Well, been talking off and on with a guy that owns a small commercial property on one of our higher traffic 4-lane roads. Good location, good traffic counts, property in good shape. Gross monthly income of $4k a month w/ property owner paying taxes/insurance so net around $44k a year. I showed him how an investor is going to evaluate his property from an income approach since the lease is locked in for another 3 years so you're primarily selling it as an income producing property. did the entire marketing presentation, etc. Impressed upon him the need to select a broker/agent with the best marketing plan and connections and track history with his type of property THEN determine price. Found out today he is signing with another firm for $700k which is obviously WAY above value. Guess he prefers fuzzy math to reality! How many investors in this market are looking to buy a 6.25% cap rate for a small non-credit/single tenant commercial property? Also the tenant only paid $2,500 for this past months rent and has told the owner that is all he can afford now due to the economy so really his income is going to be substantially less than $4k gross a month! The old saying of "if it looks too good to be true" applies here. I guess in a few months he'll realize that you can't manipulate the market to pay ridiculous prices and that it actually makes your property harder to market when you get it priced right. By then it will probably sell below FMV b/c instead of pricing it right and getting a good offer ASAP, it will languish on the market, get no activity, then you lower it to where it should have been and it will sell lower than that.

I can't wait for the market to come back so I can stop fooling with these little properties!!!

If it does not sale and expires, approach the owner again. Move on! We all know so many sellers list with the agent that says their property is worth the most, no matter what reality says.

Hey Water how has it been going??

Yes in these markets investors are looking for vulture deals. Sellers are holding on to caps of years past with buyers not biting so you have alot of capital sittong on the sidelines.

You can still get a 6.25 cap form an institutional buyer but they will want national credit rated tenants with a class A space.

The only way I can see him getting that 700k is if they demo his propertyand build new , or reengineer or add onto it.So some properties for instance on the corner migtht only cash flow with a realistic cap at 9 for a price of 300,000. Now if a developer can buy that corner at 600,000 and turn around and get 900,000 or 1,000,000 for it then it is still a viable deal.

How big is the piece of land??

I feel ya on the small projects none of the big stuff is moving right now.

Do like we do. Pick a proper listing length and pad it a few months. Tell them we will try it your way at whatever silly price, and have a clause that states the price will automatically be lowered to your suggested price if the property isnt under contract in x amount of days. That way they can prove themselves wrong. Of course Mark Brian is right. But you know all that though Watermark. Better to not waste your time. It sucks though that he might get the seller to lower and get the benefit before it expires.