Over my many years as a consultant, appraiser and broker in the golf course industry, I’ve been privileged to assist numerous sellers in the disposition of a variety of golf and club properties. With every situation presenting a new challenge, we’ve learned there are a variety of approaches to consider.
In first determining the best option for our clients, I seek to learn their goals and objectives. All sellers want to maximize price, but in some cases there are factors which may prioritize other considerations, such as:
- Retirement Planning;
- Imminent capital needs;
- Closing between seasons;
- Financial distress;
- Fatigue;
- Market considerations;
- Debt:
A seller has several options for marketing a golf property or structuring a deal. One can list with a specialty broker (like us), a commercial broker or a local broker. Some sellers market themselves and others choose the auction process. Each has its advantages and disadvantages.
Those with tax considerations may want to consider an installment sale, holding a note from the buyer for a period of time. Others (most) require a cash at closing sale. Some sellers, especially those seeking an expeditious sale but wanting to create competition, choose the auction route. Others, who see the auction option as an indication of weakness, and who have the luxury of time prefer more traditional methods of marketing, typically involving listing with a broker and taking advantage of the broker’s network and marketing skills.
Always a big part of any transaction, timing is of considerable significance given the seasonal nature of most golf operations, the considerable amount of due diligence necessary on the buyer’s part and maybe most importantly the objectives of buyer and seller. In most brokerage situations, working for the seller, we advocate developing an exit strategy that considers the desired timing of the sale in conjunction with the time required to prepare, market and close an acceptable transaction. Of course, such timing can always be impacted by pricing expectations which should be established in a realistic manner.
Pricing is often the most important element to the seller. In many cases, their equity in the property represents life savings or profit from a long term business venture. Every seller wants the highest price achievable. This can be a “double edge sword” in that over-pricing a property for sale will discourage some legitimate buyers from even considering the opportunity. Sure, you want some “wiggle room” but realistic pricing is critical.
It’s often been estimated that golf properties can take a year or more to prepare, market and finalize a sale transaction. That’s true. It can also be done in much less time. Pricing and method of marketing impact timing considerably.
Some transactions require creativity. If bank financing isn’t available, other means may be necessary. Installment sales, private equity and participation are just some of the methods buyers and sellers employ to complete a transaction.
Every seller’s situation is different. To meet their goals and objectives often requires considering a variety of creative methods of marketing and preparing the property for sale, or the possibility of joining forces with a competitor to do what’s best for the client. Sometimes, it may offer the client the best bang for the buck if one teams with a professional from a different discipline (i.e. broker and auctioneer).
Having a strategy that considers the property’s specific strengths and weaknesses and the market dynamics at the time will yield the best results. Combining these with the seller’s goals and objectives makes for a well-rounded approach.
Like two recent transactions in which we’ve been privileged to participate, we advised sellers to consider options that were not how they initially envisioned the sale but resulted in satisfactory results. In one of those cases, it involved teaming with an auctioneer (and splitting our fee) to achieve the best result for the seller.