Identifying Buyer Types When Selling Commercial Property

May / June 2020

When representing a seller of commercial real estate, we determine what type of buyer is most likely to be interested in a particular property as soon as possible in the marketing process. We then focus the appeal of the property on those features that are most important to that type of buyer.

Normally there are three types of buyers for commercial property:

• Investors, who seek an income-producing investment in which to place their surplus funds.

• Speculators, who buy so they can sell when the market goes up.

• Users, who seek sites for their businesses.

The seller’s broker will appeal to the special interests of each of the three types of buyers. Advertising and marketing materials will be developed to attract a potential buyer and furnish supporting facts, realistic projections, and professional information.

For buyers where the main goal is income-generation, we focus on the financial data, concentrating on rentals from the property, terms of the leases, maintenance charges, mortgage information, and net income. We will also demonstrate the probability of income growth from the property.

For the speculator-buyer, the emphasis is on the potential for a resale profit. We might show that the property is in an area with future development planned such as new public transportation or has newly built or renovated commercial properties as neighbors. It will be established that the property is in a growing, vibrant location.  Since income is only a secondary interest to the speculator-buyer, we will go no further than the current income status. The focus will be on the potential for profitable resale.

The location will be of greatest interest to the user-buyer. Is it right for the user’s business? Is the building in good physical condition, or must it first be remodeled, improved, or updated? We must demonstrate the wealth and habits of the surrounding population.

At Metro East Commercial Real Estate we will customize a plan for each type of potential buyer and focus our efforts to where they will most likely produce a prompt, successful sale.