It’s no secret that Edmonton industrial real estate prices have softened. If you look city-wide, at all building sizes, recent numbers suggest as much as a 20% drop in selling prices. Not to worry, that isn’t the whole story. Depending on your specific neighborhood, building size and features, this is not likely an accurate number for your specific property – you may have weathered the storm in better shape than you think.
Does this mean you need to drop your price to sell? It might, especially if you need to sell faster than average. Consider yourself warned, but these days its not uncommon to see an industrial property sit on the market for sale or lease, for over a year. If now is the time for you to sell, one of best way to preserve your equity in today’s market is to make it easy to buy.
As a seller, there is something you can learn from the strategies of big-box department stores luring consumers in with loud, almost-irresistible offers of ‘no payments till 2025!’ Making your property easier to buy is tackled through creative deal structuring – assuming that you’ve got all the bases in a smart marketing plan already covered.
Become a Deal Architect
The pool of buyers who qualify for today’s tight lending criteria is small – people or businesses with great credit, and large amounts of liquid cash for a down payment. Offering alternative buying solutions such as Seller Financing and Lease Options widens the pool of buyers who are capable of purchasing your property. Here’s a very brief run down of these two tools, we suggest you sit down with your Realtor® to discuss in depth.
Seller Financing: in essence, taking an IOU on a portion (or all) of the purchase price. The number of ways to structure seller financing is limited only by your imagination. Offer interest-only payments, delayed payments, escalating payments, or yes, even ‘no payments till 2015!’ The larger the amount of financing you can provide, and the more flexible you can be on payment terms, the more attractive your deal is to buyers. Most buyers are willing to pay a premium for this opportunity.
Lease Options or Rent-to-Own: its possible to achieve a higher sale price as well as higher lease payments through lease options. These deals appeal to the businesses that would love to buy, but either can’t come up with the large down payments the banks require, or just don’t want to because they want to keep their cash in their business. The entrepreneurial dream of owning your business’ property is still alive and well in Edmonton, and if a business owner can begin to build some equity in a rent-to-own deal, they will likely choose that before simply lining their landlord’s pockets with cash. It comes down to negotiating a non-refundable deposit, payment terms, and option expiry terms you both can live with. A non-refundable deposit ensures the buyer/tenant will treat the property as their own, saving you the hassle that typically comes with land-lording. There are also methods to increase the monthly payments, protect your sales price from future market drops, and further tie the buyer/tenant to the property as their equity increases through “down payment assistance options”.
It goes almost without saying – along with the rewards that these tools can bring there are risks, and we suggest buying lunch for your favorite lawyer & Realtor® to talk about your specific exposure.
If you are not in a position to make your property easier to buy, and you need to sell faster than the market is moving, you will need to take a hard look at pricing aggressively. Before you simply drop your price, talk with your Realtor® about creative ways to make your property easier to buy.
What’s your take? I’d love to hear your stories in the comment section.