If you are in the market for a piece of commercial real estate and you believe that you have found what you are looking for, it is time to make an offer. Sometimes, however, you receive no reply in response. This can be both frustrating and confusing, as it is hard to understand why a seller wouldn’t at least provide you with some feedback if they don’t want to accept the offer that you have made. There are a number of reasons why your offer may get ignored.
1. You Made a Bad Offer
Obviously, if you have made an offer so low that it is nearly scandalous, it is understandable that you will get ignored. However, commercial real estate is about creating a win/win situation, for both the buyer and the seller.
The concept is that both parties should come out of a real estate closing happy, having made a good deal. If you approach any commercial real estate deal from the perspective of mutual respect and understanding, then negotiating is much easier.
Unfortunately, the seller may have completely unreasonable ideas.
2. You Have Competition
In places like Santa Ana, there are so few commercial properties available, that anyone who wants to sell can expect to receive a wealth of offers.
Please don’t believe you’ll waltz out into the market and lease or buy the first thing you see. You won’t have many choices. Time will be needed for more spaces to come available.
3. The Seller May Be More Complex than You Realize
Often, when an offer is made, we believe it is done to a single individual. In reality, commercial real estate is often owned by multiple people. It is possible that there is some disagreement between those people as to how to react to your offer, which has delayed the matter.
4. There Is a Snag
Life happens, even with sellers of commercial real estate. Perhaps the seller is ill or has gone on vacation, for instance. They may not have responded because they are not there due to other circumstances.
5. Your Offer Is Too High
Because there are so few good properties available in Orange County, you may be tempted to make a full price offer instantly. While you may be sincere, the seller may be suspicious of this and wonder whether they have priced their property for too low. Generally speaking, negotiating a deal is a lengthy process, so a seller may find it very strange if they are offered exactly what they asked for immediately.
Buying a piece of property is a give and take process. The seller quotes a price and the buyer counters with a lesser price or seeks certain concessions. Negotiations take place until both parties see eye-to-eye and agree on the terms. If both the buyer and seller believe a good deal was made, then negotiations were successful.
6. There Is a Chain in the Negotiation
The market in Orange County is so tight that if someone is selling their commercial real estate, they may struggle to find an alternative location themselves. They may have not expected to sell as quickly, or they didn’t plan properly for how long it would take them to find something. Either way, if there is a significant chain in the negotiation, things will slow down significantly and the seller may even be tempted to ignore you for the time being.
These are just some of the reasons why you may still be waiting for a response from the seller. If this is happening to you, speak to your broker about the next steps to take. They will usually be more than happy to send the seller a gentle reminder to find out what is going on. On the other hand, you may find that they advise you to simply hold tight. After all, you don’t want to seem too eager either, as this can go against you in the negotiations.
There is also a chance, albeit a less likely one, that your offer being ignored is some kind of a sign. Sometimes, the time to purchase simply isn’t right. If this is the case, you being ignored may turn out to be a lucky escape for you.
Low interest rates, speculation and a number of other factors are combining to flood the market with REIs, and in a haste to snap up a great deal, a lot of investors overlook the fact that what they’re dealing with may not actually be a great deal.
As stated previously, the market in Orange County is incredibly tight. All the good properties are gone and those who own them are clinging on to them because they know what they are worth. What is left, therefore, is usually something that has significant problems and issues attached to them. If your offer is being ignored, perhaps now is the time to look elsewhere, or at least to look again.
A final thing to remember is that, as much as being ignored is annoying for you, as it puts a stop to your own plans, it is the sellers’ right to ignore you if they want to.
Sellers are under no legal obligation to respond or otherwise entertain an offer. To improve your chances of gaining a seller response, follow the offer instructions precisely and make your offer competitive.
In the vast majority of cases, your real estate broker or agent will be able to tell you what is going on. It is likely that they know the seller or at least have some sort of professional ties with them. In every commercial real estate deal, your broker is your partner and for good reason. They have extensive knowledge of the market and they are likely to have advised you on what offer to make as well. They also have their ear firmly placed on the grapevine, meaning they know what is going on. If your offer has not yet received a reply, therefore, they should be your first port of call as they are likely to know exactly what is happening. Sometimes, you just have to wait.
