Top 5 Reasons Commercial Properties Don’t Sell

September 25, 2022

As you can imagine, there are almost countless problems that can arise to prevent a commercial property from being sold. However, among those myriad problems, there are five which are, by far, the most common causes that prevent a successful sale of commercial properties.

If your commercial property didn't get sold, or if you're considering the sale of your commercial property, you'll benefit from this article.

By the way, the information in this article applies equally to leasing commercial property.

Reason Number 5 - Poor Advertising

Unless prospective buyers know that your commercial property is for sale, your property can't be sold. And, the only way those prospective buyers are going to learn about the availability of your property is through advertising.

Properly advertising a property in the media most appropriate for that property type is one of the most important reasons why a commercial property either sells or fails to sell.

Reason Number 4 - Difficulty Showing the Property

Difficulty in showing a property is one of the top reasons why a commercial property doesn't get sold. And, while one may first think the cause of this difficulty may be due to an uncooperative listing agent (which is sometimes true), there are other reasons why it's difficult to show a property.

For example, there may be times when dangerous activities are taking place on the property that would be hazardous to visitors, such as in certain manufacturing or chemical processing procedures.

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Another example is when there is an uncooperative tenant who may be using this tactic to extort a concession from the landlord-property owner, or is simply seeking retribution for some unknown reason.

Then we have the seller who is intentionally uncooperative. A seller's lack of cooperation in allowing their property to be shown can have several different causes ranging from having a disagreement with their listing agent to being less than fully committed to selling the property.

Regardless of the reason, the fact remains that difficulty in showing a commercial property typically results in few, if any showings, and generally results in the property not being sold.

Reason Number 3 - Agent Negotiating Skills

One of the most common, yet one of the least recognized reasons why a commercial property doesn't get sold is because of the poor negotiating skills of one or both of the real estate agents.

A skilled negotiator has an arsenal of negotiating strategies and techniques they can use to reach a successful result. But, there are a few basic rules that are common to every successful negotiation.

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While I'm not going to get into a dissertation on how to conduct a successful negotiation, I will say that negotiating to reach a conclusion that satisfies both parties in a commercial real estate transaction requires:

1) Complete knowledge of the intricacies of each of the many types of commercial real estate and the issues related to the sale of each,

2)  Understanding how to interact with the many different types of personalities,

3) Recognizing the personality type of the person with whom you're negotiating, and

4) Having extensive experience with successfully negotiating with a wide variety of personalities in as many different situations.

When both real estate agents are skilled negotiators, neither will likely get everything wanted by their respective client. However, both agents will almost certainly satisfy their respective client's most important requirements.

Unfortunately, when one or both agents lack negotiating experience, it will likely result in a failed outcome for one or both parties.

Reason Number 2 - Agent Cooperation

An important ingredient in the creation of a successful sale of a commercial property is the listing agent's willingness to reasonably cooperate with other commercial real estate agents.

Reasonable cooperation with other commercial agents includes:

1) Assisting in making appointments for cooperating agents to show the seller's property to their buyers.

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2) Answering questions about the availability status of the property.

3. Provide insight into the seller's willingness to consider holding part of the purchase price in the form of either a first or second mortgage, the seller's preferences concerning a closing date, and other things that can help eliminate wasting time dealing with undesirable and unwanted issues during future negotiations.

Consequently, the lack of cooperation by the listing agent with other commercial real estate agents is one of the top reasons that significantly reduces the probability of consummating a sale of that property.

Number 1 Reason - Pricing

Among all the reasons why a commercial property doesn't sell is because its offering price is so high that prospective buyers conclude that the seller isn't serious about selling.

However, the problem of over-pricing may be the fault of the seller's real estate agent rather than the fault of the property owner.

In today's commercial real estate business there is a large and growing number of new and "cross-over" agents (a cross-over agent being a residential real estate agent trying to break into the commercial real estate business sector).

In both cases, neither of these types of agents has the requisite knowledge and market experience necessary to form a reasonable and well-supported opinion of the value of a commercial property.

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There are very few new and cross-over agents work under the direction of an experienced commercial broker or agent to help them to properly and ethically serve their prospective seller clients.


And, because there are so many other new and cross-over agents trying to "fake it 'til they make it," many property owners are at a disadvantage because they don't know how to determine an experienced commercial agent from an inexperienced "newbie."

Bonus Information

Quickly Separate the Newbie from the Professional

The importance of hiring an experienced commercial real estate agent to sell or buy a commercial property cannot possibly be overstated.

And, while there's a long list of ways to determine whether the agent you're talking with has the experience you need and expect, here is a very quick and simple way to find out.

Simply ask the agent to provide you with a copy of their curriculum vitae (CV), which is a summary resume used by every real estate professional.

An agent's CV will give you an overview of their work history, how long they've been in the commercial real estate industry, what type(s) of property they typically deal with, their professional education (not to be confused with academic/college education), their professional designations, awards they may have received, and other information relevant to their commercial real estate experience.

Finally, if an agent's CV doesn't indicate an extensive history dealing with commercial real estate or, worse yet, if they don't immediately produce a CV, this is a very strong indication this agent is not an experienced commercial real estate agent.

DOWNLOAD KEN'S CV


Contact Us for a complimentary and confidential conversation to learn how we can help you get your commercial property sold.

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