S.E.C. Real Estate Observer

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Strategies for Success in Today’s Market

I have heard Mark Johnson, S.E.C., ask me more than once, “You know what that’s a sign of, don’t ya? The way things are!” That pretty much sums up the current status of the market we are living in and with today. Along those lines, we need to figure out ways to not only survive today, but to thrive today and prepare for future success.

In this environment, we have to grab hold of the opportunities created by the current trends. One quick way to ensure survival today is to realize that this environment forces people to either stray from their normal comfort zones or not to do anything. Whether it is the land seller who has never wanted anything but a straight cash sale and a short due diligence window, or a retail landlord who wanted nothing but a specific kind of tenant, people are having to either adapt to the market or sit on the sidelines. Some will choose the sidelines, for sure, but others will entertain new (to them) ideas. Because of this, now is the time to present or re-present creative ideas and structures to those who have been too rigid in the past. Now is the time to take that land seller a rolling option or a phased purchase of his land. Now is the time to take that picky landlord a different kind of tenant and change the makeup of his shopping center to be more of what the market craves.

An offshoot of this is that the current situation has changed how some formally skeptical sellers and buyers must formulate transactions. If we want to put deals together, we have to understand these. Counseling today is as important as ever. A seller soon to be foreclosed on cannot accept a long option, no matter how much he likes the price. However, through counseling and some educating of the other party, this same seller might be able and willing to take a discounted cash purchase while retaining a portion of the backside profits on a non-preferred basis. Similarly, a bank with capital issues might not be able to take a discounted cash price, but might be willing (as I have seen lately) to accept another property in trade as part of the transaction to help show a preserved value.

Another way to not only survive but thrive in this market is to put those relationships you have spent so many years developing to work for you. We all have developed relationships with banks, management companies, contractors, etc. over many years. However, over the last number of years, first with a booming market, and then with a drastically different one, we have not needed those relationships like we once did to get deals. Now is a different story. Now is the time to take all of those people to lunch and remind them that when we can get deals put together, they win with us. This will help increase the flow of potential deals coming through the door. Not only will it help get the deal in the door, it can help dramatically in setting you apart while negotiating the deal. Put yourself in the seller’s shoes. If you have two offers, but one comes with a management company in tow, a banker’s recommendation, and was referred by a contractor you have used before, and the other is an unknown entity, who would you accept? Even more simply, a letter or phone call from a banker saying he will do the financing on the offer as prescribed can and does help to seal the deal more than ever in today’s marketplace. You have built these relationships, so use them! Everyone in the relationship will win when deals are getting done.

Finally, if we not only want to thrive now but prepare for success, we need to change some of our attitudes towards those who do not understand how we do business. Now is the time to educate and help those who are struggling under the old non-creative system of thinking. If we can help and educate these folks, we have added to our potential deal-making partners and made the industry just a little better for the future. This might include going with them to help present offers we make, or taking an inordinate amount of time making sure they understand our offer, or even regular coffee or lunch sessions, letting them brainstorm with us.

Try these, and maybe we not only can survive, but thrive in today’s tough environment while building a better future.