Double Barrel Shotgun

Back on the farm, I hunted rabbit and quail with a single barrel shotgun, but dad had a double barrel. I was envious of that gun. It seemed to me he could get twice the game I could.

I see a lot of commercial brokers doing the same—marketing with one barrel. The first barrel is the real estate asset we have been employed to market. The second barrel is a deep understanding of our clients’ needs. Most brokers do a really good job of underwriting the physical and financial components of the real estate. If we added the client knowledge to our real estate knowledge, we would be hunting with both barrels.

What I’m suggesting can be easily shown by an analogy. Assume three commercial condos with similar location, square footage, leases, quality of tenant, finish, amenities, occupancy—they have identical RE traits and therefore similar appraised value. Let’s use $500,000 as the appraised value of all three. We as commercial brokers should all do a similar marketing effort: CoStar, LoopNet, Catalyst, fliers, signage, advertising, and calling brokers and investors, but let’s look closer.

If we have not discussed with our clients in depth what they are trying to accomplish, why they seek to go out of title, and what their objective is, we may miss a marketing strategy. Now back to our three condos. Let’s assume one property is owned by a recently widowed client who wants a passive income; one by a wealthy investor with a low tax basis and no mortgage; and one by a developer of a large equestrian ranch that is not selling, and foreclosure is in process on all his assets, including the condo which he borrowed against. All three clients have different motivations and are seeking different benefits.

The widow may accept an installment sale for the 20-year income stream or sell for cash and invest in stock or an annuity. Or, maybe, as her agent, you can help her find excellent management and remove the property worry from her. The investor is looking to do a 1031 Exchange and move up into a larger asset. If thoroughly questioned, he or she may contribute the condo into a JV in a development deal or use it as a down payment into a simultaneous exchange to a $3 million income property. The foreclosure client needs a 15-day close to stave off the foreclosure and may take some discount in exchange for speed of closing.

Our goal as the Broker is to maximize the benefits for our clients. In this example we can probably sell all for cash, but if we don’t ask, listen, and try to understand what our client is trying to accomplish, we may not maximize the benefits they seek. Our goal as a professional Real Estate Broker is to maximize the BENEFITS our clients seek.

Ted has been a commercial broker and investor in Colorado since 1980. He can be reached at 303-748-9998 or via email at blank1031@gmail.com.

One Comment »

  1. Excellent!!

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