Commercial Real Estate Pricing Strategy: The Pros and Cons of TBD Pricing

In the competitive landscape of commercial real estate, establishing a pricing strategy is crucial for sellers aiming to maximize their profits. At EASE CRE, we emphasize a well-informed approach to pricing that can lead to successful transactions. One strategy that has gained traction is To Be Determined (TBD) Pricing, but is it the best option for property owners?

The ultimate objective for every seller is to achieve the highest possible price from a qualified buyer who can complete the transaction promptly. This objective remains unchanged, even amid fluctuating market conditions. In today’s real estate environment, sellers can command record-high prices for properties that are well-located and functional. However, even properties with less ideal characteristics can still fetch premium prices due to limited inventory. Since 2010, historically low interest rates and favorable economic conditions have significantly driven property prices upward. Therefore, if you’re considering selling your property soon, there’s a strong likelihood you could secure a substantial return.

As you craft your disposition strategy, your commercial real estate pricing approach should be a top priority. Pricing your property correctly is essential; pricing too low can lead to lost potential revenue, while pricing too high may deter informed buyers from engaging. The key lies in setting a price that attracts widespread interest and fosters competition without alienating qualified buyers.

This delicate balancing act has led many sellers to adopt TBD Pricing, where no specific sales price is published. While this strategy may be suitable in certain situations, we at EASE CRE believe it often falls short in helping property owners maximize their sale proceeds. Here are a few reasons why:

1. Enhances Comparability: By establishing a clear price, potential buyers can more easily compare your property with others on the market. If your property is competitively priced yet boasts superior physical and locational attributes, buyers will have a better understanding of its overall value. Remember, prospective buyers seek to maximize their investments, and a well-defined price allows them to gauge your property’s worth effectively.
2. Timeliness is Key: With vacancy rates at historic lows and a scarcity of quality properties, the competition for prime real estate is fierce. Buyers are often in a hurry and cannot afford to pursue properties with uncertain pricing. By setting a definitive asking price, you provide motivated buyers with a clear direction, facilitating their decision-making process. If your asking price reflects good value, even if higher than similar properties, qualified buyers are more likely to engage in negotiations.
3. Signals Seriousness: A specific asking price conveys that you are a serious seller, not merely an owner seeking an appraisal. It indicates that the property is available for purchase, even if some final terms remain unresolved. Too often, properties with TBD pricing linger on the market, as buyers and their representatives may perceive these listings as less credible. Active brokers typically represent qualified buyers and often avoid listings with uncertain pricing. Establishing a firm asking price sets the stage for negotiations and encourages buyer engagement.

Conclusion

In summary, while TBD Pricing may seem like a flexible approach, it can hinder your ability to maximize the value of your commercial property. At EASE CRE, we recommend a strategic pricing approach that ensures your property stands out in a competitive market. By setting a clear price, you not only facilitate meaningful comparisons but also attract serious buyers ready to negotiate. If you’re ready to explore your commercial real estate options, contact EASE CRE today to strategize your pricing and achieve the best possible outcome.