By Hilda Allen*
Selling? Then step on the marketing accelerator!
By Hilda Allen & George Logan, Hilda W. Allen Real Estate, Inc
Like Banquo's ghost real estate haunts the U.S. economy . So far the Fed's deflation fighting
efforts are pretty much a bust with respect to this crucial asset class. It 's unhelpful that banks
won 't sell foreclosed properties at mark to market or loan you the money to purchase them. Mix in
a bipolar stock market, a Federal government that at times eerily resembles a banana republic, add
the European debt crisis, and speculation about why the Fed now promises to keep low rates
through 2013, an action without historical precedent. Do they know something?
Against this backdrop it's the best of times and the worst of times for golf operators. The market is a rare mix of opportunity and creative destruction. A lot of properties are making money although more would be better. There are some great properties for sale and there are buyers for them, a number of them with cash.
The bad news for sellers is that it's a buyer's market. However, if you need to sell, don 't let that stop you. In retailing they say your first markdown is your best. You may not get as much as you once thought you would; but we think there are structural reasons for this that we don 't think will change very much. We aren't economists or
pundits. We just try to focus on the best day-to-day economic information we can find because our core business is marketing golf properties. The world has a way of intruding on what you want to do.
We think the golf business as distinct from the sport is at an inflexion point:
The main tent pole of the business model needs to shift from a male dominated activity in favor of a younger demographic including women and children. In some places that's happening, in others, not so much.
ON LINE TEE TIMES ARE NOT CUTTING EDGE...
Successful clubs and courses are becoming a point of destination for recreation, fitness and hospitality with golf as the
anchor attraction. For some operators this is an epiphany. For others it's a steep learning curve. Should there be more nine hole executive courses, different rules for novice players, events and specials in the bar and restaurant several days a week? How about day care for young moms? One property we know of has a daycare operation. You can leave the kids for as long as you are on the property . Can a driving range make money? We are aware of one company that builds a
restaurant and an entertainment center around the driving range. Special range balls on a wired range transmit your yardage and the ball's exact landing place and other data. There's no golf course.
Against this backdrop, qualified buyers are out there and looking for good golf properties,
Why? Because run correctly they can make money.
CAN COMPETE IN THIS ENVIRONMENT?
If you are debating whether or not to sell we recommend a reality check. If you decide to continue the business your survival will depend on the depth of your capital or access to it, a mission-critical focus on the customer's
wants and needs, and the quality of the business plan you are executing. (We know one management company executive who says he can tell if a plan is being executed ten minutes or less from the time he sets foot on a property).
Additionally, your powers to imagine and innovate, your ability to motivate others to execute your strategic vision,
and your tolerance for risk will all be tested. If you aren't checking off these boxes we would recommend selling.
Timing is important because the value of what you are selling is no longer primarily in the land or the replacement cost
of the improvements; it's mostly about the gross income you are earning. Scores of properties are either on the market or headed there in the near term - some are marquee quality which sometimes may hold dollar for dollar value more or less equal to smaller operations. In the eyes of prospective buyers right now the value of a golf property rests largely on the gross income it is generating and how much the buyer thinks that figure can be increased.
SHOULD I LIST MY PROPERTY WITH A BROKER?
In this type of market, listing your property for sale with a real estate broker may not always be your best option for getting to the best price or even getting an offer. Although a real estate listing remains a valuable tool for the broker and the seller-and one most sellers are comfortable with-a listing may not be your best choice unless it turns out to
be the only choice. Here's why:
• A listing is a passive strategy - effective in a strong market, less so in a weaker market where sellers outnumber buyers.
• A list price signals what you think is the optimum value of your property & you invite buyers to bargain down from there.
• A listing creates no sense of urgency in the buyers mind. S/he may decide they have an advantage by waiting you out
before expressing interest.
• A listing invites a sale contract with contingencies which can be legitimate or may be used to tie down your property
while other properties are considered. A listing is unpredictable with respect to selling and closing.
STEPPING ON THE GAS
Although it's not suitable for every property, we recommend considering an Accelerated Marketing program. Ours is called the
Hybrid Sealed Bid Offering (HSBO)
and it retains the appealing features of an auction - speed and brevity - while aoiding what sellers don't like about them - public disclosure of bids and competitors and unqualified curiosity seekers taking it all in. With an HSBO it's possible to sell a property in ninety davs or less
from launch to closing.
• The seller controls the narrative
• There is no list price for buyers to bargain down from.
• In essence knowledgeable buyers negotiate with each other instead of with you.
• Established deadlines create a sense of urgency.
• Bidders are pre-qualified and must sign confidentiality agreements.
• Due diligence is completed before bidding.
• Offers are by sealed bid and are confidential.
• Contracts have no contingencies.
In effect, the market prices the property for you. You may or may not accept its verdict, but if the high bid falls below your Reserve Price you haven't publicly devalued your property if you decide not to sell. Just say "No Thanks" and walk away.
HSBOs: NOT A ONE SIZE FITS ALL STRATEGY
There are two risks:
The seller incurs upfront marketing costs for a media campaign, Depending on the property and the market
those costs can range from $30,000 to $75,000 and up. There is no guarantee of success although our experience has been that bidders sometimes come back and make offers after the event if the property hasn't sold. The intense
exposure in the media also provides a post offering carry forward benefit that can attract new prospects.
To avoid failure we will advise the seller if we don't think this option will work for a particular property. Sometimes listings are more appropriate. We all need to listen to what the property is telling us.
In addition to the expense for the seller an HSBO involves a lot of hard work and preparation by us and the seller and a lot of travel for us, another reason we try to be selective in our recommendations. At this point we have a pretty good feel for what will work and what won't. If we don't think the property is strong enough to carry an HSBO event we just
won't recommend it. But in a hyper connected24/7 world it's a good tool and we think sellers should consider it.
Hilda Allen is a nationally recognized expert in golf real estate and has sold and auctioned more than $850,000,000 in golf properties. Hilda W. Allen Real Estate, Inc. is based in Georgia and licensed in sixteen states. Call 229.896.1492 or email email@example.com
George Logan joined Hilda W. Allen Real Estate in 2002. He began his real estate broker brokerage career with Adams Cates Company (Grubb & Ellis) in Atlanta, later joining Fickling & Company of Macon, Georgia. He worked in sales and editorial for Doubleday & Company. He is a graduate of Middlebury College. Call 478-747-4122 or email George at firstname.lastname@example.org
Originally posted by HildaAllen
on 23 May 2012.
All contributors: HildaAllen
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