Selling a commercial real estate property all alone may be a challenge, but it is not difficult. Although it tends to be an overwhelming assignment, it isn't inconceivable. You can save thousands of dollars in real estate commissions by doing it yourself. One of the processes of selling is that sellers get hung up in negotiations. Some sellers may not want to confront the buyer or haggle with the price. If you can get over the talks, the rest is easy. Real Estate Brokers will tell you that negotiations are art and take years of learning to persuade you to give them the listing. Here are suggestions to make it easier for you to sell your commercial real estate.
First and foremost. Find out what is the highest and best use of the property. In other ways, can you determine the suitability of the property? What can the property be used for if zoning and deed restrictions prevail? Then you may have no choice. For example, if the property used to be a restaurant, it would most likely have to be sold as a restaurant building, then you would have to conform to that. If zoning laws are in place, check to see if you can request a change. You may have to discuss your plans with a planning committee and prove why they should change them. A residential building may be transformed into a commercial building; land zoned for residential may be converted to commercial or vice versa. Buildings can be converted into another type of commercial property if it makes sense. If there are no restrictions, think about the property's best potential and consider whether you can convert the property into something else. For example, a Hotel can be converted to an Assisting living facility, a half-way house, or a drug rehab facility. An old box retail store or retail center can be converted to a storage facility or warehouse, apartment buildings turned into condos, or a concrete tilt-wall Industrial building can be converted to an office building. Find the highest and best use of a property to maximize its income and realize its highest potential. Once you understand this concept, you can sell your property for more money. If you own land, see if it is cost-effective to bring utilities up to the land. If it is not, check out the cost of placing a septic tank or water well. If those costs are too much for you, then offer the buyer a list of contractors they can contact to place utilities. Changing the layout of a building can also make you a lot of money. For example, you can turn a 20-unit apartment into a 10-unit apartment and make the living area more significant and attractive. You can take a motel and convert it into medical spaces. Let your mind run wild and experiment.
Have someone look at the property and let them evaluate the look. Does the property look old, run-down, and tired? Can you get by with just putting on a fresh coat of paint? Or can you do something to the elevation where it looks more modern? If money is the issue stopping you from giving the property a fresh look, perhaps you can get a temporary loan from someone and have it writtten that you will pay them back plus interest when you sell the property or seek a rehab loan lender. Make sure the interior, as well as the exterior, is clean from debris. Does the parking lot look good, or does it need a fresh coat of asphalt or concrete patch? Change out the light bulbs to the newer LED white light. Clean the floors and walls or paint the walls or ceilings or replace ceiling panels. Try to remove the musty smells. Remove and replace old carpet or flooring. Add air fresheners to the interior. If you can't make the fix yourself, you should employ a contractor or handyman..
We advise that you hire an inspector and make sure the property is up to City or County code. Is the electrical, plumbing, and HVAC in order? Is the roof in good shape? Do you need to make some repairs or maintenance? If the property was built before 1978, have the property tested for lead-based paint by a certified lead base tester. See if there is asbestos in the building and make sure it is not fraying. If removing lead based paint and asbestos is prohibited, perhaps you can encapsulate it. Whatever you do, contact your local EPA office and seek assistance.
After the property has been inspected and all the critical fixes have been made, your next step is to figure out the price. You don't want to overprice your property because then you will have a difficult time selling it. The best method to obtain a price is to allow an appraiser to do an appraisal to give you his opinion on the value. It is best to enlist an expert appraiser who can give you a non-bias value of your property. A fee appraiser will direct a thorough walkthrough of your property to decide its worth. Appraisers work with three methods or approaches to appraising a property value. The methods include the Comparable sales approach, the Revenue approach, and the replacement value approach. The Replacement approach is usually used for insurance purposes, and it applies to the property value would have been if the property was demolished, destroyed, or completely gone. The comparable sale approach is mainly used for residential property. The appraisal gathers similar sales and deducts the location, condition, size, and other features to come up with a value. The Revenue approach is usually the method used for a commercial property. The appraiser considers what the revenue is today and other similar properties that are sold within the area. If the property is vacant and there are no revenues, you can create what they call a pro forma, indicating what the property revenue will be in the future if it is leased out. There are examples of proforma on the internet for each type of property. You can create one on an excel spreadsheet by laying out each year and adding the gross income below that and then deduct the expenses such as management fees, taxes, insurance, and other costs and subtract that to get the net income. You can get an idea of the gross income by going on Commercial real estate listing sites and seeing what others are charging a price per Square foot monthly, and multiplying that by 12 months. Some may even state percent annual increases of the rent. If it is an apartment or office building, you can deduct a 5% vacancy factor, which is the average. Each year you will have increases in the rent depending on the type of property. To get an accurate figure, you can contact a commercial real estate broker who sells property similar to yours and ask him what the annual rent increases are. Sometimes you can see this on his offer memorandum. Comparable sales information usually is suitable for less than a year and better when six months or less. On a commercial comparable, sometimes you cannot find comps that are less than six years old, and you have to factor in the increase of appreciation to arrive at a good number. Appraisals can be expensive, and if you feel that you don't want to pay for an appraisal, you can do a few things. You can go on the internet and contact an appraiser in the given zip code that your property at and ask him, and ask him for his opinion, the value of the type of property you are selling as per the price per square foot. In return for giving you the information, you can tell him that you will use him in the near future to do the appraisal. Sometimes you can refer the appraiser to the buyer who will be buying your property if his lender does not have any reservations about using your appraiser. A second method would be to search all commercial real estate listing websites and search on the type of property you are selling; You can narrow it down by the zip code and see the going price. Some of these sites have comparable sales information but may charge you for them by asking you to pay a subscription fee or may sell you one comparable. Another method would be to contact a broker who works in the area where your property is located and ask for their opinion. They can put together a broker's opinion of value less than what a full-blown appraisal would cost.
After you know the value of the property, you are ready to market your property. I recommend that you create a one-page flyer with all the detailed information about the property. You may also want to do a video walkthrough showing the property's interior and exterior and mention the location, the amount of traffic it gets, and the nearby retailers. Also, you can hire someone to do a drone video showing the property's surroundings. If you do not know how to do this yourself, you can hire someone inexpensively on fiverr.com. Fiver.com has many freelancers that can do the flyer or edit a video for you at a very reasonable price. Just give them the pictures and the detailed information, and they can put it together. Search for someone with experience, and you can look at their rating and how many projects they completed. Choose someone with a 4.8 to 5.0 rating. Don't be afraid to ask them to show you some of their work. You don't pay them until they complete your flyer and you are delighted.
Make sure to visit the HUD.gov website and read their information about laws against discrimination. It is best to acquaint yourself with government laws when marketing your property. Ensure that your detail about the property does not affect any class or person and does not discriminate because of race, color, ethnicity, religion, sex, or so on.
After you complete your flyer and video, you are ready to list your property. You can list your property for FREE at www.newlista.com. We will put your property in front of many investors. If you own a retail property and you have vacancies, now is the time to lease the vacant spaces to obtain a higher value on your property. If you lease your vacant spaces, you can edit your listing's sales price on our website anytime by going into your dashboard.
In addition to adding your listing at www.newlista.com, you can also post your property on Facebook. Your listing will have a Facebook share button. If you have not signed up with Facebook, please do so right away. This will give your listings lots of exposure. On the left-hand side of your Facebook page, you will see a word that says, Groups. Click on that and then on the top of the search page search Commercial Real Estate. You will find many Commercial Real Estate group pages. Make sure to join them. Once the moderator of the group approves your invitation, you can post your property for sale. There are many groups that are related to Commercial Real Estate. You can do a refined search, let say, your city and the words Commercial Real Estate or the USA or any State. You can also search for Commercial Real Estate investors, or if you are selling an apartment building, then you would search for Multifamily investors, or Apartment investors, and so on. Another suitable place to market your property is linkedin.com. Linkedin.com also has a group feature like Facebook, and you can find many groups there and post your property for sale. Also, we recommend youtube.com. You can upload a video tour or a drone video of your property. If you do not know how to create and edit a video, you can create a video with your phone or digital camera and find someone on fiverr.com to help you make the video.
Make sure you get an account with youtube.com, otherwise you will not be able to upload your video. Make sure you place some keywords related to your property in the video content so that when someone is searching for a specific property, they will find it. For example, you own a retail center, on the heading place Retail Center for Sale in "City" and "State." Then write a detailed description about the property. Other areas that you can try to sell your property would be Local classified ads. Search Classified advertisements in your city, craigslist.com, instagram.comtwitter.com. Also, word of mouth is the best. Let everyone know that you are selling a property. Offer a finder’s fee if you want to. Do a general search on google.com. Or other search engines, for Investors, such as Retail Center investors, Multifamily investors, Industrial warehouse investors, and so on. Go on their website and look for the contact information and send them a message about your property. Also, here is one unknown method to find investors, download Google Earth Pro https://www.google.com/earth and on the top left of the page search box, type in Commercial real estate investors, or be specific, retail center investors. A list of investors will show up.
Now here is the crucial part. You are negotiating the price. Always start a bit higher on your price because the investor may ask you to reduce the price. Most of the time, if the property is located in an exceptional area, and the demand is high, you can demand whatever price you want. If a potential buyer calls you, and offers you a verbal price, do not accept it right away. Your reaction will be to be a bit hesitant and twitch. For example, when he blurts the price, cringes and says "Wow" a couple of times. Then tell him I don't accept verbal offers. Ask them to give to you in writing in the form of a Letter of Intent. A Letter of Intent is a non-committal way of receiving an offer without accepting it. If they tell you I will submit you a contract, tell them you would rather see the letter of intent first. Ask him to send it to you with his full contact information, including his or her cell phone. When you get the Letter of Intent, look over it carefully. If you don't agree with the price or anything on it, take a pen and scratch it out and change it. Scan it and email it back and follow up with the person. Make sure you give the buyer a deadline. You don't want to give him or her many weeks to make a decision. If you dread making phone calls, email them once or twice. Sometimes emails go into the spam box, or the investors get too many emails to fall through the cracks. If you don’t hear from them, text him on his phone. Ask them if they received your counter offer. The Letter of Intent is to iron out the details and come to an agreement on the firm offer. Once you agree, you are ready to go hard or draw up a contract. If you don't have a contract, I advise getting an attorney for the right one. You can also ask the investor to give you the contract but recommend that you allow an attorney to review it. The attorney's is basically to protect you and make sure there are no hidden clauses that will affect the property's sale. You will obtain the contract, sign it, and submit it to the investor and ask the investor to sign it and submit it to the title company with earnest money. Earnest money is a security deposit made to demonstrate that the buyer is serious in willing to complete the transaction. Follow up with the title company to make sure they receive both the contract and earnest money and get a copy receipt. The party who is paying for the title policy will choose what title company they want to close. Depending on the country you live in, sometimes it could be a Attorney office or notary office. In some states, the title policy's payer may be the seller. Check your title if you are not sure. Keep in mind that the buyer has a period called a due diligence period to review all of the information about the property. If they are not satisfied, they have the right to terminate the contract and receive their earnest money back, and you will have to find another buyer again. Don't get discouraged if this happens. Put it back on the market and give it another shot.
This document is for informational purposes only and shall not constitute any type of legal, professional or investment advice. and may not reflect the current laws in your area and we suggest that you consult with an attorney or other professional in the field if you have doubts on what actions you should take. We do not accept responsibility for any omission, error, or inaccuracy in this document or any action taken in reliance thereon. The above websites mentioned are registered names of their respective companies.