How Much is my property worth?
The question on every property owner’s mind is, “what’s my property worth?” As brokers, this is the first thing we’re asked, and the starting point for every transaction we’re involved with. And our answer is always the same…. “it depends.”
When it comes to determining how much to sell a property for, we look at two areas: property value and property positioning. They are interconnected, but one is dependent on the physical attributes of the property itself, and the other is based on the needs and goals of the property owner.
Determining Your Property Value
So, you own a commercial property and you’re interested in selling it. You call your local commercial broker (and definitely not your cousin who sells residential houses) to find out what it’s worth.
Here are some questions you should be considering with your broker:
How fast do you want to sell the property?
What type of market are you in right now? Is it a buyers market or sellers market?
What is the highest and best use of your property?
What is your property zoned for? What is permitted within that zoning?
Are you selling land, or land with an existing building?
Do you have tenants in place, and if so, will the leases stay with the property?
Property value is not just dependent on local sales comps and square footage. While that may be a starting point, determining a true value requires an understanding of zoning, current market trends, and critical thinking. A parcel on one street may carry twice the value of a parcel of equal size a few streets over, if the zoning permits a more profitable use.
Positioning Your Property For Sale
Once you’ve determined the highest and best use of your property, it’s time to consider how you will position it for sale. There are a lot of variables to consider. When we work on positioning a property, it starts with determining your timeframe.
Are you focused on getting rid of it quickly as possible, or maximizing the sale price and getting the most money? You’re probably saying to yourself, “more money, of course.” Everyone says they want the most money, but ultimately we uncover other factors that may impact the price or timeline to better meet the goals and needs of the owner. You might want to bring your property to market on the high end and wait for the right buyer. Or maybe you need quick cash to fund a big life change, such as starting a new business, paying for your kids’ college, or sometimes divorce.
Maximizing Your Sales Price
Ultimately, there’s gonna be some give and take between what you list your property for and how fast it closes. For example, if you want to hold out for a high paying developer, your buyers may need a nine month inspection period. On the other hand, some buyers will come in and make a low ball offer, but agree to close in 15 days. There’s always gonna be a nuance between what you’re willing to accept and how fast you want to sell it. If maximizing your sales price is the most important thing, sometimes it takes longer. If you want quick cash so you can take advantage of other opportunities, such as a potential buyers market, lowering your sales price might be the way to go. As they say, “a bird in the hand is worth two in the bush.” Sometimes you can maximize your money by selling one property quickly, and investing in another with higher returns.
Regardless of what your pricing strategy is, it’s important to work with a broker that specializes in commercial properties and understands how to properly value and position your property. Building a relationship with a broker that has commercial experience and acumen will help ensure your long-term goals and short-term needs are met.
Call Us Today To Determine What Your Property is Worth