Understanding the Seller’s Objectives
Before we undertake the marketing and sale of your property, we need to understand your reasons and objectives for selling the property. When you sell your property using Rincon Corporation we employ the following procedures to ensure that we prioritize and achieve your objectives in the sale of your property.
1. Understand your objectives and priorities- Everyone has a fairly different reason for selling their property, and different objectives to achieve when doing so. In order for Rincon Corporation to best meet your individual needs, it is important that we understand your exact situation and reason for selling. For example, if a quick sale is critically important, we would likely employ different marketing and sales strategies than for someone who would like to take their time and see if they can “get their price”. Sometimes a seller wants a “Confidential Marketing” or an “Open Marketing” of their property.
2. Analyze the Strengths and Weaknesses of the Property- Just like every person is different, so is every property. It is important to understand the nuances of your property, knowing the market impact of each, and find ways to maximize the strengths and minimize the weaknesses.
3. Make Recommendations to Prepare Your Property for Market- Once we know your objectives and understand the strengths and weaknesses of your property, we will make recommendations if appropriate to better position your property for the market. For example, if your objectives are to maximize value without a great need to expedite the sale, you may want to spend the time and money to solve some environmental problems, fix broken irrigation lines, obtain permits, zoning issues, certificates of compliance, lot line adjustments, etc. In addition you may need to renegotiate leases, easements, water sharing agreements, etc. Often times, there are old items on the title report that need to be cleaned up.
4. Structure the Property Offering to Achieve Objectives- Pricing is probably the most critical issue in marketing a property and meeting your objectives. However, there are other terms of offering a property for sale that are critical in meeting a seller’s objectives. For example, sometimes “the sum of the parts is greater than the whole”, or in other words your property is worth more by selling it in pieces according to their respective highest and best use. Other times this may be contrary to your personal objective of a quick sale. Do you want to consider taking a note back, or do you want to cash out? Are you going to utilize a 1031 Tax Deferred Exchange? Perhaps a long-term lease can take the place of a sale. What are the alternative uses for your property and is your property best marketed for a different purpose use than its current use?
Commissions are Negotiable – Contrary to some belief, all commissions are negotiable. Therefore, they are subject to competition, which is to the seller’s advantage. At Rincon, we are very aware of this, and thus approach setting commissions in a competitive and businesslike manner. It is our belief that we will add more value to a transaction than we will cost, or we will not get involved. Before we list a property with you, we will discuss, and agree in writing, upon the commission rate and structure.
Types of commissions – Commissions are generally paid by the seller from the proceeds of a successful sale.Typically, no commission is earned unless a transaction closes successfully. We strive to structure commissions as cost effective for the seller as possible.
Most commissions are structured so that a commission is paid to the broker, representing the seller, and a commission is also paid to the broker representing the buyer. We usually utilize this commission structure for a rural estate property or a commercial property because buyers come and go into the market and generally use their own broker to do so.
Sometimes we structure the commission where the seller is not obligated to pay a buyer’s broker. We do this when we believe that we can sell a property without requiring a broker to procure a buyer. This is often the case with vegetable/berry farm ground because we know virtually all the potential buyers in the market and have direct access to them. As a result, we often are able to sell large commercial farm ground for as little as a 2% commission.
Why Use a Broker?
I will Probably End up Selling my Property to my Tenant, Neighbor or Friend – This is often the case, and sometimes the best solution for all parties involved. However, as the seller, you need to know that you have received the maximum price attainable on the open market. Also, your tenant, neighbor, or friend needs to know that you have viable alternatives for selling your property and therefore must pay a fair market price. Having Rincon as a part of your team will help ensure this. With Rincon Corporation’s various commission rates you will be assured that your individual needs will be taken into account at a reasonable cost.
I Can Net More Dollars if I Don’t Pay a Commission – If the price the market was willing to pay for your property was fixed, then this would be absolutely true. The real question that you need to ask yourself is, “Can I present my property in its best image, with maximum exposure to potential buyers, in order to receive the top dollar the market is willing to pay?” If the answer is yes, then you should sell it yourself. Otherwise, it is wise to employ an experienced and competent broker to help you achieve a top price.
Selling Your Property
Showing Your Property – Once a prospective buyer has demonstrated an actual interest in your property, the first step in selling is to listen to the buyer. Through the art of listening, the salesperson will identify the buyer’s objectives. They will then communicate how your property will meet those objectives. The salesperson will also listen to the buyer’s objections or fears regarding your property, and alleviate them to the greatest extent possible. This may involve additional research or information. It may simply require an explanation from the salesperson, whom the buyer recognizes as a competent professional in the industry.
A good salesperson will then communicate to the buyer how the property best meets their objectives. They will also communicate to the buyer that their property has the value for which they are asking, and that the buyer should act quickly and decisively to make an offer. An experienced and knowledgeable salesperson will impart an image to the buyer, providing the confidence that:
- Your Property and the Property Information is credible and accurately represented
- You as the Seller are fully informed of current market conditions and activities, and therefore will command a full and fair price
- Your Property is being efficiently and professionally marketed and presented, and therefore action is required immediately in order to avoid losing this buying opportunity
Negotiating the Transaction – Once a potential buyer has developed serious interest in your property, selling then involves facilitating an offer and the subsequent negotiations. Also, it is important for the seller to know if the buyer is actually serious and capable of closing this transaction. If a buyer is neither serious nor capable of closing, you may be subject to undue delays in securing an actual sale, which could result in lost sales opportunities. The negotiation process can be quite tense, and professional and accurate communications are essential to avoid potential pitfalls. Negotiations are often where the most incremental dollar value is added to a transaction. It is important that you and your broker are in continual communications during this process, and that communications between the seller and the buyer are effective. Initially, negotiations primarily center on purchase price. However, there are several significant aspects to the transaction that must be fully negotiated. These are best completed with the experience of having done many of these types of transactions for your specific property, and may include:
- Contingency period
- Liquidated damages
- Escrow period
- “As-Is” purchase
- Terms of Escrow and escrow company
- Title Policy
- Buyers/Sellers rights and obligations during escrow
- Costs incurred or shared between Buyer/Seller during escrow
- Representation and warranties
- Terms of Financing (if applicable)
- Fixtures and appurtenances
- Tax Deferred Exchange issues
Closing the Transaction – Selling ultimately involves the closing of the transaction. Once a deal is negotiated, drafted, and signed, then escrow is opened. During the escrow period, the buyer will conduct his due diligence to satisfy himself that the items of contingency are satisfactory. In order to facilitate the buyer’s efficient due diligence, and to help protect the seller from future litigation, Rincon prepares a Disclosure Package with information provided by the seller as well as information generated by Rincon. Complete and accurate information will instill greater confidence and help expedite this process for the buyer, and helps avoid claims against the seller after the close of escrow. We often work with the Buyer’s lender to provide property information and coordination in the closing of escrow. Often issues and concerns arise during the due diligence period, which must be addressed quickly and professionally in order to avoid delaying or jeopardizing the transaction. An experienced and competent broker is important to have on the team to deal with this.
Marketing Your Property
Once we have determined your personal objectives, your property’s strengths and weaknesses, and how best to mold those into a marketing strategy, it is time to “go to market”.
Marketing is the act of compiling, presenting, and distributing information to prospective purchasers. Rincon’s objective in creating a marketing package and strategy is to:
- Present complete information and quality information
- Present your Property Information in a professional presentation that attracts the buyer’s interest and maximizes their image of your property
- Present your Property Information to the greatest number of prospective buyers and create maximum market awareness
- Arrange for professional tours of your property
Quality Information Much of the work here belongs to you. We will provide you a checklist to obtain information on your property that we will need to do our job, such as well reports, production history, leases, etc. Additionally, there is information we will assemble on your behalf, such as aerial photos, ground photos, title information, assessed values, soil maps, zoning, Williamson Act, etc., in order to provide the highest quality and most complete information, to prospective buyers.
Professional Presentation Once the Property Information is compiled, it must be presented to prospective buyers in the most professional, clear, concise, and intriguing manner. The idea is to attract the buyer’s attention and then maximize their image, and thus the desirability, of your property. In order to achieve this, Rincon will create a “Flyer”. The Flyer may be used as a direct mailing piece, an email piece, or as a response to a preliminary inquiry. In addition, the Flyer is the basis for a web page that will be inserted into the Rincon Web Site, promoting your property. This provides instant worldwide availability to anyone with Internet access.
If the Flyer creates further interest, or if initial interest and buyer qualification warrants, a prospective buyer will be provided a “Package”. The Package will contain all of the Property Information necessary for the buyer to make an informed offer for your property. We want the buyer to be confident in the value of the property on which they are making an offer.
Historically, the Package has been a bound “book” containing all of the Property Information presented in an exceptionally professional manner. Occasionally, the information is placed on a CD and indexed instead. This allows a greater amount of information to be presented, which is easier and faster for a prospective buyer to review. It also allows for greater portability and more impressive audio and visual enhancements to the Package.
Create Maximum Market Awareness Rincon maintains a proprietary database of potential buyers and brokers appropriate for the property. We employ this database in a direct broadcast email campaign customized to your Property and your objectives. While this is generally the most effective form of marketing, in “Open Marketing” we employ more mass distribution of your property information in order to ensure the greatest chances of a prospective buyer being reached. To do this, we utilize:
- Rincon Web Site- Agricultural Properties for Sale
- Listing on internet agricultural real estate sites
- Member Multiple Listing Service-your Properties availability is made known to other area brokers from Santa Ynez to Paso Robles
- Personal relationships as nothing is so effective
Marketing versus Selling
There is often some confusion between the idea of “marketing” your property and “selling” your property.
Marketing is the act of compiling, presenting, and communicating information about your property to prospective buyers. It involves identifying the target markets that comprises the potential buyers of your property, and effectively getting that information to those individuals in a way that it generates initial interest. Once initial interest is established, then the opportunity to “sell” arises.
Selling, on the other hand, is the act, or more appropriately the art of producing a successful transaction. This first requirement is understanding the buyer’s needs and concerns, and demonstrating how your property fits those. It then requires successful negotiations of the optimum purchase price and the other important terms of a transaction. Then it requires the successful completion of the buyer’s due diligence, and ultimately the close of escrow.
“Confidential” versus “Open” Marketing Plans
Not only is each property unique, but each seller’s individual situation is unique. As a result, we tailor each and every marketing program to match both the seller and the property. In some cases, a seller wants to maintain confidentiality that a property is for sale, and/or information about the property that may be proprietary in nature. Other times, a seller wants maximum exposure to the world that their property is for sale and all the aspects of the property. We can accommodate either objective, or find something in between that best meets the needs and desires of the seller and the property.
It is not unusual, however, that an owner of some farm ground does not want the word out that their property is coming onto the market. This may be due to family situations, not wanting to needlessly worry tenants, or for any number of reasons. In this situation, we identify a specific list of prospective buyers and discuss it with the seller. We then contact those specific prospective buyers and describe the property in a non-specific manner in order to establish potential interest. If there is interest, we then have the prospective buyer sign a legally binding Confidentiality Agreement before identifying the specific property, or releasing any information about it. There is no advertising, broadcast emailing, internet marketing, or MLS listing in this situation; only one-on-one contact.
In some cases a seller wants as many people as possible to know that their property is for sale. In that case, we employ an “open marketing” program that is customized for each property and its potential target markets. An open marketing program will generally involve some or all of the following:
- A “For Sale” sign on the property
- A printed flyer or brochure
- Placement on Rincon’s web site
- Listing in the Multiple Listing Service from Santa Ynez to Paso Robles
- Placement on various internet real estate sites
- Broadcast email to proprietary database of potential buyers
- Broadcast email to other real estate brokers on the Central Coast
- Inclusion in Rincon’s newsletter