Creative Solutions That Are Cost Effective

Are you considering selling commercial real estate? You might be surprised at how much the process differs from selling residential real estate. As an experienced real estate lawyer in Scottsdale, AZ, Anthony Law Group can help you navigate the complexities, avoid costly mistakes, and advocate on your behalf.

Eight Considerations for Selling a Commercial Property

If you want to sell commercial real estate, you must keep these eight considerations in mind. A commercial real estate sale can leave you vulnerable to complications, regulations, and subpar deals if you do not have the right real estate attorney and experienced real estate brokers. That’s why you should never sell off market.

1. Analyze Micro and Macro Market Dynamics

The real estate market constantly shifts on the local and national levels. While the housing market can affect the sale of apartment buildings, it will not have any impact if you are selling a retail building, office spaces, or other properties where people do not live.

However, you will have to understand the following factors:

• Local market and business growth trends
• Economic trends, including the stock market and projected changes to inflation and interest rates
• The city’s zoning laws
• Customer demographics and spending habits

2. Expect a Complex Valuation Process

When you are selling commercial real estate, you should expect a more complicated valuation process compared to what you experience for selling a home. The residential real estate market determines value by comparing the recent sales of similar properties.

To calculate the purchase price of a commercial real estate property, your agent will consider the property’s income potential and expected return on investment. You will need the following detailed financial records:

• Profit and loss statements
• The rent roll
• Expense reports
• Property tax receipts
• Survey reports
• Environmental reports and energy usage statements
• The title report that designates you as the owner of the property
• The property’s service history list and property work

Working with experienced commercial real estate brokers can help you avoid any issues and confirm you have all the necessary documents.

3. Plan for a Lengthier Selling Process

Do not expect to sell a commercial property quickly, though the right commercial real estate agents could help accomplish this task. You should maintain realistic expectations as the sales process for a commercial property takes between six and 12 months.

The longer selling time results from several important factors, including:

• A smaller pool of potential buyers
• The required due diligence process
• Potential caution over a fluctuating market value

4. Refine Your Approach

When you sell commercial property, you cannot use off-market or general advertising approaches that may work for residential property owners. Since the commercial real estate market draws cash buyers looking for an investment property, you have to take a more narrow approach.

Your commercial real estate broker will reach out to a small audience that includes commercial real estate investors, owners of other commercial properties, and even commercial real estate brokerages. Commercial real estate sales rely on tapping into an established network, using high-quality photos, and expertly describing the commercial property’s benefits. You need an experienced commercial real estate agent to capture the attention of a potential buyer.

5. Minimize Tax Implications

When you are selling commercial real estate, make every effort to reduce how much you will owe in federal and state taxes. An experienced attorney can help you navigate the following tax burdens, like capital gains taxes.

6. Prepare for Complicated Negotiations

When you sell commercial property, you must negotiate much more than the cash price and necessary repairs. When you find an interested party, you will discuss lease agreements, financing conditions, and even things like tenant improvements and other nuances of the sale process. A commercial real estate agent knows how to navigate these discussions, which is why you should never sell commercial real estate off market.

7. Remember Regulations and Legalities

Why do you need an experienced real estate attorney when you sell commercial real estate? Commercial property remains subject to much more regulations and legal considerations than residential property.

As a commercial property owner, you will need help selling commercial property while considering various legal issues.

8. Perform Due Diligence

During due diligence, the property buyer will perform an in-depth investigation to find any potential problems with the property or business operations. If you are selling commercial real estate, you will be expected to fully comply and provide all requested documents.

How To Sell Commercial Real Estate in Arizona

What happens when you sell your commercial property? You will use the following process.

Find a Commercial Real Estate Broker

To avoid mistakes, find a commercial real estate agent rather than selling your property off market. Along with your attorney and accountant, they can help streamline the process.

Establish Selling Amount

Your agent will help you establish an asking price. While they will consider sales comps, the property value also depends on several other factors, including:

• Specific property type
• Building square footage
• The property’s income potential
• Market trends

Sign Purchase Agreement

When you sell commercial real estate, you will likely spend a few months finding a buyer. When you find someone to buy the property, you will spend some more time negotiating various aspects of the sale and then completing the due diligence process.

With these steps complete, both parties can sign the agreement for selling the property. At this point, only a few unusual situations would prevent you from completing the sale.

Complete the Closing Process

You can usually complete the closing within three months of signing the final agreement. You will sign additional documents that complete the sale.

Hand Over the Property

When you hand over the property, you will likely give the buyer more than just a set of keys. You must give them everything they need to access and use the property, such as security codes.

Consult Anthony Law Group When You Sell Commercial Properties

When you are looking to sell commercial real estate, Anthony Law Group can help you navigate a variety of legal issues. Whether you need help with a purchase/sale contract or an escrow agreement or ensuring your documents are in order, our team can help.

To learn how we can help, call 602-362-2396.