer can deal with the tank if he knows how much it will cost to remove.
Be a professional and spend a little extra time and effort at the front-end of a transaction. You'll look like that much more of an expert than a salesperson. There is nothing a buyer hates more than unanswered questions. Ask yourself every potential question you can think of that a buyer would ask and find the answer and then ask your colleagues for their thoughts and answer those questions and then ask some more... get the point???
And most importantly, if you aren't a lion tamer, stay out of the lion's den...
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