Have you ever been in a situation where you own a commercial property but when it’s time for you to sell it, you are told by a real estate agent that it’s not worth as much as you thought it was?
They may be right about the property’s value, but did they give any constructive ideas on how to increase the value of the property prior to trying to sell it?
In this article, I will detail a few real-life scenarios I have encountered where I was able to add 20% to 45% to the value of a client’s property by making a few simple, inexpensive tweaks.
One example was an industrial building in North Austin that had been owned by a family business for 50 years. They operated it with no problem until it came time to sell it. The zoning at the time only allowed for a limited number of industrial uses since the zoning designation was so restrictive. Because of the restrictive zoning, we had very few prospective buyers that could use the property. We received an offer on the property that was quite a bit lower than our asking price and the buyer wanted a long feasibility to attempt to change the zoning.
Since I have a background in rezoning properties myself, I teamed up with my client, and we engaged the City of Austin in the rezoning process ourselves. To our surprise, the City of Austin was very helpful and guided us along the way. Due to the specific circumstances of this property and the owner’s history with the property, we were able to qualify for an abbreviated zoning process which opened the possibility of a wider pool of businesses that could use the property. We were able to complete the rezoning within 2 ½ months (well under the typical 4 to 7 months) and at a fraction of the cost of a typical rezoning. During this process, we connected with a user that fit perfectly and negotiated a deal contingent upon the rezoning. Because we went through the effort of the rezoning, we were able to negotiate the deal at full price.
Another example is a property I have listed in the Austin area. It is a commercial land parcel on a heavily trafficked road. We have struggled attracting buyers at a price point that matches comparable properties in the area. The reason is the zoning. Like my other deal, the existing zoning for the property does not allow more compatible uses. In this case, it needs to be retail zoning. After a period of time on the market and getting feedback from prospective buyers (specifically several offers that were 45% below our asking price), my client decided to apply to rezone the property to C-3 (which allows for a wide variety of commercial and retail uses). We expect the process to take about 4 months and cost around $12,000 if all goes well. The payoff? If we can get the C-3 zoning, our market intelligence tells us we can achieve an offer much closer to our asking price, putting an additional several $100,000’s into the client’s pocket.
If you are interested in this topic or have a property you are wanting to know the value of, call me at 512-736-5933 or email me at oddo@toweratx.com.
Until next time,
Chris Oddo
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