Selling a commercial property is a multifaceted process that demands careful planning and execution. Given the current economic climate, you might be wondering if it’s the right time to sell. This article provides a comprehensive guide to the essential steps in selling a commercial property, helping you secure the best possible price.
Step 1: Make Sure You’re Selling at the Right Time
Timing is crucial when selling a property. If you have some flexibility in your sale timeline, it’s a good idea to talk to your commercial real estate (CRE) broker about the current market conditions in your area. The CRE market typically follows a cycle — recovery, expansion, oversupply, and recession. Each phase lasts a different amount of time depending on factors like interest rates or unexpected changes in the local market. EB Mortgage can analyze your location and property type to assess current demand and guide you on the best steps to take, helping you get the most value from your sale while meeting your business goals.
Step 2: Prepare Your Property for Sale
Before listing your commercial property, it’s essential to assess its condition and understand your needs from the sale.
- Understand Your Needs: Consider the timing, type of buyer, and sale terms you require. If you have financial obligations, like a balloon payment on your loan, this can affect your timeline.
- Ensure All Paperwork is Up-to-Date: Buyers will want to review all relevant documentation before proceeding. Make sure permits, inspections, and repairs are current, and organize receipts for any work done, especially if under warranty. Confirm there are no liens on the property and that insurance policies are in place. For historic buildings or properties in historic areas, be sure to inform potential buyers of any regulations they must follow.
You’ll also need to provide critical financial information, such as leases, cash-flow analysis, and other business records. Key documents include the title, lease, zoning regulations, ADA compliance, permits, surveys, tax certificates, and financial records. While your attorney may handle the paperwork, ensure everything a buyer would need is readily available and that you’re familiar with the necessary documents.
- Make Necessary Repairs and Enhance Curb Appeal: Before listing your property, take the time to address any deferred maintenance. Buyers will quickly spot these issues, and they can impact the sale price or turn potential buyers away. Start by walking through your building as if you were a prospective buyer. Make a list of everything that needs attention — from minor repairs like loose tiles or sticking doors to larger maintenance tasks. These small details, which you may have become accustomed to, can make a big difference in how buyers perceive the property.
Additionally, ensure that your property makes a positive first impression by refreshing the exterior. Simple improvements such as painting, landscaping, or power washing can significantly boost curb appeal and create a welcoming atmosphere when prospects first see your building.
- Get an Appraisal: A professional appraisal helps determine an appropriate asking price and sets realistic expectations. During uncertain economic times, the appraisal may not meet your expectations, so keep your hopes grounded.
Step 3: Price Your Property and Clarify Inclusions
Begin by establishing a realistic price for your property, based on the appraisal and market research. In a high-demand market, you may be able to charge higher prices, but in a slower market, consider being more flexible. Commercial real estate brokers can provide valuable insights into local market conditions to help determine the right price.
Additionally, be transparent about any personal property or items that won’t be included in the sale. If you live in the building or have equipment, fixtures, or business items that are not part of the transaction, make sure to inform prospective buyers early in the process. This prevents surprises during negotiations and helps maintain a smooth transaction.
Step 4: Market Your Property
Effective marketing is crucial for attracting potential buyers. Utilize a commercial Multiple Listing Service (MLS) and leverage your real estate network for enhanced exposure. If your property is suited for an owner-occupier, attending local business events or working with a commercial broker can help further.
In today’s digital world, quality visuals are key. Hire a professional photographer to capture high-quality photos, and consider adding a walk-through video, 3D tours, or aerial drone footage to make your listing stand out. The goal is to give buyers a comprehensive view of the property before they even visit.
Step 5: Negotiate the Sale
Negotiation is key once you’ve received an offer. Be prepared with market research, understand your property’s value, and remain flexible. Be ready for requests, such as repair negotiations, and decide which terms are acceptable to you.
Additionally, understanding the buyer’s perspective can help facilitate a smoother transaction. Whether you’re planning to reinvest or pursue a different strategy, anticipating questions and having key documents ready can improve communication and ensure a positive experience for both parties. This approach sets the stage for a successful deal.
Step 6: Close the Sale
The closing process involves completing the necessary paperwork, addressing financing considerations, and understanding the tax implications associated with the transaction. Ensure all documents, such as the sales agreement and deed, are completed correctly. If you’re using the sale proceeds for another purchase, be aware of financing and timing needs. Additionally, consider any tax consequences and the potential for tax deferrals through a 1031 exchange.
Partner with the Experts: EB Mortgage
Selling a commercial property involves many steps, from preparing the property to negotiating the sale. Market dynamics, property condition, and pricing all play vital roles in achieving the best return. Consider working with a skilled commercial real estate broker to guide you through the complexities of the sale process.
For a broker with decades of experience in closing commercial property deals across various market conditions, save time, money, and hassle by contacting EB Mortgage today for a free quote.
EB Mortgage is a locally owned mortgage company with experts in new home purchase, refinancing, and commercial loans. Our wholesale rates can’t be beaten. We offer more products, more options, and more solutions. Our “3C” Process is simple: complete our pre-approval request, consider options based on your requirements, and choose the offer that suits your needs best. Call us or e-mail us today!
Written by the Digital Marketing Team at Creative Programs & Systems: https://www.cpsmi.com/.