A friend and mentor of mine who actually talked me into quitting my job at 34 years old also happens to be one of the largest hard money lenders in Phoenix and he is an opportunistic buyer during the appropriate time of each cycle. We have a ten plus year relationship and he allows me to sell all of his commercial buildings, land and some of his residential real estate that he loans on for builders. Over the last two years I have sold two buildings for him ranging from 2 million and 11 million plus some land valued in the 2.2 million range. I mention this only because we do not target certain types of real estate to sell nor do we turn down deals relative to their price point of the fee associated with the relationship as we have even helped him buy a $350,000.00 piece of land for our future office. When we sold the large project in Glendale, Arizona we put together a marketing plan and we contacted a few potential buyers off market and a few trusted brokers that work with large groups looking for large amounts of cash flow. As it turned out, a broker I know for a fairly large firm in town had an institutional buyer. We first shared the rent roll and the purchase price expectations. After some questions on the rent roll and the building condition the buyer did make an offer. We held firm with our price as we communicated if they did no pay up we would take the buildings to market and with the amount of REIT and equity money chasing deals and cash flow in Phoenix they did not want to take that risk. We closed on the deal and I discounted EIR’s fee to 1% which was still a nice fee and my friend/mentor received his desired result.

Roughly 6 months later we assisted with his 2 million dollar building that had some issues due to the fact that it was a customized building which had a very specific tenant use. This building sale required more of my property management and construction background as we needed to evaluate based on the current market less the cost to get the property in functional condition for an investor buyer with a tenant in tow or an owner occupant type buyer. Neither group would pay market so we needed to get cost estimates that would justify our net value price expectations. We initially went out well over market to create a psychological environment that allowed a buyer to feel as they received a deal at a lower than list price that was still higher than what we felt the building was really worth. After shaking a few trees and having two buyers cancel due to the fact they could not get their arms around the condition of the property we found an owner occupant buyer via a local agent. After going under contract we received an offer for $50,000.00 over the contracted price and we utilized this offer to keep buyer number one from attempting to reduce the price during the Due Diligence period. We closed timely well above my friend’s expected price and my friend paid us a full 3% fee for this transaction or $54,000.00 as a thank you for other fee reductions and for the proactive approach we took to selling this building.