Tire Kickers

[AroundTheWorld]

When you have commercial property for sale, how do you deal with tire kickers?

We get these potential buyers that come in, asking for the packet - - - which is pretty extensive. We've got the actual PL statements, historical occupancy graphs, rent rolls, etc. etc. Then, they come back and ask for X, Y, and Z, then they are "getting serious" and want A, B, and C.

Multiply this by several tire kickers over time and it gets to be a huge waste of time.

At what point do you say - - - "bring me an offer, then I'll gather the rest for you." ?

 

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[fanocks2003]

I am getting fed up with tire kickers....

We get them coming in, asking for the packet - - - which is pretty extensive. We've got the actual PL statements, historical occupancy graphs, rent rolls, etc. etc. Then, they come back and ask for X, Y, and Z, then they are "getting serious" and want A, B, and C.

Multiply this by several tire kickers over time and it gets to be a huge waste of time.

At what point do you say - - - "bring me an offer, then I'll gather the rest for you." ?

This is the method I use myself:

-Small amounts - direct payment with VISA, Mastercard etc. Payment first, then service.
-Bigger amounts (usually everything above $2000) - Escrow deposit, then further discussion.

This is just my way of getting the right customers. People who are serious will commit and make something happen. Everyone else needs to think it over some more (nothing wrong with that, but it is wrong when using other peoples precious time. Time those entrepreneurs/businesspeople could spend on helping people who can act now. Hence contributing value to those who value it).

 

[AroundTheWorld]

Thanks for your reply Fanocks... I should have been more specific in my post... sorry. I'll go back up and edit.

This is regarding commercial real estate we have for sale.... the tire kickers are prospective buyers of the property.

 

[hakrjak]

With commercial as a potential buyer I'm always wondering what to offer. I don't want to offer too low so that the seller will be insulted, but I also don't want to over offer before I've seen any hard data.

Maybe the best option is to just offer full price pending my approval of the financials? Then if I see something there I don't like, I can bid the price down from there.

Cheers,

- Hakrjak

 

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[AroundTheWorld]

I am always really surprised at the lack of data many owners supply. How on earth do they think they will get a reasonable offer w/ the lack of hard data?

That is why we offer a pretty good initial info packet to our prospective buyers. We supply a lot more data then I often see with other properties.

That is partly why I am amazed at the number of "additional info" requests we get from prospective buyers. At what point do I basically refuse to give additional info until I see an offer?

 

[MJ DeMarco]

I'm not sure for commercial property, but when you start the process of selling a business, a signed Letter of Intent needs to be executed. Since your property is really a business, I would assume it would be the same. After the LOI, at that point, the buyer can request all types of diligence info, data, reports, etc.

Without the LOI, it's a full time job providing diligence to the tire kickers. I went thru the same thing when I sold my business. Cursory data is provided to tire kickers .... if they sign an LOI (which opens up the inspection/diligence period), then they get the motherload.

At that point, they can decide to move forward or not. The LOI is not a sales contract so it doesn't lock the buyer into buying.

The LOI does a decent job of removing the tire kickers, not 100%, but many.

 

[yveskleinsky]

Can you blackout all personal info (ss#, etc.) and create a site that requires them to sign up, and once they do they will be given a username/password for them to get to the info? Or maybe just have your personal assistant email it to them? Either way would allow you to build a small list of interested tire kickers, I mean buyers, and you could follow up with them periodically.

 

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[PurEnergy]

Just a thought but PROOF OF FUNDS at a certain point seems reasonable to me.

 

[fanocks2003]

Proof of Funds and escrow deposit are almost the same thing. Escrow deposit is of course a lot more extreme than just having your bank show the seller a bank guarantee or something similar.

But I would never discuss any kind of details with anyone who said no to depositing cash in escrow, at least the down-payment part. I value my time to highly for that and besides, if I own an asset then there is no rush to sell of anyway. The buyer either oblige or leave. Simple.

 

[SteveO]

What is xyz and abc? Do you have an agent?

One of the jobs that a selling agent has is to separate the wannabe's from the the serious buyers.

If someone shows an interest and asks for more information, you can request a resume or list of professional references. I have a resume with all of my references listed that goes out with all offers.

I am one of those buyers and sellers that likes to get all the known information out on the table from the start. Require an offer be put forth if you have enough information in your package.

It is tough to pay an agent for a sale but I won't sell without one. Perhaps it is my personality but I have little patience. I would blow up every deal if an agent was not in the middle. People don't like to hear "What the **** is the matter with you?" or "Tough ****, that is my price". My agents smooth those character flaws out. :smx4:

There are a lot of "lowballers" out there. I would just as soon not have to deal with them at all. I will make low offers but they will have a well defined coversheet that explains my reasoning. I usually calibrate this with an agent before the offer is made.

Buying and selling is tough. Marketing your own property puts you in a position of sifting the garbage yourself.

 

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[SteveO]

The proof of funds and earnest money should be required prior to, or within days of an executed contract. A letter of intent is very useful as a negotiation tool as it lays all the basics out for agreement.

You can have some supporting documentation that can follow a package but in reality the dd starts when a contract is executed.

 

[AroundTheWorld]

We do have an agent... the problem we are running into is that the agent keeps coming back to us asking for additional info... "because they have a serious buyer" ... but they always end up as tire kickers.

We need to have a talk with each of them, I guess... Make sure they are spending more time filtering the tire kickers out before they come to us for more info.

Thanks!

 

[SteveO]

What type of additional information is being requested?

 

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[hakrjak]

I am always really surprised at the lack of data many owners supply. How on earth do they think they will get a reasonable offer w/ the lack of hard data?

That is why we offer a pretty good initial info packet to our prospective buyers. We supply a lot more data then I often see with other properties.

That is partly why I am amazed at the number of "additional info" requests we get from prospective buyers. At what point do I basically refuse to give additional info until I see an offer?

If you are providing a good prospectus up front, then I would withold additional info like tax returns, etc until I had an offer in hand. Maybe you can have your Realtor politely tell the prospect, "Due to the interest in this property, the owners are only providing that type of information to prospective buyers who have already submitted an offer in writing."

I think the problem everyone faces in commercial (I have faced it every time I've tried to enter the commercial market) -- is that every seller and seller's agent lies and deceives when it comes to info... It's just considered another day at the office... Figuring out what the real numbers are, even if you're experienced -- turns out to be a guess most of the time.

- Hakrjak

 

[AroundTheWorld]

What type of additional information is being requested?

Well, it is different every time, but here is the latest.

The prospective buyer wants a breakdown of expense by month. We provided an annual YTD Profit Loss, but that wasn't enough... they wanted to know expense by month...

Info like this is going to vary by owner. Some may pay for insurance monthly, other's only once or twice a year, etc. I don't understand why they would ask us to take our time to put this information in exactly the format they would like to see it. If you want an average, how hard is it to take your annual number and divide by 12?

 

[SteveO]

I think the problem everyone faces in commercial (I have faced it every time I've tried to enter the commercial market) -- is that every seller and seller's agent lies and deceives when it comes to info... It's just considered another day at the office... Figuring out what the real numbers are, even if you're experienced -- turns out to be a guess most of the time.

- Hakrjak

My fun loving personality allows me to have some fun with some of these agents. Not that they enjoy it, but I certainly do.

I have noticed a trend lately that real information is not even showing up in many marketing packages. All that is listed is some hilarious pro forma. I guess it isn't really that funny. :smxE:

 

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[SteveO]

I would provide the financials 12 month trailing, year to date, and monthly to the agent. Let them put the information into their own format or distribute based on how they see fit. Your software should already have it in a monthly format. If not, tell the agent you don't have it.

 

[biophase]

I would provide the same numbers as Steve has mentioned and no more. I approach as if I was a buyer and think about what I'd like to see and what is reasonable for me to see.

I think its reasonable for a buyer to ask for all the numbers even at the beginning stages of interest. A lot of times, the presentation of the numbers from the seller tells me alot about them. If the seller provides within a day or two an excel spreadsheet or a quickbooks report, then I can assume that this seller is fairly organized and that the numbers are "good" and can be confirmed easily. If the seller or agent comes back with a couple sheets of notebook paper and numbers scribbled onto them, I assume the seller keeps very poor records and probably has no idea what his income and expenses really are. Most of the time, if you ask for more info like checks or receipts, they won't be able to come up with them or they'll want two weeks to do it.

You can provide actual income and expenses for the buyer to have enough information to crunch and calculate all the numbers. If the buyers start asking for real documents like bank statements, receipts or anything to confirm your numbers, at that point I'd request something more substantial that shows their sincere interest.

 

[AroundTheWorld]

For the most part, that is what we provide initially....

prior year profit loss
year to date profit loss
revenue by month - going back 4 years
occupancy rate by month - going back 12 months

But they always come back and ask for essentially the same info but in a different format... or for tax returns... etc.

Each time they ask for the info in a different format, it takes up our time.... and they already have the info - - they just might have to dig for it a little.

 

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[SteveO]

Tell the agents to quit bugging you for information that they have and to put it into a format for the buyers.

 

[hatterasguy]

Exactly what Steve said. Your paying the agent a lot of money, tell them to do there job or your listing it with someone else. They shouldn't bother you with all that BS.

As for the buyers wanting more, you gave them the info. If they want it in a different form tell them you don't have it. If they are serious it won't matter.

 

[hatterasguy]

I guess things are very different in Europe.

 

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[fanocks2003]

How do you deal with an escrow deposit before you have a binding agreement? (I've never seen this in real estate)

Without a binding agreement/contract, how does the escrow holder know who to distribute the escrow funds to, when, under what conditions and exactly how much?

Of course you sign an agreement. LOI or something similar. Thank you for the detailed eye.

 

[hatterasguy]

In real estate "details" are often worth $300k.

 

[KyJoe]

Get your agent to deliver you a LOI, or leave you alone. If he/she can't do that, you should get another agent. Think about what info you received when you bought the property as a guide line, since you were a actual buyer of that property. It's nothing but pure conversation until it's on paper.

 

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[MJ DeMarco]

Bump cuz I like the thread!

 

[taichijedi]

Exactly what Steve said. Your paying the agent a lot of money, tell them to do there job or your listing it with someone else. They shouldn't bother you with all that BS.

As for the buyers wanting more, you gave them the info. If they want it in a different form tell them you don't have it. If they are serious it won't matter.

This is exactly what I was thinking. Agents make good money by representing you, and you have already given them all they should need in order to bring you only serious buyers. Maybe you need to have a conversation with the agent stressing that you expect them to be able to reconfigure the info you initially provided them, when you listed through them, to meet the needs of the potential buyers.

I have a good friend who is a commercial agent, and that is precisely what she does. After the initial meeting, she spends a couple of hours putting together differnt formats of info, and creating different packets. Some really vanilla (for the tire kickers), others far more in depth (monthly breakdowns, etc.) for more serious buyers. Things such as tax returns and the like are a no-go without an LOI.

She actually does really well, has decent turnaround, and a great reputation because she doesn't waste her clients' time. She knows what she needs, she gets the info upfront, and she only brings serious investors to call.

Part of it might just be her perspective, though. She's not just there to sell a property and earn a commission. She is just as concerned with the service and value she brings to her clients, trying to offer the best service in the market.

 

[hatterasguy]

Thats what they should be doing.

 

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