As you reach Phase 3 of the process, the determination has already been made that a Private Selling Officer would be beneficial to the specific situation and you have selected a PSO to take on the project. Your next step will be a discussion with your PSO regarding marketing of the asset, the costs associated with that effort and who will be paying those costs. It is quite common for PSO’s to request a funding advance to cover expenses of sale just as other vendors may require a retainer or deposit.
Within marketing and advertising, there are two different types – required and enhanced. Unfortunately, each PSO offering still requires the Legal Sale Ad. This is usually the most expensive, least viewed and least impactful promotion that one can purchase.
While the Legal Sale Ad will probably generate nothing but a bill from the publication, there are other outreach options that do generate ROI and increase the opportunities to sell to third parties without increasing timelines.
As touched on in the prior article, I’ll mention again that bundling of assets does create economies of scale both in the cost of marketing and possibly even the fee paid to the PSO for their services. As such it is always recommended.
It is possible, and quite cost effective, to promote multiple assets at once at a lower cost per asset than undertaking the promotion on one asset at a time. For example, a PSO can provide an extremely well rounded and far reaching ad campaign for $2,500 on one small to medium size commercial property. Bundle 7 properties together and that same program may only increase to $7,500. Your cost per asset goes down to $1,071 however the marketing outreach doesn’t decrease. In fact, the added dollars allow expansion of the overall campaign into mediums unaffordable with individual asset sales.
When reviewing the actual marketing profile, your PSO should be providing you with a commercially reasonable program. Some believe that commercially reasonable is simply placing an ad in the local paper and hoping for the best.
In my opinion, to truly achieve reasonable marketing you need to advertise where the buyers are. That means the following:
- Posting to real estate related websites such as Loopnet, CDX or the local MLS.
- Negotiating syndication agreements with other web providers to share your data on their platforms.
- Utilize subscription eblast services as well as maintaining and using your own internal list of buyers, brokers and other real estate sales professionals.
- Posting to auction related websites and having syndication agreements with those providers as well.
- Use of Facebook forums, personal and company pages, ads and boosted posts.
- Use of Google Adwords.
- Use of Twitter and LinkedIn.
- Involving cooperating brokers in the effort and compensating buyer brokers.
- Media relations and press releases.
- Signs when possible.
In some instances the use of cold calling, strategic direct mail, drone video, professional photography, interior inspections, condition reports and bidder seminars may be beneficial as well. The bullet points above are what we feel is on the list of reasonable enhanced promotions for most offerings, however complex properties may require additional actions.
In our next article, we will go through the different bidding types as well as pros and cons of each. If you have questions or would like to review sample draft motions and entries for appointment of a Private Selling Officer, please contact Richard Kruse at 614-774-4118 or firstname.lastname@example.org.