commercial real estate

The pool of commercial lender owned real estate (or real estate owned - reo) Much foreclosed commercial property today was encumbered by a CMBS loan (i.e. securitized, conduit loan). When CMBS loans go into default, a third party called a special servicer takes over. There is a small handful of special servicers nationwide assigned the duties of working out troubled loans or if necessary taking them through the foreclosure process. You need to get to know the special servicers, ideally before they need you. the mortgage bankers association should have a list with contact information (mbaa.org). call each one, ask for the person dealing with “troubled loans” and real estate owned (reo) in your state. then “farm” them (to borrow from the residential parlance), calling or emailing them periodically and offering to help with market information if they need your help.

I use any number of means to market my commercial properties: costar, loopnet, google base, craigslist, washington post ads, direct mail, email blasts, cold calling, etc. etc. When it comes to selling buildings, there’s still nothing that beats brokers.

When I market empty buildings, I need to reach out to cooperating brokers. Larger users of space got successful by leaning on trusted advisers. They are represented by brokers 95% of the time.

When I market larger investment property, I start with my own relatively conclusive list of owners and investors across the mid-Atlantic. Once I’ve gotten the word out to that list, I expand my efforts to include the cooperating brokerage community.

Most of the buyers the internet brings me are still “small potatoes:” they might buy a $300,000 condo from me, but rarely are they in the market for that $10 million free standing warehouse. I’m not worried about being disintermediated yet (a word we real estate brokers made up I think). The process of buying real estate is still complicated…a lot more complicated than buying a stock.

The popular wisdom is that social networking sites are going to be great business generators for brokers in the future. I’d like to hear if anyone is actually finding any business this way.

Linkedin is a popular one with the older crowd.

I acknowledge I’m a cynic, but it strikes me that these sites are like high school all over again. How many friends are in your clique?

Tell me about your experiences positive or otherwise on these sites.

I know, a dry topic, but if you don’t work for an institutional owner or a national brokerage firm, you may be lacking in access to good analysts for Argus modeling and other financial analysis.

Here are some folks who have expressed interest in doing this kind of work, or do it for a living:

rebackoffice. http://www.rebackoffice.com/analyticsResearch/investmentAnalysis.html. $250 plus $10/tenant and $25/assumption. rebackoffice has a wide range of real estate outsourcing solutions. Overseas solution.

Cherie M. Hardgrove, MAI, CCIM. chgrove@columbus.rr.com. $90/hour.

Global Realty Outsourcing, Inc. T: (212) 209-0772. Wide range of pricing depending on format of data provided. Can do lease abstracting and other due diligence projects. Overseas solution.

Carey Guiberson. Carey [carey@ont.com]. Will refer assignments to his graduate students. $50/hour.

This is a complete generalization. Fees can be higher or lower. Just thoughts about the appropriate range:

Up to $3 million - 6%

$3-$5 million - 4% to 5%

$5 - $10 million - 3% to 4%

$10 - $20 million - 1.5% to 3%

$20 million to $40 million - .5% to 1.5%

over $40 million - .75% or lower

Fees tend to top out (with sophisticated sellers) in the $500,000 to $1 million range. That said I have heard of much larger commissions being earned.

You know the bubble has burst when people start suing the salesmen. Real estate agents, prepare to join stock brokers on the firing line of the blame game.

The lesson? Brokers do not give “opinions of value.” Only appraisers do. Do not let these words appear in the same sentence. Share the facts and let your clients draw their own conclusions.

I have every exclusive listing professional photographed.

Jim Oesch, one of the best commercial real estate photographers in the country, charges me well less than $1000 to shoot a building. Jim is flown all over the country to shoot buildings.

He makes buildings look so good, I’ve actually got complaints from prospective buyers: “the building doesn’t look nearly as good in person!”

I argue your marketing materials not only sell your listing, but win you your next one. Whether we’re talking about a residential commission (in the five figure range) or a larger commercial sale, it’s money well spent.

When I list and sell commercial property, I ask my clients to order updated:

1. Phase I Environmental report from a national, reputable firm

2. Title Work

3. ALTA Survey

4. Roof report (in case of one story property in particular)

In order to share with the contract purchaser. The goal is to keep the contingency/due diligence/study period (whatever you want to call it) as short as possible.