Digital Tools Are Modernizing Today’s Investment Sales Cycle
Technology is transforming the investment sales process.
Ten-X Commercial Division Managing Director Yan Khamish said though technology can never replace brokers in the investment sales process, it can cast a wider net and help investment brokers, buyers and sellers close more deals faster.
“Technology is a tool that can benefit you to do more business, embrace it. It is the future at the end of the day and it’s not going away. Figure out how to use tech to drive your business forward, [and] don’t look at it like a replacement to you, because that’s never going to happen,” said Khamish, who is speaking at NAIOP's Office Evolution conference Nov. 9 and 10.
One of the major tech offerings transforming commercial real estate is the use of cloud-based technology. By using the cloud to exchange information, players can streamline and share documents with multiple parties, eliminating the need to send countless emails and evaluate numerous spreadsheets to keep track of pertinent information.
“[If] the seller, buyer or broker is involved in the process of documentation, they’re wasting their time,” Khamish said. “You don’t need to send 200 emails with the same information to different people, they should be able to go into a vault and look at it. You don’t need to run around town all day and get 10 signatures, people should be able to go on through Ten-X or Docusign and sign that document.”
Ten-X is an online transaction marketplace with a database of 250,000 vetted buyers, which sellers can use to offload assets quickly and efficiently. The company recently partnered with financier Money360 to pre-arrange loans for qualifying properties for sale through its platform. This allows buyers using the virtual auction platform to know ahead of time whether the properties they are interested in bidding on qualify for financing.
Khadish said there are four major components that every investment broker, seller and buyer is involved in when it comes to property trades: customer engagement, advisement, documentation and review. Technology can accelerate the final three, leaving brokers more time to handle customer engagement in person.
On the leasing side, platforms like VTS, which merged with competitor Hightower last November for $300M, are beneficial. The combined platforms track market data, including neighborhood rents or lease expirations, and add forecasting and analytic services. The platforms also consolidate information about lease activity, tenant relationships and transaction data such as emails, spreadsheets and even handwritten notes in one place.
CompStak is another firm aiding in the closing of deals by providing a wealth of office, industrial and retail leasing data and comps crowdsourced by brokers. The company recently announced plans to expand its reach to investment sales data, and will provide cap rates and net operating income in addition to leasing comps.
By using these platforms, all parties involved in a transaction can hone the process of the sale and shorten the time frame in which a property trades hands.
“Your competitors are figuring out how to use technology to do more. Either you’re going to figure out how to do that, or the tech won’t replace you — another broker will replace you,” Khadish said.
How Tech Is Eliminating Buyer, Seller Uncertainty
Another added bonus of tech, Khamish said, has been increased certainty when doing deals. Ten-X’s platform eliminates the re-trade model that plagues sellers.
In a re-trade, a potential buyer can renege on its initial offer for a property after conducting due diligence by saying it is not worth the amount previously agreed upon. This is a common occurrence in the investment sales cycle and can tie up a deal or force prices lower. However, buyers interested in purchasing through Ten-X’s marketplace are required to put down a 10% deposit that is nonrefundable, limiting potential re-trades.
“CoStar has data that says the average deal in the middle markets takes 300 days [to close]. That’s because people tie deals up,” Khamish said. “With this technology, no one gets to tie up a deal in escrow."
Technology Can’t Trump This
Though commercial real estate professionals have a wealth of tech solutions to choose from today, Khadish said there is one element in the investment sales process that technology can never replace: customer interaction.
“Technology can never replace engaging with clients and understanding their needs. Real estate needs that personal touch unlike other investment vehicles like stocks and bonds. It’s a pretty complicated investment,’ Khadish said. “People have this misconception that we’re going to [snap our fingers] and everything is going online. That is not the case, but [technology] will make people much more efficient. It will make people much more aware of different markets and enable people to do more volume.”
Bisnow is the exclusive media partner of NAIOP's Office Evolution conference in Brooklyn Nov. 9 and 10.