5 Real Estate Mistakes Commercial Owners Make (and How to Avoid Them)
The U.S. commercial real estate market was worth $16 trillion by the time 2018 was over. In the first half of 2019 alone, that same market was worth over $8.12 billion. Experts estimate that there is over 70 billion square feet of commercial space. That space is projected to grow to 126 billion square feet over the next 30 years. With impressive figures like this, it’s easy to understand why commercial building owners are anxious not to make any real estate mistakes during their property sale. Read further on five real estate mistakes to avoid so that you’re transaction is a successful one.
1. Don’t Have Paperwork in Order
If you want to influence a prospective buyer, have your historic property files ready to go. At a minimum, you should have a hard copy of your title deed and any past appraisals on your property.
Be sure to have pictures or copies of any building permits you secured for improvements. If you have these items, buyers will know your building’s unique history.
2. Fail to Pre-Qualify a Buyer
It’s tempting to not pre-qualify a buyer because you don’t want to scare them away. But if you have confidential information related to your property, you want to be sure it’s shared with genuinely interested buyers. One good rule of thumb is to ask potential buyers if they can represent 20 percent of their borrower upfront so you’ll know if you have a real lead or not.
3. Setting Asking Prices That are Too High
Sometimes a seller will set their asking price that’s too high without assessing the true value of their business. To avoid this mistake, hire a commercial real estate valuation expert who can assess your property and operations. They can also help you develop an accurate and fair sales price to entice buyers genuinely interested in real estate investing.
4. Forgetting to Share Existing Tenant Details
Another common mistake is to forget to share information on your existing building tenants with prospective buyers. For example, let them know who has a long term lease or who has a month-to-month agreement. This might lend to the buyer’s decision to buy as well as influence a buyer’s lender.
5. Selling Your Property By Yourself
Perhaps the most avoidable mishap in the “real estate mistakes book” is trying to navigate the process on your own. Real estate attorneys and brokers are experienced professionals with complex real estate legal documents. They also understand the “buyer’s mind” so well that they can help you find eligible markets to target.
Don’t make these real estate mistakes during your next sales process. Your first steps are to organize your background information on your building’s history as well as your tenant’s history.
If you’re ready to speak to a commercial real estate broker, request a private consultation. At MANSARD, we can help you sell your property with confidence. Watch us market your investment like it was our own!