The Top Down Listing Strategy
By Peter Ciriello CCIM CBI
In a recent transaction I had the opportunity to meet a man who at one time was the biggest owner of housing in the United States. This person, whom unfortunately I cannot name (due to a confidentiality agreement I signed), taught me a way of selling commercial real estate that I previously never used.
As an agent since 2003, selling multifamily in Los Angeles, I was often trained by peers to talk about deals that were highly competitive (multiple bid situations) as achievements. When speaking to other brokers, I would often hear about these stories and think "that agent is good, he/she marketed the property well and was able to achieve a high level of interest." Well, this client, after spending 2 months with him and his family (his company) selling a trophy parcel of real estate, has taught me an alternative - and it is this alternative measure that I will champion for the remainder of my career. I call it the "Top-Down Listing Strategy" and the old way, I will refer to as "Bottom Up."
In my opinion, there is one main difference between top down and bottom up; who it's good for.
The one thing that most broker's never want to talk about to their clients is the fact that when you hire a broker, you're hiring someone who has his own needs. I am sure every landlord want's to believe that profession of commercial real estate brokerage is filled with agents who put the needs of their clients above their own, but sadly, I don't see that to be the way the majority brokers work in any of the markets I work in. So as a landlord, you will need to ask, "are my needs going to be primary, even with, or secondary to the needs of the broker I hire?"
Unfortunately, the way to determine the broker's hierarchy of needs is EASY to determine and these I outline in my article "The Commercial Broker Cheat Sheet" so I won't rehash them here.
the bottom-up strategy is good for agents, and makes properties easier to sell, and therefore is part of the broker's repertoire to consistently taut it as the "way to sell real estate." It is the top-down approach that means an agent will have to work hard, might need to cooperate fee with another agent, and is truly the best strategy for the Seller.
As an agent since 2003, selling multifamily in Los Angeles, I was often trained by peers to talk about deals that were highly competitive (multiple bid situations) as achievements. When speaking to other brokers, I would often hear about these stories and think "that agent is good, he/she marketed the property well and was able to achieve a high level of interest." Well, this client, after spending 2 months with him and his family (his company) selling a trophy parcel of real estate, has taught me an alternative - and it is this alternative measure that I will champion for the remainder of my career. I call it the "Top-Down Listing Strategy" and the old way, I will refer to as "Bottom Up."
In my opinion, there is one main difference between top down and bottom up; who it's good for.
The one thing that most broker's never want to talk about to their clients is the fact that when you hire a broker, you're hiring someone who has his own needs. I am sure every landlord want's to believe that profession of commercial real estate brokerage is filled with agents who put the needs of their clients above their own, but sadly, I don't see that to be the way the majority brokers work in any of the markets I work in. So as a landlord, you will need to ask, "are my needs going to be primary, even with, or secondary to the needs of the broker I hire?"
Unfortunately, the way to determine the broker's hierarchy of needs is EASY to determine and these I outline in my article "The Commercial Broker Cheat Sheet" so I won't rehash them here.
the bottom-up strategy is good for agents, and makes properties easier to sell, and therefore is part of the broker's repertoire to consistently taut it as the "way to sell real estate." It is the top-down approach that means an agent will have to work hard, might need to cooperate fee with another agent, and is truly the best strategy for the Seller.
Top Down
The top-down strategy determines the market price for a property and then prices the property as much as 10% higher on the listing (market). This is designed to tell the market that the Seller is willing to sell, but that he's looking for the top bidder in the marketplace. 10% is the maximum, you don't want to list the property higher than 10% of the actual expected price, because it could tell the market that you are not really trying to sell the property (not committed to selling).
The Seller is only looking for one offer to buy the property. He doesn't care about multiple competitive bidding.
The top-down strategy determines the market price for a property and then prices the property as much as 10% higher on the listing (market). This is designed to tell the market that the Seller is willing to sell, but that he's looking for the top bidder in the marketplace. 10% is the maximum, you don't want to list the property higher than 10% of the actual expected price, because it could tell the market that you are not really trying to sell the property (not committed to selling).
The Seller is only looking for one offer to buy the property. He doesn't care about multiple competitive bidding.
Bottom Up
The bottom-up strategy determines the market price for a property and then prices the property as much as 5% lower on the listing or just at the expected market price. This is designed to tell the market that the Seller is looking for many competitive bidders to drive the price up.
While some may argue that this approach only works with trophy properties where there is high demand, I believe it can work in varying degree with all properties.
The Seller is looking for many offers to buy the property. He believes competition will get him the highest price and the best terms
Brokers want Sellers to use this strategy because it strengthens the likeliness that the property will sell and the broker will be paid. But as my client so eloquently put it "if there's multiple offers, the property is under-priced."
The bottom-up strategy determines the market price for a property and then prices the property as much as 5% lower on the listing or just at the expected market price. This is designed to tell the market that the Seller is looking for many competitive bidders to drive the price up.
While some may argue that this approach only works with trophy properties where there is high demand, I believe it can work in varying degree with all properties.
The Seller is looking for many offers to buy the property. He believes competition will get him the highest price and the best terms
Brokers want Sellers to use this strategy because it strengthens the likeliness that the property will sell and the broker will be paid. But as my client so eloquently put it "if there's multiple offers, the property is under-priced."
