Finding The Best Time To Sell

Finding The Best Time To Sell

If you’re holding commercial real estate property, there may come a point when you decide to sell. It might make sense for your overall investing plan, or you could have a loan coming due. Your financial goals and overall market conditions can also play a role in deciding whether to sell.

The timing of the sale can impact the return you receive on the transaction. If you understand the process involved in marketing a property, and can be patient, you could set up a strategy to get the best possible price. Sellers who choose the right broker can often reap great outcomes too.

Follow these steps to plan the timing of your sale and get the highest price:

Account for the Sales Process

The average sales process for commercial real estate in a primary market typically takes around six months. A couple of weeks are needed to gather information and create brochures. Then another month or two are spent getting as much exposure as possible. Sending out contracts and waiting for buyers to get financing can take several more months.

Sometimes sellers aren’t able to allow for this window of time. Owners might decide to wait until market conditions improve and run the risk of delaying the sale too long. Also, as you look at the selling process, note that commercial real estate isn’t seasonal. However, you may have to keep holidays in mind; for instance, people might travel and be away at the end of summer.

Be a Patient Seller

When there is uncertainty in the market, buyers and sellers tend to prefer the sidelines. Buyers may decide to wait to see if more opportunities come later. I watched this happen recently, starting in the middle of 2022 when interest rates began to increase. Sometimes long-term investors look to take on debt at a conservative level. Rather than transact in a market with high interest rates, they’ll pause on purchasing until conditions improve and interest rates go down.

Given this, if you’re a seller and can be patient, you’ll increase your chances of getting the best possible outcome. You’ll be able to wait until buyers are ready to act, and can then evaluate the bids that come in. If you can avoid being in a situation where you have to transact, you’ll be able to spend time looking for higher prices. You can learn more about taking a long-term approach in my conversation with William Rudin, co-executive chairman of Rudin Management Company, on my podcast, The Insider’s Edge to Real Estate Investing.”

Work with the Right Broker

Your relationship with the broker who oversees the selling process on your behalf can make a difference in the outcome. I cover ways to work with a broker in Step 3 of “The Insider’s Edge to Real Estate Investing” book. Check to see what the plans are to market the property. Is the broker going to try to get as much exposure as possible? If they are, this can make it easier to get more interest and higher bids on the property. Also learn about the broker’s track record, and whether they have experience working with the type of asset you want to sell. Evaluate the broker’s team as well to see the type of resources and attention you can expect during the sales process.

Selling commercial real estate typically involves multi-million transactions, and these don’t occur overnight. By understanding that the sales process can take at least six months, being a patient seller, and choosing the right broker, you can better navigate the complexities of the market. This approach will help you maximize your return on your investment and position you for long-term success.