How to Eliminate Fake Commercial Real Estate Sellers
When you locate a seller who tells you they are interested in selling, but they tell you they don’t want to list, and they invite you to bring in an offer to purchase, how do you know if they’re genuinely interested in selling?
Similarly, if you have an owner who tells you they are interested in selling, but the price that they want is an above-market price, how do you know if you should even take the listing, or just completely pass on doing so altogether?
In this first situation, you may really be dealing with an owner who isn’t serious about selling, but they want you to give them a current appraisal of the property by you bringing them an offer on it. So in this situation, a good question to ask them ahead of time is, “If I bring you a signed offer from my buyer, will you give me a signed counteroffer to bring back to them?”
Then notice how they respond–If they immediately say something like, “Absolutely! If you bring me a signed offer I will definitely give you a signed counteroffer to take back to your buyer”, this is a good sign that they may be a real seller. However, if they hesitate instead and say something like, “Well, you just bring me in an offer and we’ll see what happens”, this is an indication that they may not be for real, and that they may actually be concerned with signing anything that would then obligate them to sell.
So in this situation, use your own best judgment, and if their asking price is reasonably close to what your buyer would be willing to pay, you may want to submit an offer to see if a transaction can in fact be consummated.
But in the second situation, where the owner is asking a high price, a good question to ask them can be, “If no one is willing to pay your price, and you still own this building five years from now, do you see any problem with that?”
With this in mind, the reason you want to ask this question is because you want to determine if the owner has an underlying, motivating reason to sell their property, or if they’re only a seller if they get a ridiculous price for the property. Because when an owner wants to sell, it’s usually because they either want to, or need to, in order to do something else with the money, and this is why they’re putting the property up on the market to sell it. These underlying reasons to sell can include divorce, a dissolution of partnership, estate planning, trading up, wanting to get out of one particular kind of property and into another one, and flat out needing the money for something else that’s now happening in their life.
However, if an owner is fine with still owning their property five years down the road, unless you can deliver an above-market price to them, you may want to then pass on taking the listing…unless you’re in a market where values are rapidly rising, and you believe that if you control the listing for long enough, that someone may finally step forward and pay the owner that full asking price.
So in putting all of this together, when you’re dealing with owners in either of these two situations, remember to ask them these questions, as they will help you to identify the real sellers, so you can then pass on the ones who will be totally wasting your time.