Going Beyond “Buy and Sell”: Tackling the Post-Quarantine Commercial Property Market
Not unknown to real estate practitioners and even those who merely dabble in the property market, “Buy and Sell” is a familiar investment tactic for many Filipinos seeking to make a profit off property turnovers. As the local real estate sector slowly moves into a buyer’s market and an influx of properties become available for sale, long-time buyers and new investors alike will be facing challenges in choosing the best investments.
Identifying Highly Motivated Sellers
The COVID-19 pandemic and the ensuing community quarantines left many businesses and landlords scrambling to secure their real estate assets. We can expect that post-quarantine, many of these owners will find the need to dispose of their assets much more quickly than before the lockdown. The reasons for selling properties so suddenly can be for a number of reasons, such as outstanding loans that must be paid off or the need to refinance their core businesses. It is also worth being on the lookout for sellers who prefer to feel more secure and comfortable by choosing to have more cash during this time.
Despite recent upward trends in the general economic outlook of the country, small and medium-sized businesses will continue to bear the brunt of the larger economic downturn well into the end of the year. As current quarantine restrictions ease up and the country begins to assume a new normal, it is likely that many more borrowers will be defaulting on their loans, leading to a marked rise in the number of distressed assets available on the market. It is therefore best, as a buyer in a uniquely advantageous position, to act ahead of this expected flurry of activity in order to secure a solid foothold in negotiations.
Sitting on the Negotiation Table
Once a highly motivated seller is identified, the next steps would be to enter the negotiation stage. With experienced brokers at your side, this would not be a difficult step in the process. It is well to understand that as part of their negotiation strategy, highly motivated sellers may come off as less motivated to sell. As a buyer, making a strong first offer and taking the upper hand on the get-go, then gauging the seller’s response is the best way to identify the degrees of motivation from both parties.
With the effects of the COVID-19 lockdown still affecting the economy, the local real estate sector is currently undergoing a pronounced transition into a buyer’s market. Cash is considered as the most advisable payment option, although some sellers will still be open to different payment terms. Negotiations may take time but it is best to keep the discussions hot, provide fast responses, and ensure continuous communication until the deal is successfully closed.
Matching with Motivated Sellers
While one cannot be completely certain that a newly listed property immediately means distressed property, it is advantageous to first assess whether the property portfolio is a legitimate compilation of assets from verified highly motivated sellers. A trusted broker is expected to disclose pertinent information regarding the sale of such properties to interested buyers, and one can expect bargain prices accompanying distressed assets. Similarly, due to an increased demand for properties below market value, sellers likely know that their best strategies must include partnering with an experienced broker to ensure a fair deal.
Now more than ever is the perfect time for buyers to seek out these platforms and discover the best opportunities. PRIME Philippines, one of the country’s leading commercial real estate advisory firms, is offering a Business Resumption Service for interested investors seeking to acquire and dispose of distressed assets. From matching properties, handling marketing, processing paperwork, facilitating negotiations and closing the deal, PRIME Philippines assures an end-to-end service to best maximize your investment. For inquiries, please contact any of our associates below:
Mhel Dellosa, Manager for Commercial Property Investments, +639175266143, [email protected]
Pia Aguirre, Manager for Commercial Property Investments, +639176314821, [email protected]