In 40+ years of golf property valuation, advisory and brokerage, I’ve learned that “treating the patient” (not just the disease) is critical. The decision to sell any golf property, whether owned by a membership, commercial enterprise, family or individual is usually a complex one and involves consideration of not only property characteristics but also the goals of the client. Accordingly, the motivation to sell is important to understand in order to help the client develop the best strategy for them.
Sometimes, the decision to sell is based purely on economics. Maybe the market is strong (like now) and owners simply want to maximize return. In other instances, memberships or owners decide to sell due to operating distress, families sell because the next generation has chosen other pursuits and ownership is looking to retire. Once the decision is made, it’s important to determine the level of motivation, desired timing and reason for selling which often determine the best strategy for marketing the property. In most instances, creating competition for the property is a priority to achieve the highest price.
When the goal is an expeditious sale accomplished in a limited amount of time, the auction concept is one that can be used effectively. Either a classic auction with a specific date and time, where we’ve partnered with auctioneers, or a form of “hybrid” auction can be used to establish deadlines by which buyers need to act. This can take some commitment on the part of the seller, even if a reserve price is established since the reserve should be set at a level that while it may not be ideal, makes it likely the property will sell. The seller’s motivation level, as well as desired timing is critical here.
We’ve successfully marketed properties without an asking or minimum price. Assuming the property is a desirable acquisition, this can result in multiple bidders giving the seller a choice of opportunities from which to choose. This can be done with or without deadlines.
Motivation to sell varies considerably depending on multiple factors. These can include (but aren’t limited to) age, debt, success, market conditions and more. When a seller is unusually motivated, that can lead to discounted (from “market value”) pricing. When a seller is not forced in any way to sell, has a desirable property and there are eager buyers, it’s possible to achieve premium (above “market value”) pricing.
Developing a strategy for selling a golf property that results in the maximum obtainable yield depends on accurately and realistically evaluating the property in question and choosing a marketing strategy that fits not only the property but the seller’s goals and objectives. In one scenario we experienced where club members had the right of first refusal, ownership sought to create competition for the property by exposing the property to the market and, in effect creating a bidding war. It was quite successful, resulting in an ultimate sale price nearly double the estimated market value. Another bidding war was created for a fairly unremarkable property that was simply in a desirable market area and there were several suitors for the property. Conversely, another property we were asked to market received limited interest due to the seller’s reluctance to expose the property’s availability, likely due to a less than enthusiastic desire to sell.
Pricing a golf property properly can be a challenge. A traditional strategy among sellers is to establish pricing goals and add something for “wiggle room”. While in certain market environments that may be advisable, we’ve also found that either pricing attractively (low) or simply not establishing a sale price can be advantageous to a seller hoping to create competition, in a strong seller’s market like we’ve been experiencing of late in many cases. Overpricing properties usually results in limited interest and the property could sit idle for an extended period of time.
Part of any strategy also includes evaluating property condition and deferred maintenance and addressing those items that may impact sale price. How and when to address can be dependent on both the nature and scope of the items and the market conditions at the time. If the property is one that is likely to create competition, ownership may be able to avoid capital investment without penalty to the sale price. Again, I can’t over-emphasize that ownerships goals and objectives relating not only to price, but to the timing of the sale, who potential buyers might be and whether ownership is willing to participate in seller financing, among other factors all contribute to the strategy employed and ultimate success of the sale.
A good exit strategy should be developed that goes beyond just market value and considers all relevant factors
