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Insights for Selecting the Right Buyer or Tenant

8/19/2021

 
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​With so much interest and activity on virtually every listing that hits the market, and/or even available unlisted properties as the case may be, how should sellers and landlords decide on which buyer or tenant to choose.  There are several key factors to consider in making the right selection.
​We will look at this first from the landlord’s perspective.  As landlords receive multiple offers to lease  their available space, they ought to consider more than just the highest lease rate being offered.  For starters, the credit history and financial strength of the prospective tenant is of significant importance as this will demonstrate  past performance and  future sustainability. Will they be able to pay the offered rent consistently. The tenant’s use of the property  needs to work within the city’s guidelines.  Of even greater importance is that the proposed use is not going to create excessive wear and tear on the property or create any potential liabilities for the landlord.  It is important that landlords protect themselves against any potential environmental liabilities.  The longevity of the applicant’s past operating history will demonstrate their stability and a proven track record of performance through the normal ups and downs of market cycles.  Understanding the reason why the applicant either needs to move or wants to occupy this space will help the landlord gauge how long the tenant may stay at the property.   For example,  has the applicant  experienced rapid expansion, steady growth, or has  the property they currently occupy  been sold. Each of these  scenarios will  indicate different potential long-term plans or objectives for this space.
 
Next, we can look at this from a seller’s perspective.  As sellers, the initial consideration is also price.  But someone who makes a strong offer on price may have other pitfalls lying under the surface.  We recently received a strong offer on a building, much higher than we initially expected.  But when we dug deeper with the buyer, we uncovered some things that made us caution our seller away from the deal with them.  For example, this particular buyer was reluctant to meet us in person at the property, we could not get a clear picture of the type of business they were planning to do, it was difficult to determine where they were presently located, and the broker they had representing them was not very clear when we asked direct questions.  All of these behaviors raised red flags to us as the seller’s agent, so we strongly encouraged the seller to pursue another buyer.  In contrast, the other buyer stood out as a strong candidate because they provided a very clear understanding of their financial capability to close the deal, a clear picture on where they were located, and how they planned to use the property.  To help avoid false starts with a group and to minimize the potential of a canceled escrow, it helps sellers tremendously when their agent, in concert with the sellers themselves, perform the proper front end investigations on the potential buyer.  This is even  more important on investment sales.
 
Therefore, as landlords and sellers navigate these investigations, it is important that they partner with an experienced real estate agent who can help them discern the right choices for their unique situation. Our team has created a streamlined process to determine the critical elements for each  unique decision  to achieve clarity and direction as to what is the right path for the most successful  outcome. Contact  us today and we can help you. 

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    Author

    Christopher J. Destino, SIOR, a Principal at Lee & Associates,  is  an engaging, responsive professional who enjoys working closely with his clients and helping them succeed.

    Contact  Christopher 
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Commercial Real Estate Services

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Orange, CA 92865
​LeeOrange.com
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Christopher J. Destino, SIOR
Principal
714.564.7181
cdestino@lee-associates.com
​Destino Industrial Team
DRE #01447060

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