Commercial Clichés

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Posted by REMAX on February 14, 2020
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Commercial Clichés

By Mark Hulsey

I recently developed a new commercial real estate training program with loads of detailed commercial brokerage information but added a section with a little lighter tone titled, Commercial Clichés. We all have our favorite “lines” we seem to always come back to within our respective industry. I certainly have my go-to clichés that seem to roll off my tongue sometimes a little too often. Here are just a few of my favorites. See if any of these ring true to you.

“Time Kills All Deals”

Here’s one my team surely hears too often, but it’s so true. I’m sure many of you have experienced a negotiation that gets stuck-in-the-mud for one reason or another. It’s usually tied to the parties involved, or blamed on their counsel’s review, or pre-offer due diligence that takes the negotiation down to a snail’s pace. Another day or week goes by and things just don’t feel right. Or, the contract is wrapped up, we check-in with a buyer’s broker and there’s no progress on the due diligence checklist. The clock is ticking and nothing is happening. Not good. This is when the classic, Time Kills All Deals line rears its ugly head. But actually, when we keep this cliché top of mind, it serves as an excellent warning flag that demands our immediate attention. Since our business is built on the ever-present axiom of Time is of the Essence, we know we better pay attention when the deal is not moving along like it should be.

“Commercial Follows Residential”

Right now, our brokerage, Results Commercial, is feeling the effects of this cliché. Specifically, the residential market has been in a low inventory mode for the past few years. On the commercial side, we’ve been feeling it for a little too long. As a seller-focused brokerage, we are accustomed to bringing new product to market every week. But it’s truly a slower and dryer new listings inventory market right now. Of course, the pendulum is always swinging and we’ll be back to a more normalized inventory hopefully sooner rather than later.
The Great Recession is an excellent example of Commercial Follows Residential. The first consequences of the serious economic downturn surfaced on the residential side and then, the commercial market caught up to this once-in-a-lifetime gigantic real estate & financial mess. Residential real estate seemed to lead the way in loan underwriting reform, OREO disposition, and finally market stability with commercial not too far behind.
Commercial Follows Residential is also seen in the world of residential housing development. You’ll often notice the new big development going up first and then the commercial buildings fill-in thereafter to serve the new neighborhood residents. It’s the new gas station and C-store on the corner or the four unit retail strip with Starbucks is often close behind. This is where smart commercial developers & investors do really well watching this classic trend.

“The 1st Offer is the Best Offer”

This is an interesting cliché to think over for those of us in the business for a long time. We need to replay some of our transaction history in our heads and see where this good old line, The 1st Offer is the Best Offer, actually holds true. Quite honestly, I’ve seen it go both ways plenty of times. But the one thing I’ve learned, is to take the first offer seriously. Sure, sometimes the first offer stinks. It’s not hard to spot a buyer or agent just fishing for a ridiculously stupid deal since their reputation often precedes their offer in our close-knit commercial market. It is surprisingly easy to see the snake-in-the-grass. But for the buyer or broker that’s done their homework, I find that first offer quite telling on how the market might be reading the asset.
The other side of the coin is when a seller thinks they should hold-out for that “better offer” only to realize months later that they had a good thing going with that first offer. In fact, I’ve seen this many times when working with commercial real estate professionals such as out of state asset managers. They’re sure they’ve nailed the disposition value, only to have the market let them know the actual value after rejecting an offer or two, and then having to play the waiting game for the next offer. Regardless, brokers, owners, and investors need to pay attention to that first offer, even if it’s not what they’re hoping for right out of the gate.
“I’ll leave it at that for now” and not “push the envelope” or just “grab the low hanging fruit,” since “it is what it is.” Don’t think “I have the bandwith” or it’s “in my wheelhouse” to step “outside the box” since I “drink the Koolaid,” but just wanted to “run it up the flagpole” to you guys. Okay, “let’s take this offline” and I’ll “put a pin in it” while it’s still “a win-win situation.” (Sorry…I just couldn’t resist.)
You can reach our Managing Broker, Mark Hulsey, anytime at mark@resultscommercial.com.
tags: commercial real estate, twin cities commercial real estate, minneapolis commercial real estate, st. paul commercial real estate, commercial real estate brokers, commercial real estate agents, commercial real estate negotiating, real estate cliches, residential real estate, brokerage, commercial real estate investment, commercial real estate deals, commercial lending, commercial banks

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