Marketing Properties Beyond the For Sale Sign
The Pros Reveal a Mixture of Old-Fashioned Networking and High-Tech Promotion for Selling Properties.
Though we've all read reports on the changing nature of the workplace and its implications for the commercial real estate industry, the fundamentals of marketing a property remain the same, and brokers are doing all they can to strike the appropriate balance between a timeless function and a changing market.
It is the synthesis of old and new approaches-along with an open-minded attitude toward possible new uses for an asset-that succeeds in getting properties sold. Good old-fashioned networking has not gone out of style, but savvy commercial real estate pros are supplementing their traditional efforts by rapidly expanding their presence on the Internet and their use of e-mail. Computers are organizing information, but sales cannot occur without knowing whom to contact, how to tell them about the property, and how to package the information in a way that interests buyers.
Networking Is Always in Season
For many brokers, the initial step in marketing a property is also the oldest step: spreading the word and looking for leads by networking with other brokers and past and present customers. Those contacts usually are organized on computer databases or contact management software, which also list potential customers who have not been contacted in the past.
"Everybody who comes in contact with us goes into the database," says Tom Richardson, CCIM, of Commercial & Industrial Properties in Sarasota, Florida. "It's too easy to forget things. We are always running, and this database means we can instantly retrieve types of properties, uses of properties, industries, the property someone first called on. I'd be lost without my contact manager. It reminds me when to follow up with people; it reminds me if I sent something out and haven't gotten it back."
Robin L. Webb, CCIM, of The Prudential Florida Realty in Winter Park, Florida, developed a database from contacts on previous properties and updates it regularly using trade publications such as hotel directories.
Webb, Richardson, and others developed their databases through contacts and through professional groups and resources. They recommend drawing on the following sources when building a contact database:
- previous clients;
- top 25 lists in business journals;
- real estate records, sorted according to area and type of property;
- national phone directories;
- Crittendon's Ownership Directory;
- Real Estate Directory of Major Investors, Developers and Brokers;
- chambers of commerce;
- local bar associations; and
- any group-such as doctors, restaurant owners, or manufacturers-that might best utilize your available space.
Some of these references are available on computer disc, CD-ROM, or on-line services. They are great time savers; Paul Lynn, CCIM, of Grubb & Ellis in Houston, has a listing of all property tax records in the Houston area on CD-ROM. If he has an office building for sale, he'll look at the zip code of the building, sort the buildings there by use, and send sales information to the owners of nearby office buildings.
Professional designation networks and relationships are very useful tools for the initial contact in search of buyers who might be interested in pursuing the property. "The CCIM relationship gives us a targeted channel, instead of dropping meat in a pool and hoping there is a piranha nearby," says Webb.
Initial contacts include letters-generated off computer databases-along with fliers and phone conversations. Some brokers are using e-mail to distribute information about their properties. For example, CCIMs can take advantage of the CCIM Electronic Network at no cost to notify hundreds of other CCIMs of available properties.
Once the initial contact is made, it is important to get the information out quickly to interested parties. Fax machines and e-mail are the key, brokers say. Richardson has every property evaluation package in paper and fax form so he can immediately send them to any interested party. "Very frequently, you need to reach somebody at just the right moment and faxes allow us to do that," he says.
Joseph Sinclair, CCIM, a real estate consultant from Benicia, California, says that e-mail is the most effective and cost-efficient way to reach interested prospects.
He proposes a standard format property package. After showing an interest in the property, prospects immediately receive an e-mail package, which can include photos. Anyone with a Web browser could view it if the broker sends the e-mail message with the photos in attached files.
By organizing e-mail addresses according to type of customer-such as shopping center owners or apartment investors-brokers can use it as another way of targeting their message. "Organizing addresses can make it a better marketing tool," Sinclair says, adding: "I can e-mail 100 people and it doesn't cost me anything more than my monthly [on-line] fee. If I fax 100 people, it costs me $60 to $70, easily."
He says that the speed of e-mail suits the needs of real estate sales people. "Sometimes delays are fatal," Sinclair says. "Anything you can do to accelerate the process is needed."
Listing the Properties
A property's size and value generally dictate placement of advertising, affecting whether it receives promotion in local, regional, national, or even international media. Finding the appropriate medium for advertising a particular property requires knowing the target market ahead of time. Local and national newspaper listings are important, as are broker publications and other targeted periodicals.
"With something like the Wall Street Journal, you have to be selective because of the expense," says Lynn. His company uses regional advertising in the Wall Street Journal, primarily in the south and west, usually for large deals such as sealed-bid sales.
For most brokers, the format of their advertising, both in newspapers and in fliers, is consistent for all their properties. "Our typical approach is boiling down facts, getting them into an intelligent format that we can follow up with our buyer prospects," said Eric Wilcox, CCIM, a vice president of A&C Ventures and Arroyo & Coates in San Francisco.
"The way we present it is in a very logical, consistent format so people we deal with don't have to skip all over the page to get the information," he continues. "There is all you need to make an intelligent initial assessment of the property. There's not enough left out so that it's enticing and then you call me for the bad news."
Advertising in Cyberspace
Brokers are having success communicating with potential buyers nationally and even internationally over the Internet. That's not surprising to Wilcox, who sees more information exchange than deal making on the Internet. "I think the commercial real estate industry is moving in that direction, but it's not common enough at all," Wilcox says. "With us, it's 'fax first, call second, mail third' type of thing."
Sinclair has been using computer listings since 1977, although he says a lot of people have gone bankrupt focusing all their attention on computers to market properties nationally. "I think it's because most properties are regional and not national," he says.
One broker who has successfully used the Internet for property marketing is Greg Laycock, CCIM, from Grubb & Ellis in Seattle, who sells multifamily, hospitality, and hotel properties. He reports doing deals through the Internet-by which he means the contract was signed electronically-but he says that, no matter how good the display on the Internet, the computer cannot communicate everything about a property and the buyer will eventually want to see it.
Laycock has had his own Web page since May 1995, and he advertises the address in news articles, office marketing materials, speaking engagements, and his business cards. The Internet Real Estate Directory recently designated Laycock's page as one of the top 10 in its category. The Internet has made him contacts in many countries, including Japan, Thailand, Canada, Mexico, Chile, Germany, and Switzerland.
Laycock designed his Web page after talking to marketing people and other Internet users about what makes a page readable and what makes them want to visit a page. Listings go up on Laycock's page as soon as they are acquired, and none of his clients has ever declined an Internet listing. The page also includes articles about how different types of properties are selling, though he doesn't post cutting-edge information because he knows his competitors look at it.
Internet success stories are growing. Webb had a sale in 48 hours for a 340-room Florida hotel from California buyers; he also uses his e-mail extensively, answering about 20 inquiries a day. Richardson's company made an $81,000 commission last fall from a property that sold within four weeks of being put on CompuServe. He is currently working a deal with a broker in the Carolinas who saw an ad for a $6.2 million listing on the CCIM Web site. "I am a firm believer in using everything I possibly can to get my name and my company's name out," he says.
Advertising Dollars-Who Pays for What?
The issues of who pays and how much they pay for marketing a property have become more complicated as cash-squeezed owners have sought to deflect as much marketing risk as possible onto the broker. In addition, the fee-for-service movement is altering the traditional commission-and-costs environment, leaving a sometimes-muddled set of seller expectations for brokers to meet.
The first question to tackle is simply who should pay for advertising. "We are in an internal struggle on that," Lynn says. "We are starting to ask owners to pay some of that. Previously the company underwrote it." The difference today is that "we've been able to do it," he says. "For a long time, brokers felt you could not ask or it would scrub the deal, but now it becomes a negotiating point. In order to do better-quality stuff, you need money, and marketing expenses have gotten way out of hand."
The amount his office asks the seller to pay varies. It is no more than $1,000 to $1,500 on a traditional listing, but the seller will be asked to pay most of the cost of any special campaign.
David Bickell, CCIM, of RE/MAX Commercial Group in Carmel, Indiana, offers a basic package-a blank glossy sheet, three colors with the RE/MAX commercial sidebar and black-and-white print-that his company will provide as part of its job as listing broker. But what goes on top of that-particularly for regional or targeted national players, or industrial facilities with a lot of features that need to be displayed-is negotiated with the client, who is then asked to share the costs.
"If it is a manufacturing organization and we are asking them to participate up to $3,000 to $4,000, we guarantee that it will be written off of the commission," says Bickell.
Harold Helm, CCIM, of RE/MAX Commercial Brokers in Louisville, Kentucky, spends 1 to 2 percent of the value of an asset on marketing and may go up to 3 percent if it is a low-value property. He asks the seller to pay that cost most of the time-usually in advance.
For Joe Larkin, CCIM, of Larkin Commercial Properties in Albany, New York, the amount of money spent on marketing varies according to the estimated time for the sale to take place, marketing requests, timing, and whether the property is priced high or low. The decision about who pays for marketing is negotiable.
"It depends on the seller, their need, urgency, motivation," says Larkin. "A lot has to do with sitting down and counseling sellers in the beginning, finding out where they want to go."
Not all companies follow that route; some still consider marketing to be part of the broker's costs of doing business. Richardson's Commercial & Industrial Properties pays for the marketing and ties the cost to the value of the listing. His company will use 10 percent of the gross earnable income for marketing. "It is very difficult to get owners to [take on those costs]," he says.
The property should do its part in the selling efforts by looking as attractive as possible. "You want it to have a visual appeal," says Lynn. "If there is deferred maintenance and [the sellers] can fix it without a lot of money, we ask them to clear it up. Sometimes they have made a conscious decision not to maintain the property."
Poor maintenance can have a definite impact on the sale. "If it shows lousy, someone will offer a reduced price," Lynn adds.
One of the basic ways to sell a property is with the "for sale" sign. "People drive around, see the sign on the property and they make the phone call," Richardson says, adding: "If somebody sees it and calls, you know they like the location."
He sold an industrial warehouse two years ago that had been on the market for three years with other brokers. "I sold it in four months with a telephone campaign," he says. "I counseled the owners to clean it up because it had been empty for years and it was starting to look overgrown." The sellers lowered the price a bit, and it sold. As an added benefit, the new owners just relisted the property with his company.
Flexibility Pays in Many Ways
In the process of covering all the traditional bases, brokers must remember to be flexible. Webb reminds brokers to consider a change of use for properties, such as marketing hotels as good locations for nursing homes or condominium conversions-which are coming back into vogue.
His company once had a 100-room Holiday Inn for sale that was closed and had been on the market as a hotel for a year with another broker. Buyers were only willing to offer low prices for the property because they thought it was a "desperation" move, even though it was excess property.
Because the hotel was surrounded by retail property, Webb marketed it as a retail site. Within 45 days, the building was under contract for the seller's full price, and there were two back-up offers. The building was demolished after the sale and the land was used for a retail development. "It takes some practice to do that," he says. "You can look at the circumstances and never see exactly what you are looking at sometimes."
Christian Peek, CCIM, associate vice president of Long & Foster of Salisbury, Maryland, counsels flexibility of another kind.
A few years ago, his company was selling an Italian restaurant in Salisbury. After much negotiation, a sale price was arrived at, but the seller balked at paying the full commission if he was to accept the negotiated price. As part of the agreement, Long & Foster agreed to accept $1,000 of the $15,000 commission in trade at the seller's other restaurant in Ocean City, Maryland.
After about a year, the entire commercial division at Long & Foster, along with significant others and the secretarial staff, went to Ocean City and-although they tried their best-could only eat and drink about $850.
They tipped the wait staff the remaining $150 and "toddled home," Peek reports.