Many times over my career I have heard buyers complain that if a property is a really good deal, it gets snapped up by an investor before the buyer even knows about it. If you are considering investing in commercial real estate it's important that you have access and knowledge of these deals. The best way to be “in the know” is to have a good relationship with a commercial real estate broker and make sure that he or she is aware of exactly what you are looking for and your criteria to buy. The broker can then guide you as to what you need to do to get your financing in order, so when an opportunity arises, you are ready to go.
Opportunities are increasing as bank foreclosures continue and sellers consider short sales. With commercial real estate, there is often a long process of evaluation and disposition strategy that banks consider before a property comes to market. This is often a period when brokers become aware of a property and will make their clients aware of good deals on the horizon.
In the past year I have been asked to do evaluations or list properties by Huntington Bank, 5/3rd Bank, Independent Bank, Northpointe Bank, Honor Bank, TBA Credit Union, TC State Bank, Northwestern Bank and Citizen's Bank. I am honored to have been referred to these banks and so far, I have listed quite a few and made clients aware of others that might work for them if they come on the market. They do not always become available for sale as the borrower may work out a plan with the bank or the bank may sell the property directly. However, during this time frame the bank will often tell me that if I have buyer, they will look at offers even though it is not listed. A buyer that waits for the property to be listed may lose an opportunity.
It is important for a buyer to know that a bank's motivation may change from quarter to quarter depending more upon the bank's balance sheet than on the real estate market. Sometimes the bank can't lower the asking price because they have the asset on their books at a certain value. However they may accept a severely discounted offer if they are looking to free up some cash. One of the listings I sold was at a 40% discount from list price and a 60% discount from the price the building had been purchased for 4 years earlier!
A buyer needs to work with a broker who knows about potential deals coming to the market, properties that are currently on the market that could be purchased at a discount, and properties that are just great deals. If you are a serious buyer and want your broker to work hard for you, consider offering to enter into a buyer-broker agreement that says you agree to work with that broker and they agree to represent you. Good deals go to those buyers who are ready with financing and have a relationship with a good commercial agent.