May
28

Overcoming the “I’m Moving” Objection

selling-energy

Over the course of the next few days, I’ll be sharing a few objections and some strategies for dispelling them.

Overcoming the I'm Moving Objection

There are times where you’ll hear the “I’m moving” objection, usually in two different situations. The first situation refers to a landlord.  Let’s say he or she is going to sell the building in three years.  They might tell you, “Well, our plan is to limit that building’s capital expenditures because we're selling it."  What you should counter with is, “If we invest money in this building to spruce it up, it may very well increase your net operating income, which would help you sell the property for a higher price.” 

An example I often use is somebody investing a dollar per square foot to improve their efficiency.  Let’s say they capture 25 cents per square foot in savings.  If that building were sold at a capitalization rate of 10%, then that 25 cents would mean the building would enjoy $2.50 more per square foot using the Direct Capitalization variety of the Income Approach to Appraisal.  This is a very clear example of how these investments work: you’ll get two and a half times your money back upon sale.  Higher appraisals also come in handy when doing a cash-out refinance.

There are other reasons as well.  If a landlord makes these improvements, they can attract more tenants, prevent complaints and decrease operating expenses during the last three years of building ownership.  The sum of those other benefits would most likely outweigh any financial investments they made in energy improvements.

The second situation involves a tenant.  You might hear them ask, "Why would I make an investment with a four-year payback from energy savings if I’m planning to leave between now and the end of that payback period?" The answer, of course, depends on the non-utility-cost financial and non-financial benefits they would likely enjoy thanks to said improvement.

I have read countless studies about those benefits: better illumination, better indoor air quality, better thermal comfort and so on.  What about better productivity?  What is that “virtual” payroll benefit worth?  If the tenant could increase the morale of its employees, even by as little as 1%, that would likely pay for the retrofit several times before the end of their existing lease. 

The fact that the tenant would be leaving the energy-saving equipment behind might initially seem like a loss; however, once the value proposition is expanded to include non-utility-cost and non-financial savings, the tenant should see the light.

Sales Training That Works! Selling in 6.

Posted by Mark Jewell