Monthly Archives: July 2020

Commercial Real Estate Agent Prospecting Facts and Strategies

When you work as a commercial real estate agent or broker, it is essential that you develop and implement a prospecting program to generate new business leads. It is a personal process and it is not something that you can or should delegate.

I am amused sometimes when I hear that an agent has paid considerable money to a marketing company to ‘cold call’ their entire sales territory or market segment looking for leads and prospects to serve. Delegating the prospecting process to a marketing company or another ‘unskilled person’ is a waste of time and money. Commercial real estate is an industry built around personal relationships and trust; a marketing company or employed canvasser cannot offer that level of communication or service.

So why would a real estate agent employ such a ‘marketing firm’ to make prospecting calls? The answer in most cases is glaringly obvious; the agent doesn’t have the skill or the discipline for the prospecting process to be successful.

If you want to win the new business, then you will need to do it yourself. Yes, it takes time to get results and you will need to develop some new skills, but discipline will help you get to the results that you are seeking.

One thing should be said here; commercial real estate brokerage is tremendously rewarding for the sales people that can work hard and to a system or plan. Looking for leads and opportunities is part of the process or game. It’s a personal thing and it can’t be delegated.

Here are some way’s to find new business, better property listings, and good clients:

  • Redundant Properties – Some properties will move to a level of redundancy due to age, deterioration, change of zoning, or lack of tenants. When this happens it is time to move to the next phase of the property ‘lifecycle’. A good real estate agent can see the signs early and work closely with a property owner as they start to deal with the issue of investment change.
  • Vacant Land – As a city expands or suburbs change, vacant land will be rezoned for new development. Keep ahead of this opportunity by monitoring the planning and development applications at your local planning approvals office. Get copies of the public minutes of the planning committee meetings.
  • Old Listings – Some listings don’t sell or lease at the first attempt. What you can do here is withdraw the property from the market today and then revisit the property marketing effort a few months later in another and perhaps different marketing approach. Refreshing a listing is a valuable business process.
  • Open Listings – The best way to sell or lease a property is through an exclusive listing process. Open listings are very much a process of luck; most open listings stay on the market for a very long time and on average are far less successful when compared to the dedicated marketing efforts of an exclusive listing. Revisit old open listings to see if they can be optimised for a fresh marketing effort.
  • Larger Businesses – Local businesses are involved in property either as tenants or as owner occupiers. Business owners will need help with property from time to time. The best way to tap into that opportunity is through direct and ongoing contact. Cold call every business in your town or city and speak to them regularly about property needs and changes.
  • Surrounding Other Listings – When a competing agent puts a property on the market, you can use that listing as a reason to talk to all adjacent and nearby business and property owners. One property listing can be the catalyst to talk to others to see if they would like to compete or do something themselves.
  • Street Canvass – On a street by street basis, systematically move through your sales territory and research all property owners. Eventually you will create a good list of owners for your database. Ongoing contact will allow you to build valuable client relationships and the levels of trust that help grow commissions and listings.
  • Cold Calling – The telephone remains the most effective business tool that we have. Direct calls handled in a professional way will help you reach out to new people. Selectively researching the property owners and business people in your area will support the cold calling process.

A simple list like this will give you an abundance of property leads and opportunities. The secret to making things work for you is in doing it yourself.

Understanding Property Curbs

‘Property curbs’ is nowadays a very frequently heard term in wealth management space. Nations across Asia, such as China, Indonesia, Hong Kong and Singapore have implemented property curbs in the recent years. Property curbs can be defined as property policies set by the governments to curb excessive increase in property prices. Property curbs are also called as property tightening or cooling measures. The policies generally target the residential sector. An excessive increase in home prices can lead to property bubble and make housing unaffordable and out of reach for a wide section of population. When property bubble bursts, it generally has far reaching consequences on the economy. This is because the linkages between banking sector and property sector are usually strong, in the form of mortgage lending to home buyers and project lending or construction loans to developers.

Property tightening measures can be demand side measures or supply side measures. Demand side measures are targeted at decreasing speculative/investment demand, in order to soften the prices. Some of the measures include i) decreasing the availability of funding, ii) increasing the cost of loans, iii) increasing the down payment on loans, iv) rising taxes such as property tax or capital gains tax, and iv) tightening eligibility criteria for home purchase. Funding availability can be tightened by not providing loans/mortgages for second or third home purchases. Further, even if loans are sanctioned, the initial down payment can be higher and interest rates can be higher. For example, the minimum down payment on first home mortgage is 30% in China, while that on second home mortgage is 60% (70% in tier-1 cities such as Beijing). Capital gain tax hike impacts second-hand/secondary home market and controls speculative demand. An extreme form of curbs is to prevent a whole section of population from purchasing property. Non-locals (within a particular city or country) may be barred from buying property. Hong Kong in October 2012 levied a 15% tax on property purchases made by foreigners. Supply side measures aim to increase the supply of homes in order to control price gains. Some of these measures are i) increasing land supply/availability for property development, ii) government developing affordable homes for lower income population, and iii) imposing hefty fine/penalty on land hoarding (keeping land idle for long time).

Whether property curbs are effective is the question. China introduced property curbs in 2010 and has been able to avoid a property market crash till now. Hong Kong implemented curbs in 2012, while Singapore and Indonesia imposed them in 2013. When price rise is due to shortage of land and housing, like in the case of Hong Kong, demand side policies may not be effective, unless they are stricter policies such as banning certain population from purchasing home. Compared to demand side measures, supply side measures take longer time to have any impact on the property markets. Property acts as an investment or storage of wealth, when household savings rate is high, deposit rates are low and there is a lack of investment channels. In such a scenario, measures tightening the mortgage market may not have a significant impact, as home buyers fund purchases out of their savings and do not depend on mortgages. Other measures such as allowing alternative investment options may divert investment away from property and contain investment demand.

Real estate asset class provides investment opportunities to investors. However, investors should consult financial advisors in order to better understand the regulatory environment in different markets, assess the various risks associated with them and invest accordingly.

Internet Marketing Your Investment Property

So you’ve made the decision to make additional income by flipping or wholesaling investment real estate, and you’ve acquired the property following a profit formula. What is your plan to market the property to find a buyer?

The percentage of homes purchased by people looking online can’t be ignored. From the National Association of REALTORS (NAR): according to the latest NAR Profile of Home Buyers and Sellers 2009, 90 percent of buyers used the internet as an information source in their home search. With figures like this, doesn’t it make sense to have a planned internet marketing strategy?

Real Estate Related Websites

One of the best sources to find buyers for retail home owners and investment buyers is Craigslist. With a reported 59 million visitors in May 2010, Craigslist (CL) is a great site to promote your property and drive traffic to your business – and it’s free.

Using CL is one of the simplest ways to start an online marketing campaign. I’ve received most inquires and built our buyers list from CL ads over the years.

After you’ve posted your property on CL, post the same property on other online real estate related websites. They are mostly free, requiring you to only fill out an online form for your information. The great thing about some of these other websites is that they automatically post your property on other real estate or “for sale” websites.

Some of my favorite sites are Postlets.com, Houspads.com, Loopnet.com, MyHouseDeals.com and Sellpoint.com.

Video Marketing

Make a video of your property. Video marketing is one of the most popular ways to get your property seen by retail buyers and investors. A good video only has to be about two minutes long. The most important part, if it’s an investment property, is to show how the financial numbers look, the investor’s monthly cash flow. Also, in your videos, remember to always give your viewers a “call to action” at the end, by going to a website, filling out a form, etc.

Start your own YouTube page – also free, and start posting your videos there. YouTube will give you a place to where you can send people to see the properties in your ads.

Article Marketing Site or Blog Site

Have a blog site or article website where you can post articles on various subjects in real estate and draw buyers/investors to you. If you have a blog site already, update your articles on a consistent basis. It can be once a week, once every two weeks, but as long as you’re adding new material, real estate buyers searching for information will find you.

If you don’t have a blog site, sign up for a free account on Squidoo.com. Squidoo allows the user to create a “lens” of a particular subject. Make a lens of your property using the wording from you CL ad and you can also embed the video that you have on YouTube for readers to watch your video all on one site.

Social Media

Hopefully by now you have a Facebook account. Yes, you can use FB to keep in touch with friends and relatives, but you can also build it to use FB as a way to promote your real estate properties. I’ve written an article on how to start using Facebook as a marketing tool. Check it out: “Facebook Internet Marketing for Newbies”.

With consistent promotion and updating, potential buyers/investors will funnel down to your website or final property page from these various sources.

There are other aspects to internet marketing, such as SEO and keyword use that will be covered in other articles or you can research the importance of their uses yourself.

But also remember, that face-to-face networking, is marketing that should always continue and not be forgotten in this internet marketing world.

Learn Internet Marketing

Commercial Real Estate Valuation 2

The approaches used to value real estate from an appraisal perspective determines the possible sale price a property would yield on the open market with adequate time for marketing by a knowledgeable seller who is not under duress, fully informed of market conditions and a knowledgeable buyer agreeable to consummate the purchase also without undue duress to act. The range of values derived from the methodologies used and the final conclusion after implementing adjustments for different variables represents processes used to determine the market value of subject property under specific conditions and at a specific time. Changes in the variables e.g. vacancy factor, comparable sales, depreciation for economic or functional obsolescence, etc invariable alters the values derived from the processes and the obtained conclusion. The three methods used for finding a range of property values from which the final conclusive worth is attained are the: – Income Approach, Cost Approach and Comparable Sales Approach. Each has its own process for calculating a property’s value and is given varying worth or relevancy in the final value attributed to the realty.

Income Approach – establishes the value of real estate as a derivative of its net operating income in relationship to the prevailing capitalization rate associated with the asset class in its submarket. The Net Operating Income (NOI) representing the amount after gross income drilled down through effective income added miscellaneous income, etc minus expenses associated with operating the property. The value calculated from this approach is deemed more indicative of the true worth of the property by some practitioners in comparison to the other two approaches below from an investment perspective.

Cost Approach – establishes the value of real estate calculating the current worth to recreate improvements at cost minus depreciation for functional and economical obsolescence; the underlying land is not depreciable. Technological advancements, procedural changes, more adaptable efficient materials, user friendly space layout plus industry changes and the desires of the end user, etc can diminish the appeal of once highly sought buildings or leasable space in relation to newer inventory. This results in a lesser market value being assigned to the property factoring its reduced appeal to a broad base market.

Comparable Sales Approach – establishes the value of real estate from the historic sales of similar properties in the submarket with adjustments for dissimilar characteristics with these properties; assigning values for these features or lack thereof and adding or subtracting dollar amounts reflective of the increase or decrease in value attributed. This process draws its data from the sales activity in the market place and the historical purchases/sales of properties of the same CRE type, e.g. multifamily, retail, industrial, etc that have sold under arms’ length transactions including financing structure which does not suppress the sale price.

The collective information obtained from each approach is analyzed with weight given to respective methods depending on the nature of the subject property, the quality of the data available for the approach and the purpose of assigning value. The nature of the subject property influences the method which is considered most applicable to determining value, e.g., is the property vacant land, stalled mixed use development, operational hotel, etc. However, from an investor’s perspective the income approach is usually given more consideration than the other two in relationship to commercial real estate income producing or potentially income producing properties. Even land’s value is tied to its use or potential use mobilized through zoning and entitlement and the income stream that can be attained from the improvements added. The final value given to the property factors all the variables applicable to the realty and the experience of the individual drawing the conclusion of property value.

Selling Your Home – FSBO – Is it Time For a Total Shock and Awe Marketing Campaign For Your Home?

In today’s over-crowded real estate market to pull out all the stops when creating a marketing campaign for your home. You need to use every marketing means available.

You need to overwhelm the market with information about your property. If you don’t your home is likely to get lost in the sea of other properties on the market. You might want professional help for planning out your campaign, or else do a lot of reading to get knowledgeable on real estate marketing.

The first thing you will learn is that there are literally dozens of places to advertise your home-for-sale website. You will also learn that many of them are free to use if you comply with the website terms.

The only cost to advertise on these sites is the time to register at the site and set up your property advertisement. It may be more efficient to hire somebody to do this for you because there is a learning curve in working with all these websites out there for you to advertise on.

The same is true for other places online you can list information about your property for sale. By this I mean social bookmarking sites, social networking sites, blogs, forums and directories. There are more of these than you think, i.e., dozens of each kind that are available to you.

Then there is the non-internet advertising media. There are more of these than you think too. People think there are only two newspapers in Maryland (in Baltimore and Annapolis) but there are actually 36. The same for magazines and free distribution “shopper” type papers for classified ads.

The thing you won’t want to do is blow a lot of your money on one or two expensive ads (like a display ad in the Washington Post, for example). Every dollar you spend has to be analyzed to give you the most “bang for the buck” in terms of exposure, readership, and traffic.

Paying an internet marketing consultant with expertise in real estate marketing will give you access to dozens of free (or very cheap) advertising vehicles, and this will cost less than some expensive ads can cost.

Internet marketing even allows you to set up “word of mouth” advertising campaigns, which can be the most effective. There are dozens of paid advertisement websites online also, including Google, which now gives local real estate search results.

Your Online Reviews Can Make or Break Your Real Estate Deals

If you looking to purchase a product which is offered by different companies, how would you decide who to purchase it from? If you are like most of us, you would simply pick up your smartphone and read online reviews about each company and make your decision on those reviews. Well, the same goes for anybody who is possibly going to use your real estate services.

With the internet and technology making it easy and quick to access information about anybody, your potential clients will search for reviews on you. The reviews and testimonials they find online could be the difference between getting new clients, or losing them to someone else.

Get a Testimonial From Your Client After Every Closing

It is important that you obtain a testimonial after every closing if your clients are happy with your real estate services. Typically, the time of closing is a happy time for the client, and therefore, a perfect time to ask for a testimonial. It is always harder to obtain that testimonial at a later time down the road.

Tell your clients that it could be short and just be a few sentences. Many don’t like writing long reviews and may not give you one because of that. A short testimonial that’s to the point is just as effective.

Take a Picture With Your Client In Front of the Property

Along with asking for a testimonial at the time of closing, you should definitely take a picture with your clients. It is always preferred to take a picture at the property. An effective picture is to take a picture in front of the property while your clients hold the SOLD sign or the keys. The picture can be taken when you meet your client at the property to deliver the keys.

Displaying Your Testimonials on Your Real Estate Website

The most important place to display your reviews and testimonials is on your very own real estate agent website. Your real estate agent website is typically ranked higher in search engine results than your Facebook page and profile pages on Zillow, Trulia, realtor.com, and other large real estate marketplace websites. Therefore, you’ll definitely want to display your testimonials on your agent website.

You should have testimonials clearly visible on your homepage along with a separate page that displays all of your testimonials. Your real estate agent website platform should contain an interface that allows you to enter reviews and testimonials along with pictures of your clients.

Post to Facebook

If someone is looking online for reviews about you, they’ll most likely land on your Facebook page. Therefore, it is very important to create a “Just Sold” post after every closing. The post should contain the testimonial by your client AND the picture you took with them in front of the property. Be consistent and do this for every time you close on a property.

Ask Clients to Submit a Review on Zillow, Trulia, and realtor.com

Anybody looking for online reviews about you will also most likely end up on Zillow, Trulia, and realtor.com. All of these sites accept reviews and it is important that you build up the number of reviews and your rating on these large marketplace real estate websites.

The review is submitted by your clients from your profile page on each of these sites. A client can submit a review by clicking on the “Submit Review” button that appears on your profile page. To make it easier for your clients, send an email with links to your profile page for Zillow, Trulia, and realtor.com.