Why is NOW the best time to sell your station?
The timing for buying and selling investments has always been a serendipity exercise, one wrought with surprises. Along the way of forming, owning and operating MJG, Mike was a stockbroker. As most people now know, investing in public markets is like living in a gold fish bowl, and that was before the internet; now it's even more transparent, and information more immediately available to all. Does the proliferation of immediate information mean that market timing can be more calculated, more certain with less risk? Many have tried over the years to find the formula to timing market movements, and theories now supported by computer models abound. After years, decades, even lifetimes of pursuit many have concluded that trying to predict the motivations, emotions, and investment actions of others is simply not in our DNA.
And the market for private businesses and commercial real estate is less transparent that the public markets. It's the lack of transparency in these markets that raises the specter of the unknown, of loss, to both buyers and sellers, and brings on the anxiety that lives in the pit of your stomach. Influencing factors such as the health of credit markets, Federal Reserve activity & policies, the position and nature of the economic cycle, and trends of commercial real estate to name a few, affect the aspects of a private business or commercial real estate capital transaction. Note that these factors are beyond our control. These and other factors can be known historically, and to a degree considered within the context of future expectations. They contribute to strategizing for a transaction, accommodated during negotiations, and structured into the purchase-sale agreement. In today's economic, socio-political, and market environment each transaction is hand-crafted. The days of cookie-cutter deals based on rule-of-thumb pricing and historical participant behavior are gone. To be a successful seller today takes work ... skill and experience help, but it still takes work.
So when is the right time for you to sell your station? When it's right for you! This is a personal decision driven by factors affecting you, that can be controlled or influenced by you. You, or we, can't control the external factors noted above. But of all the things you can't control, you can control your own market timing. Talk with us. We'll give you our best assessment of the market, how to approach it (strategy), what to expect (pluses and minuses), and assist you in structuring a transaction for your optimal benefit (not just price - terms and conditions count).
#1 - Character-based Representation
Honesty: To you, and everyone we contact on your behalf.
Integrity: We do what we say we'll do, and when we say we'll do it.
Confidentiality: What's between us stays between us.
Work Ethic: We come to work everyday.
Responsiveness: By company policy, we return calls within 6 business hours.
Uncompromised Representation: We keep your interests first.
#2 - Gas Station & Real Estate Industry contacts
We currently manage a proprietary data base that contains:
402 existing petroleum marketers including MOJ representatives.
1062 commercial real estate agents & brokers nationally. (We co-broke with qualified licensees.)
60 general and ADEQ-approved petroleum contractors.
51 petroleum equipment suppliers.
15 architects and engineers.
32 environmental consultants.
205 lenders who finance gas stations (including 50 for SBA loans).
159 business brokers. (We co-broke with qualified business intermediaries.)
652 pre-qualified prospective buyers for AZ gas station properties and/or businesses.This is a dynamic list continually updated for entrants and departures from the market.
#3 - Real Estate and Business Brokerage Expertise
In Arizona, most gas station properties are owned by the same principals who own and operate the business. (Notable exceptions are Circle K and QT.) And most owners, when they sell, want to sell both the real estate and the business together. In most cases, these are offered through 1 of 2 intermediaries: either a real estate broker, or a business broker. In either case, the part not represented becomes a weakness in the marketing and selling.
We bring to you over 21 years of commercial real estate experience as both principal and agent, as well as 32 years of investment banking and business brokerage experience.
Let us offer you the best of both worlds.
#4 - Sales Experience
I (Mike Green) have been a sales representative with one title or another for over 30 years (outside sales ... not taking phone-in orders at a desk or clerking behind a counter). Along the way I’ve sold for, and been a sales manager for, 2 Fortune 500 companies, and formed and owned my own business on 4 separate occasions, including MJG. I’ve been through numerous in-house sales training programs and 3rd- party-expert seminars and workshops. I’ve also developed and implemented sales and marketing programs, and taught and trained sales reps for clients in a variety of industries. (Yes, I can tell you how to sell a refrigerator to an Eskimo.) I'm fortunate to implement my experience and training to MJG agents. Our focused effort is to provide you with the very best representation in buying, selling, or leasing your gas station business or property.
I’ve personally been selling gas stations as a segment of commercial real estate and business brokerage in Arizona since 1999.
#5 - Marketing Resources
MJGdeals in gas station businesses and real estate exclusively - we don’t sell houses.
Our resources are directed to gas station properties only. In terms of marketing your gas station, our objective is to present your property or business to as many qualified prospects in as short a time as possible.
To accomplish this we currently use 3 public domain websites in addition to our own MJG website. These sites are devoted exclusively to commercial properties & businesses.
Of course we’ll put a sign on your property if you like, but most operating businesses prefer not to use signage. We also present your listing to local commercial agents at 4 Association Commercial Realtor and Business Broker groups at regular meetings.
Then we get into direct marketing. We email, FAX (some still do), phone and mail your listing to target market groups. This is continuous activity on pre-determined cycles over the course of the listing period, typically a year. We also make personal calls to petroleum marketers and real estates agents within the geographic market of the property or business. This is all managed through a proprietary marketing process developed at MJG.
#6 - Retail Gas Station Experience
Mike learned the retail gas business by building and upgrading stations in the mid-to-late ‘90s. He was an estimator and project manager for a general contractor and petroleum equipment supplier in Phoenix. They also had their own in-house environmental consultant where he worked the first year or so that he was with the company. While there, he also developed an in-house equipment financing program through numerous equipment leasing companies to provide capital for the ADEQ-mandated improvements needed at that time. Through this activity, he learned the business and financial aspects of the gas station and c-store business.
Lynda Gromek, our Specialist for the Phoenix metro market, came to us after 26 years as a district manager with Circle K. Her merchandising expertise has been invaluable in staging stores for sale. Along the way she was tasked with re-branding Circle K's bulk acquisitions to the Circle K format. She's converted will over 100 stores in this process.
This is thumb-nail sketch of the industry skills and talents available to you through MJG. As we remind ourselves, we are in the practice of commercial real estate and business brokerage - we expand our knowledge base and capabilities daily.
#7 - A Real Estate and Business Gas Station Specialist
What exactly is a real estate and business broker gas station specialist? By licensing, I, and any real estate agent, can sell any kind of real estate in Arizona, with just a few exceptions. Specialization is individually developed and self-proclaimed.
So what should you expect from a specialist ... an expert?
Someone who knows a few gas station owners and has been asked by one of them to sell their station?
Someone who’s uncle in Michigan or New Jersey owns a station there and wants to relocate to Arizona and buy a station here?
Or someone who knows not only real estate, but commercial real estate, and in Arizona … and who knows the retail fuel business in Arizona, including supply considerations, historic and likely future industry trends, branding considerations, multi-revenue source risks and rewards, financing alternatives, MOJ trends, environmental considerations, and industry contacts for continually updated information and referrals for services.
Now you know what a gas station specialist is … and now you also know where to find one!
#8 - Financing Capability
Besides being a commercial real estate broker and business broker, both Lynda Gromek and I are also Commercial Loan Officers with the Counsel Mortgage Group, LLC, an Arizona-licensed mortgage broker in Scottsdale. Here we specialize in gas station financing. We use this capability primarily to support my own transactions, and special non-transaction requests (re-fi’s) from our clients. As you may know, one of the primary difficulties in closing the purchase-sale of a gas station is finding a lender who will do the financing. Many escrows have been extended to accommodate a buyer going from lender to lender, only to be told “no”. Lenders, like many service providers, specialize in particular markets for the products and services they provide. Lender’s interests in gas station financing also tend to wax and wane, depending on their existing loan portfolio at the close of any given month or quarter, what underwriter or credit analyst may have just quit or been hired, etc. As such, continually qualifying lender interests and capabilities becomes a continuous requirement. It also helps if you know some of the subtleties of the lending business, as well as the business being financed - we're fortunate to know both.
#9 - Arizona Statewide Focus
It’s often said that real estate has a local focus. Most agents, particularly residential, focus on a neighborhood, a ZIP code, or maybe a town. Commercial agents in metropolitan areas will oftentimes specialize by segment of the commercial market, e.g., office or industrial properties, and many times work within geographical constraints . These decisions are dictated by needing a large enough market to make a living while assuring adquate market coverage for the brokerage company, but limiting it such that the competition is not the entire known world. By design, MJG has chosen a more extreme variation of these concepts by specializing in a more limited sub-segment of retail, but expanding the geographic coverage. To enhance our competitive position, we've incorporated business brokerage and financing as services. By covering a broader geographic area, we bring a wider perspective to the marketing of gas station businesses & properties in any one area. This also increases the number of buyers who have an interest in talking with us about finding their ideal property or business, which increases the sellers probabilities in finding a buyer for their property or business.
#10 - Pricing Accuracy
Inaccurate pricing, or pricing away from the market, is one of the more frustrating aspects of selling real estate and businesses, and gas stations are no exception.
Adding to the difficulty is that most gas stations sold in Arizona are businesses being sold with the real estate as an asset of the business - essentially there are 2 products being sold together, the business and the real estate. The considerations in the exercise of determining a price for this type of offering are significant. Determining a marketable price with an eye to the competition (other gas stations for sale), financing requirements on the part of the buyer’s lender, and what the market will bear (profitability or return to the Buyer) usually results in a broad spectrum of pricing range. If fact, we’ve found that many prices are set by “imitation” (what so-and-so down the street or around the corner is asking, or got), or by “rule-of-thumb”,e.g., the sale price should equal the number of gallons sold per month. Brokers many times, in an effort to get the listing, will let the Seller set the price without offering input about what that price should be. Many, if not most, of these offerings end up selling, if at all, by “blind luck & superstition”, and often at an unfavorable price for the Seller. In the end, either the buyer or seller, or both, feel short-changed and the transaction crumbles.
#11 - Certified Commercial Leasing Specialist (CCLS)
I want to sell my property and business … how does hiring a leasing specialist benefit me?
First of all, it may not. However, it may improve your probability of completing a transaction and accomplishing your ultimate objective.
There are 3 types of prospective buyers for a gas station: the investor who wants to buy commercial property and lease it to a tenant, the business owner who wants to own the business but not invest in the real estate, and the owner-operator who wants to own both the business and the real estate.
Most people who own both the gas station business and the real estate in Arizona are the majority of owners. When they decide to sell, they assume they’ll sell to someone who will want to own both entities as they have done, and will price and market accordingly. In this case, they are catering to only 1 of the 3 types of prospective buyers.
By understanding and being aware of the investor-tenant potential, and marketing and pricing accordingly, you increase your potential for accomplishing your sales objective. Sometimes to sell both your business and real estate, you are better off selling one part at a time.
At MJGMike is a CCLS.
#12 - Competitive Pricing of Services
“The best value … not necessarily the cheapest price”.
The old saying is that "you get what you pay for" - it’s not certain whether this conclusion was made by a salesman or a customer!
In terms of pricing for services (commission rate), we don’t compete purely on price, but we do compete. Historically, we’ve been in the mix of commission pricing with other agents offering to sell properties or businesses, whether in rural or metropolitan markets. If you’re willing to look, however, you generally will be able to find someone who’ll offer you a cheaper commission rate than we will. However, you might want to consider what you will make, and not so much what the broker makes … 93% of something might look better than 95% of nothing.
With that in mind, why would you hire a generalist to sell you gas station property or business? By working with MJG, you are choosing to work with representatives who deal exclusively in your line of business. You will not get the experience and expertise that MJG provides with a generalist business intermediary or real estate broker or agent. Would you hire a roofer to pave your driveway? Probably not. So why hire an agent who sells restaurants, flower shops, cell phone stores, houses, and leases offices and industrial property to sell your gas station? Before you sign up with that guy or gal who did such a good job selling your house,
give us a call- you might be surprised at the difference a Specialist makes.
To actively represent you, and market and promote your property or business to the public, the Arizona Department of Real Estate says we have to be contracted. You have to authorize us to represent you. Some reading this may hve experience with agents who have accepted an open listing, aka a "pocket listing", as a way for you to access potential buyers. There are typically verbal agreements between a broker and seller, although open written agreements are available, where the seller tells the agent that if he/she brings them a buyer, the seller will pay them a commission. Because of the lack of security in the agreement, the broker, or agent, does little if any market research, analysis or preparation of marketing materials, and because of lack of confidence in the broker/agent, the seller puts little if any effort into providng the broker with any business or real estate information. As you might expect, these arrangements are largely unproductive. Sometimes the seller will think that he's getting better market exposure with pocket, or open, listings by engaging several brokers on this basis, but in fact just the opposite is usually true. When an agent learns that he/she isn't the only agent with this arrangement, he/she spends even less time on that seller's behalf. Because of the lack of formality of this arrangement (especially if unwritten), these are typically entered into with a term (expiration period) undefined, and oftentimes without a price agreed to.
There is also a type of listing agreement called exclusive agency. This arrangement grants an exclusive listing agreement to a single broker, but allows the seller to also sell the business or property himself and not be obligated to pay the broker a commission. Of course if the broker secures the buyer, the seller agrees to pay a commission to the broker. These are written agreements with pricing stipulated, a commission rate or fee agreed to, and an expiration date among the terms and conditions. The seller often prefers this arrangement when they have been trying to sell the station themselves for a period of time, and believes they still have interested parties as prospective buyers. Brokers have better security in the agreement that with a pocket listing, but are still at risk for not being compensated for their efforts if in fact the seller is successful selling their station themslves. This bit of risk tends to still inhibit the broker's efforts in marketing. This type of listing is typically accepted by brokers that don't have a lot to add to the value of the sale, or perhaps have a little extra time on their hands - either of these conditions has become more common over the past few years with the decline in the real estate and business brokerage industries.
The most common listing agreement and the one first offered by brokers is an exclusive listing. With this arrangement the broker is compensated unconditionally, regardless of where or how the buyer is procured. These are formal written agreements specifying at least a pricing construct, a commission or fee schedule, and an expriation date. Other terms and conditions apply depending on whether the listing is for the business, the real estate, or both, or either. The structure of the listing agreement should fit with what is being sold - as obvious as that may seem, it doen'st always come out that way. Brokers in Arizona offer listing agreements as short as one page, and as long as a dozen pages of small print. Notably, public domain websites for listings require that a broker listing on their site have exclusive listings only. This is to mitigate the potential for involving the website in litigation which frequently accompanies exclusive agency and pocket listing agreements.
Any of the above agreements may have up-front fees to the broker under terms like marketing fees, listing fee, or retainer. The terms may allow for the advanced fee to be credited back to the seller at close of escrow if the sale is successful - if not, it's considered a sunk cost to the seller.
A brief note (DISCLOSURE) about commissions: In Arizona, all commissions are freely negotiated between the seller and the broker. Neither the Department of Real Estate nor any other governmental agency, regulatory authority, or trade group sets commissions.