Do you remember the Seinfeld episode about the ugly baby? Jerry and Elaine were invited to visit their friends after they’d just given birth to a new baby. When Jerry and Elaine arrived to congratulate the couple, they looked down and were appalled at what they saw. The baby was butt ugly. After recoiling, they faked their way through the conversation with the new parents, telling them what every parent wants to hear–that their baby is beautiful, charming, looks just like them.
What if that baby were your property and you didn’t know it?
One owner contacted us because he was confused. No one wanted to buy his property. He complained that he’d been trying to sell and couldn’t believe that not one buyer wanted such a beauty of a deal. Clearly, his previous advisors, like Jerry and Elaine, were withholding the truth for fear of hurting his feelings.
You’ve seen properties like this one before. You drive by and think to yourself, “what a run-down, nasty, dilapidated dump.” You aren’t surprised to learn that it has a failed septic system, no long-term leases in place, a paper street in the rear, no environmental 21-e report, and pricing nearly 3 times its market value. “Who would want that?” You ask.
Only if you could see its inner beauty.
Here’s how we made it shine. We started by eliminating doubt and uncertainty in the market and helped buyers see the upside. We worked with the owner to obtain a clean 21-e for the property and then had the septic system tested and failed so that we could show the new owner what would be involved in replacing the septic system. We secured a new, 20 year lease from an area tenant looking to relocate their business, and then priced the property to market value, accounting for the required septic system upgrade.
6 offers were generated and the property finally sold.
Here are the results:
CAP Rate: 13.09%
Date Closed: August 5, 2009
Not bad. The owner sold with multiple offers in a tough market. It certainly may not have been the right deal for you, but the new owner recognized the beauty in this baby and made it his own.
Do you think you are a seller today? If so, email me at Jeremy@Mansardcre.com with the words “Sell my building in today’s market” in the subject line. Include your name, when you would like to be called, and the best number to reach you. I will contact you to schedule a time for you to invite me to your building for a free consultation. If there’s a fit, you may retain us to sell your property. If there isn’t a fit, we’ll tell you we cannot help and will refer you to another firm that may be a better match.
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About the Author:Jeremy Cyrier, CCIM is a principal with MANSARD Commercial Properties and member of the CCIM Institute faculty. He offers advisory services and brokerage expertise to commercial real estate owners and tenants. You may reach Jeremy at Jeremy@Mansardcre.com.
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