At first glance, commercial real estate, and real estate in general, seems like a simple equation: the right price + the right buyer = property sold. Simple, right? If it really was that easy, then it would be a perfect industry and clients would never grow frustrated of their agent. However, it isn’t a perfect industry and many clients do experience ‘buyer’s remorse’ regarding the agent they’ve hired. The underlying reason for this frustration is likely not in the agent’s performance but in unrealistic expectations that were set leading the client to disappointment.
Why It’s Essential
In delivering the best possible outcome for clients, it is imperative that agents set realistic expectations right from day one. Unfortunately, this doesn’t always happen. Many agents are only concerned with securing a listing; in doing so they employ a ‘tell them what they want to hear’ strategy, which may excite the client at the get-go but will lead to frustrations later on.
How Pricing Should Be Set
In setting realistic pricing and marketing strategies, an agent must come up with a lease or sale price that is as close to market value as possible. The key to this is determining a balance between the asking price [what the client wants to receive] and the time it will take to lease or sell the building. If the set price is too low, the client loses out; however, if the price is too high, the space will remain vacant while incurring costs such as utilities, taxes and mortgage payments. Pricing a building too low leaves money on the table, but waiting for an ‘ideal’ price may cancel out any perceived gains through vacancy costs.
Real World Example
This happened recently with a client of ours. Having been unsuccessful in selling his property through another agent, the client had come to M Commercial Realty. Through our own research and analysis, we determined the appropriate cost for the building was between $800,000 and $850,000. What value had the other agent suggested? $1.2 million, almost a 50% premium over its realistic market value! While the $1.2 million price tag had initially excited the client, he was sorely disappointed as the property continued to sit vacant on the market.
At M Commercial Realty, we will always deal with our clients in an honest manner, setting out realistic expectations from the beginning. We will work with you to create a pricing strategy that delivers maximum return to you while minimizing your costs and managing your expectations.