Selling Your Commercial Real Estate

When we say commercial real estate, it includes office buildings, commercial land, retail space, shopping centers, strip malls, industrial complex, storage, new residential development, multi-family apartments with 4 or more units, hotels/motels, and farms.

Selling commercial property is more complex than selling residential property, and the buyers of commercial property have a different mentality than those of residential homes. Buyers of residential housing tend to be concerned with the emotions of living in the home, while buyers of commercial property view the property as an investment vehicle designed to generate income. If the numbers make sense, a bidding war is likely to occur. If the numbers do not make sense, the sale could be tough.

The sales process for commercial properties is much more business-like, and the buyers tend to be much more sophisticated. They are interested in the numbers, and a professional marketing package is crucial to present your property in the best light.

Property Valuation. While the valuation process may include finding sales comparables, the buyers of commercial property are primarily interested in the income the building generates. The value of a commercial building is directly tied to its income, and the value of the building is determined by dividing the net operating income by the capitalization rate for the area. Sometimes, the business owner happens to own the building the business is located in, and is selling the building and the business in one transaction. In this case, additional pricing considerations need to be taken into account as well

Educate Buyers. Many buyers believe the 3 most important words in real estate are “location, location, location”. While the location is important, it is not the only factor buyers should be interested in. At Dahl Real Estate Commercial, we believe the 3 most important words in real estate are “location, terms, and expandability”. It is sometimes necessary for us to educate the buyers and expand their vision, so they see the possibilities of your property. All it takes is a little education, and buyers can go from saying no to saying yes

Offer and counteroffer. The broker will help the buyer draft up an offer, which can include the following: price, terms, earnest money, bank financing, seller financing, assignment, due diligence period, closing date, utility charges, seller’s disclosure, promissory note, deed of trust etc. The broker will present all offers to the seller, and facilitate the negotiation process to ensure that both parties get what they want.

Closing at escrow. Having a good escrow agent is important because it will make closing a smooth, pleasant, and organized process. Having a good broker at closing is also important, because the broker can smooth out the process should emotions ever run high at the closing table.