Real Estate

Selling Commercial Property for the First Time

Selling commercial real estate by owners can be both nerve-wracking and exciting. After all, who doesn’t want to reap the benefits of investing in commercial real estate? 

Selling your first commercial property is more complex than it may seem, and several factors must be considered before listing your property for sale.

Commercial real estate sales require more finesse than residential real estate sales. The best way to sell a commercial building, whether it’s an office building for sale in Dallas, or a plot of land in Houston, will depend on your situation and preferences.

Why Sell At All?

There are multiple factors involved when selling commercial real estate. Most sales are made to cash out the value of the asset. If you need to move your business to a new location, then selling commercial real estate by owner may be an option.

Consider selling commercial properties by the owner because they don’t generate the kind of return you’re looking for.

Whatever the reason, you need to identify your “Why.”

Knowing why you want to sell something makes it much easier to ensure that you get the return you’re looking for.

Let’s examine a few of the most common reasons people sell their commercial properties.

Cash Out Equity

Real estate will likely appreciate over time. If you wait long enough, that price increase will lead to equity. Cashing out that equity means selling the property for more than you bought and taking home the difference in cash.

Selling an old commercial property can be lucrative even if you’ve owned it for a long time because there are many ways to turn a property into cash.

You No Longer Need It

Most people own commercial property because they own a business, use it for passive revenue, or both. The property incurs costs regularly, so if you don’t need it anymore, it is best to get those expenses off the books by selling it.

Selling the building if you no longer want to own it is the best option for getting the value you invested in it back into your pockets.

It Costs You Money

If your property isn’t generating revenue, it’s probably losing you money.

If you don’t have any other reasons for keeping it, you can sell the commercial property to the owner, so you won’t have to worry about those costs anymore.

How to Measure Proper Valuation for Property

To sell commercial real estate by the owner, you first need to determine its value.

If you can effectively price your property, then you’ll be able to get the most money for it.

There are several ways to value your property. Here are some examples.

Find an Agent Who Knows the Market Well and Has Access to Deals

A commercial real estate broker specializes in selling commercial properties. A broker is like your realtor for commercial real estate.

They will help you value your property by doing market research and getting opinions from your target audience to see what interested buyers are willing to pay.

The broker also goes out and finds a buyer and helps you negotiate the sale.

What Makes Brokers Different from Other CRE Agents?

Brokers are different from other CRE agents because they’re qualified to own their own real estate companies.

Individual agents are only licensed to represent buyers and sellers individually, not as corporations.

Why Would You Want to Work With a Broker?

Selling commercial real estate by owner means working with a broker who has access to more potential buyers than you could reach.

Real estate brokers usually have an entire realty firm behind them, meaning they have more people and resources.

It also means that brokers have more leverage in their dealings.

What Makes a Broker Suitable, and How do You Vet Them?

You need to take a close look at their history, track record, reputation, and legal situation before deciding whether they’re suitable for you.

You could also contact past clients who used the brokerage firm for advice.

This should help you understand how the work was completed and whether the broker’s clients enjoyed the experience of using them.

Find and Identify Cash Property Buyers

Looking for cash property buyers is better if you want to sell real estate fast.

Cash buyers are uniquely attuned to the market and know what a property is worth.

They can make offers fast and are usually close to what properties are likely to sell for.

There are several advantages to selling to cash buyers

Working with cash buyers has distinct advantages, such as:

  • Getting lots of attention and responses quickly.
  • Selling quickly because there is no financing involved.
  • Offers from people who are willing to buy properties that need work.

If you want to eliminate any issues regarding selling your property, then selling to a cash offer may be the best way.

Selling to Cash Buyers Has Some Drawbacks

Selling to cash buyers has its own set of drawbacks :

  • Offers are lower than what people who finance their purchases might be willing to pay for them.
  • Cash buyers often prefer to close deals quickly without negotiating.

Balance the pros and cons before deciding whether to sell to a cash purchaser. It depends on the circumstance, so analyze each situation before deciding whether it’s a good idea.

Selling “By Owner”

If you want to sell your property, you can “do it yourself.” Doing it yourself can save you money because you won’t need to pay a real estate agent a commission.

However, this may mean you do all your work to facilitate the sale. You also take full responsibility for it and can be sued if anything happens.

Why Sell “By Owner?”

Selling commercial real estate by an owner lets you control the entire process, including keeping the profits. You don’t need to pay fees to a brokerage firm; you can work with whomever you choose. This could be the best way to market a commercial property in some situations.

Make Sure All Documentation is Accurate

It would help if you made sure that all your documents are complete and accurate when you sell your commercial property.

Once the documents are finalized, there is no going back. You cannot change them once they are signed.

Check if Your Sale Qualifies for a 1031 Exchange

If you’re selling an asset held for less than one year, you may qualify for a 1031 exchange, which allows you to defer capital gain taxes on the sales proceeds.

Doing this reduces the overall purchase cost at the time of purchase and allows you to get the tax refund later.

Working With A CRE Attorney

Selling a commercial property through an experienced real estate attorney is the best route for selling a commercial property.

Regardless of how you sell your property, a ton of legal paperwork is involved.

You need an experienced real estate lawyer to help you through the entire process.

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