Selling a golf course property in today’s market environment calls for the development of the strategy best suited to that specific property. Some investors have entered the golf property market in search of the higher returns golf can provide in comparison to more traditional real estate investments like apartments, office, retail and warehouses. As an example, RealtyRates.com currently (Q1-2025) shows cap rates averaging just under 12% for golf properties while the alternative property types mentioned above range from 8% to 10%. These are considered a bit high and I’ve seen most golf cap rates between 10% & 11% of late and heard some of the other properties as low as 5% to 7%, even with current higher interest rates. As a result, with the supply and demand of golf having been brought back into balance over the past 10-20 years and increased interest in the game, investors perceive golf as an opportunity with less risk and some are paying premiums for the most desirable properties.
There are several effective ways to market a golf course property for sale. As a broker having sold nearly $200 million in golf properties on top of our extensive consulting and appraisal activities, I’ve seen most of them.
Many sellers perceive the best way is to simply price the property something above market value or expectations and leave some room to negotiate. One can also price a property attractively to generate competition and promote a bidding war or to market the property without an asking price and solicit proposals, also potentially promoting a bidding war. Of course, there is also the auction, which some sellers perceive as indicative of distress but which can also create a bidding war beneficial to the seller. It’s also not uncommon for sellers to choose a “quiet” or confidential offering of their property so as to avoid the possibility of upsetting staff or Members/patrons. The strategy one chooses depends on the property’s characteristics.
These characteristics include everything from the property’s cash flow history, physical condition, competition and reputation to the seller’s situation and motivation to sell. One thing we have learned is that despite all best efforts, confidential offerings rarely remain a complete secret and keeping staff and members/patrons in the dark can result in rumors flying and an exodus that could hinder marketing efforts. We advocate making them a positive part of the process by informing them of plans, seeking their input and encouraging their commitment to the future of the club.
There’s a common perception that market value is “what someone’s willing to pay.” As I wrote several weeks back, that’s not always the case. The best strategy for a seller is whichever one enables achieving the best price, and in some cases that exceeds market value, defined as “the most probable price a property should bring in a competitive and open market, under conditions requisite to a fair sale, with both buyer and seller acting prudently and knowledgeably, and without undue stimulus.” Finding a buyer with “undue stimulus” is what helps accomplish the goals of the seller.
Undue stimulus for a golf course can result from several motivations. Golf has always been known to attract “trophy” buyers or “hobbyists” in specific instances. In some cases there can be emotional attachment to a club that helps generate a higher price. In other cases identifying the buyer who may have a strategic motivation for a particular property can result in a premium paid. Sometimes, it’s as simple as investors seeking to place funds and competing with other investors. I’ve actually handled the sale of a property where the selling price was enhanced by one investor willing to do anything to “beat out” another prospect.
Some golf courses offered for sale can have capital needs that should be addressed prior to sale. If the buyer perceives that this can be used for their negotiating advantage, they will take advantage. If the elements under consideration have additional remaining usefulness, capital investment may not be required. Since “deferred maintenance” is defined as issues requiring immediate attention those that have remaining life would not necessarily be a negotiating point.
In most cases, the goal of any seller is to achieve the highest selling price. Knowing and understanding the appropriate market for any given course is essential to maximizing selling price. There are buyers who focus on private golf centric clubs, family country clubs, destination resorts, upscale daily-fee, affordable daily-fee and municipal (leases). There are buyers who focus on specific regions or locales and buyers who focus on properties with specific minimum levels of gross revenues.
Determining the best way to market any property also includes consideration of the goals and objectives of ownership. When would ownership like to close a sale? Is there sensitivity to the club’s future and culture? Is the seller inclined to finance any part of the sale? These are among the many questions that we ask in an effort to “treat the patient, not just the disease”.
The bottom line is that selecting the right strategy is most definitely NOT a “one size fits all” exercise. Selling a golf property is a complex undertaking and requires not only consideration of many factors but also preparation to have in hand for delivery to bona-fide prospects the documents and information required for their accurate analysis of the opportunity.
