Approaching an owner who is not selling their building.
Any advice on how to approach an owner about the potential of selling his or her building that isn't on the market?
[{"id": "gytn6ix", "text": "Yes, I would look for comparables and reach him with an idea of how much it's worth. Pretty much the conversation should start with you just having a conversation about the building and then leading to the sale of the building.", "replies": [{"id": "gyuygsj", "text": "Will put", "replies": [], "depth": 2}], "depth": 1}, {"id": "gytoslz", "text": "Its one of those KISS things usually.  I just say we are looking for property and theirs generally seems like it would fit our criteria, and ask if they would entertain an offer and if so if they have an idea of what they'd want.", "replies": [{"id": "gytqw3s", "text": "This", "replies": [{"id": "gytwqnc", "text": "This.", "replies": [], "depth": 3}], "depth": 2}, {"id": "gyttbor", "text": "Only thing that\u2019s tough in this environment is that valuations are out of control... unless someone is approaching me with a really juicy offer it would be tough to not think of this as a \u201cshould I engage a broker to market it, especially if I\u2019m going to want a BOV to validate the offer\u201d, but, depends on size and seller. It might be an uphill battle if the asset is institutional quality but hey you never know! Good luck", "replies": [], "depth": 2}], "depth": 1}, {"id": "gyu35rd", "text": "I spend too much time deflecting these to even consider anymore.  The only way I'd listen would be if it was an offer from someone I know or was introduced to by a mutual acquaintance.  Whatever you do, recognize that the owner is fatigued from being asked the same thing multiple times.", "replies": [{"id": "gyvqgi4", "text": "I guess everyone is different but I personally have a bad habit of picking up inbound calls from everyone. If someone is interested I\u2019ll usually give them a CA and some high level info for a desktop, I actually find I get value from having a 3rd party UW a deal I\u2019m not considering selling just to see where they come in. Candidly I\u2019ve never executed a sale this way but hey it\u2019s a free use of someone else\u2019s time to see if my internal value is in line with what someone else might think it\u2019s worth. It\u2019s kind of like getting a free BOV without getting a broker I\u2019d actually use to sell the asset wound up about potentially taking something to market that I\u2019m not really ready to sell.\n\nETA 99.999% of the time the values come back way low relative to my expectation, feels like most of the time it\u2019s people looking to find a bargain. That being said all of the stuff in my fund is institutional quality and it seems like the majority of these inbounds are brokers looking to off market a deal to some 1031 or syndicator or something and not another institutional firm. The only time I\u2019ve off market transacted was through outbound calling from me to a sponsor I know and that would put forth a best efforts offer that\u2019s in market range.", "replies": [{"id": "gzgn194", "text": "Any reason you don't like syndicators? I saw a syndicator put down a big deposit to mitigate extending the close time frame and likely lost the deposit from not being able to get the funds to close. That seems like free money to me plus a little headache of a lawsuit trying to claw back the lost deposit.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gyvfasu", "text": "If there is a building that matches my clients needs, I reach out and ask if they would entertain an unsolicited offer for their property. Many times they will think you are trying to \"list\" it. If you are, that is a discussion. I let them know I have zero interest in \"listing\" their property, but would like to put a deal together, if they have interest.\n\nIf there are any owners on this thread or brokers who have off market NNN inventory, I have a client looking to place about $250M in the next 2-3 months anywhere in USA. Looking for stand alone Best Buy, AutoZone, Davita, CarMax, Home Depot, Lowe's, Homegoods, Burington, Ross, etc...basically public traded companies. All cash deals..  CA Lic # 01245463", "replies": [], "depth": 1}, {"id": "gyw3zdk", "text": "Have a conversation. If the owner is an experienced HNWI they may be inclined to do a direct deal. If it\u2019s a high demand asset class it won\u2019t be the first time they\u2019ve been approached. Use the first convo to gauge their expectations. Obviously don\u2019t lie about your ability to achieve a compelling price point but sound bullish. Once you get a handle on expectations and have been diligent have a follow up conversation. Good luck.", "replies": [{"id": "gz0757i", "text": "Agree with this. have a conversation - would have been my comment.\n\nonly add is know your sht. If you come off as not knowing the market or WHY this property, you will seem like you are wasting their time. don't want that.", "replies": [], "depth": 2}], "depth": 1}, {"id": "gz6x43i", "text": "We have been receiving letters in the mail and because it's a seller's market right now we've been entertaining the idea of selling. We've responded to a few requesting an executed NDA before sending financials. Then crickets.\n\nIt's important that we transact with true principal buyers that can execute at our deal size as well as avoid daisy chain internet broker bullshit where some schmoe tries to push button wholesale our 150 unit property.\n\nI say this to warn that it's very important to have your credibility lined up in this market otherwise why wouldn't I enter into the exclusive listing broker process where they qualify buyers, avoid daisy chains and gather bids for the highest price?", "replies": [{"id": "gzavv8m", "text": "What\u2019s the best solution to approach a seller like yourself?  There are some genuine agents out there without broker chain or looking to wholesale the deal.  I think it very difficult in today market to wholesale CRE deals from an non seasonal investors.", "replies": [{"id": "gzawyu3", "text": "It is a legit brokerage with a track record of successful sales at scale we'd request a BOV and go the exclusive route.\n\nThe daisy chain/wholesale brokers don't know that it is difficult in this market or generally what they are doing. They learned from some online course to try and wholesale commercial and they have no problem pitching a 5% buyers fee on a $200,000,000 off market property that they \"have\".", "replies": [{"id": "gzb163p", "text": "Lol \ud83d\ude02 5% buyer fees on a 200M deal? Some online wholesale course??lol.  Too funny \n\nThe only ways Can justify high fees if the property is way undervalued and have a huge upside that\u2019s buyer justify his/her overall opportunity cost.  \n\nMy investors and I have been looking for apt deals for the past 6 months and couldn\u2019t find a deal that would make sense. If you\u2019re apt in Dallas, Texas and if you\u2019re interested to sell it.  Love to connect and learn more.\n\nPromise not wholesaling for 5% fees \ud83d\ude02", "replies": [], "depth": 4}, {"id": "gzgjnfu", "text": "I'm surprised you didn't laugh and hang up as soon as you heard that commission. Most direct listing brokers would kill for a 2% seller fee on a $200,000,000 deal. A deal that size has some legit brokers almost doing it at cost for bragging rights and advertising purposes.", "replies": [{"id": "gzgtmz9", "text": "I still would have a problem with a fee that large. That's a $4m check!! How is a push button broker providing value to earn that amount? \n\nCommissions generally should slide downwards as the price gets higher. We are selling a $15m deal and paying 1.25% broker fee to a national broker who has marketed to a nationwide pool of legit buyers and brought multiple offers above the whisper guidance.\n\nI was looking for one of those 5% deals in my emails and couldn't find one but I did find this from a daisy-chainer back in 2017..\n\nThe Shelborne - Wyndham Grand - South Beach, FL NEW\n\nThe Shelborne\nhttp://www.shelbornewyndhamgrand.com/\nPrice: $230,000,000 + 3%\n\n\nA sweet $6,900,000 check for blasting emails around.\ud83e\udd23\ud83d\ude02 I wonder if Wyndham knows their property is for sale on ConnectedInvestors.com lol\n\nMy typical response is \"are you direct? Can you get one of the principals on the phone today?\" The usual response is \"I'm direct to the sellers rep.\" Well, nice daisy chain you got amateurista...\n\nSorry, venting. I love entrepreneurs. I hate the stupidity around this though. Maybe the CRE business is too much of a sacred cow to me lol", "replies": [{"id": "gzhftrr", "text": "The venting is understandable. The people spamming and pretending to have control of large commercial real estate deals is a joke and gets worse with smaller deals. I dealt with a mix of brokers in the land acquisition space. It was a lot of work figuring out if a development was feasible or not. One time I even received architecture drawings for a development that turned out to not be feasible after analyzing the mountainous topography.\nSadly there are very few competent brokers work on land sales due to the long contingency closing time frame for entitlements and low sale price compared to a building. Lots of brokers were attempting wholesaling land in Florida.\n\nI'm not surprised the deal you posted was in Miami; the capital of fake it till you make it. I did wholesale lending in the $1-$5MM space for a little while. Even the reputable national brokers would stick their new college grad analyst on those deals. Sadly I actually started to appreciate those poorly written packages compared to only getting a photo copied rent roll and financial statement I would have to interpret.", "replies": [{"id": "gzhfubs", "text": "1.00 mile is 9041.26 bananas long\n\nI am a bot and this action was performed automatically\n\n conversion table\n\n|Inferior unit|Banana Value|\n|:--|:--|\n|inch|0.1430|\n|foot|1.7120|\n|yard|5.1370|\n|mile|9041.2580|\n|centimetre|0.0560|\n|metre|5.6180|\n|kilometre|5617.9780|\n|ounce|0.2403|\n|pound-mass|3.8440|\n|ton|7688.0017|\n|gram|0.0085|\n|kilogram|8.4746|\n|tonne|8474.5763|", "replies": [], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gzgm8wb", "text": "Explain why you have someone motivated to buy their building. If you have a business looking to buy and occupy the property that is a good sign as an owner the buyer will pay slightly higher than an investor. \n\nYou might also have a buyer that specializes in distressed vacant properties and find a mom and pop owner that doesn't have the capital to fix up a property and bring in a new or better tenant. Being able to keep the seller in the deal with partial equity could also be tempting to the seller.\n\nAs a broker find out when their loan no longer has prepayment penalties. Non sellers typically look at marketing a property for sale when their loan matures. See if there are any other triggers are needed before selling a property. Most value add owners want a commercial property to be close to full occupancy before selling. \n\nBe a problem solver. If a large tenant has just left you might be able to assume the loan from the seller instead of the seller defaulting on the loan and giving it back to the bank.", "replies": [], "depth": 1}]