A Commercial Building Sale from Soup to Nuts


Selling a commercial building is not something that is done spur of the moment. There are only a few reasons why an owner would choose to sell a valuable commercial building.

#1 Retirement. The owner retired and sold their business and no longer needs the building.

#2 Expansion. The owner may have outgrown the building and is purchasing another building.

There is an immense about of thought and tax planning that goes into selling an established commercial building. But, once the decision is made to sell, the owner selects a commercial broker to handle the marketing and sale of the property.

The next step is to determine the asking price with your broker.

This is where it gets really interesting…

The asking price is crucial for attracting potential buyers. Some brokers may suggest a pie-in-the-sky value just so they can secure the listing (A horrible idea).

However, a more prudent approach is to price the property approximately 15% above the market value to maximize the return. This ensures no money is left on the table, and the owner gets the best value possible.

With marketing materials prepared and published, building tours commence. Potential buyers will then express their interest through a letter of intent (LOI).

An LOI establishes the high points, the price, the length of the due diligence time, etc. to be negotiated. Although LOIs are generally non-binding, they pave the way for a binding purchase agreement.

This is where the games and the fun begin…

The negotiation phase can be challenging, with buyers seeking longer due diligence times and refundable earnest money deposits, while sellers aim for shorter due diligence times and non-refundable deposits after a specific period.

A skilled real estate broker can be crucial in securing favorable terms for the owner and the property.

Reasonable due diligence time periods vary depending on the property.  

For a stand-alone building that is in good shape, 90 days of due diligence is a good round number to work with.

For a piece of land that is unentitled, 180 days to 270 days are good numbers to work with.

Once the due diligence process is successfully completed, the transaction moves towards closing, which is the ultimate goal for all parties involved, as it marks the time when everyone gets paid. 


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