In today’s competitive and dynamic commercial real estate market, every sale must be skillfully planned and executed. The key to proper planning is ensuring that client needs are fulfilled while homeowners get the best possible deals.
If you’re considering selling a commercial property in 2024, you are in the right place! In this article, we will discuss the vital steps that you must follow to ensure that you get an excellent deal for your commercial property.
We will help you set up for success in CRE and understand the commercial real estate market. So, what are you waiting for? Let’s jump right into it and explore the 11 essential steps to selling a commercial property in 2024!
The 11 Essential Steps to Ensure Better Commercial Property Deals
We have broken down the complicated process into 11 sub-steps that are listed below: –
1. Conduct a detailed property evaluation
Property evaluation refers to an inspection of your property by an expert commercial agent. The key is to go through a checklist and evaluate the general condition of your property including the roof and other systems that are in place.
Note that general conditions refer to the factors that can be seen and do not include system and structure conditions. If you want to get these factors evaluated, you must get in touch with a licensed professional.
After all, these issues might have an impact on the sale and the desirability of your commercial property. You must also keep this information on hand and include it in disclosures to ensure proper representation of your property.
2. Analyze the current commercial market
Market analysis refers to getting a picture and a view of the commercial real estate market around your area. Some common factors that you must research and learn include leasing rates, new construction projects, the latest commercial real estate trends, competing inventory, absorption rates, comparative valuations, and capitalization rates.
If you are new to the commercial real estate market or are not updated about these, we recommend getting in touch with an expert for more information.
3. Prepare your commercial property for sale
Before you jump right into selling your commercial real estate property, you must prepare it to ensure better deals. Some steps that you must follow to better prepare your commercial real estate asset for sale include: –
a. Understanding needs and expectations
In this step, you must zero in on what you need from the sale and set your expectations. Some common questions that you must be able to answer include: –
- How quickly are you looking to sell your commercial property and close the deal?
- Is there any specific type of buyer that you are looking for?
- If the sale goes through, what would be your ideal terms?
b. Get an appraisal
Here, we mean that you must get an appropriate understanding of the worth of your commercial real estate property based on market conditions and other factors. This will not only help you form an estimate but also provide potential buyers with an idea of the value of the property.
c. Prepare your property
Ensure that your commercial real estate asset is in the best possible condition to quickly close a better deal. In case there are pending maintenance issues or pending renovations, you must get them done as soon as possible. Another tip to boost commercial real estate valuation is to invest in capital improvements.
4. Determine the value of your commercial real estate property
Once all renovations are done and your property is ready for sale, it is time to estimate its value. Although every homeowner looks to get the best possible deal and high returns on investment, you must be realistic.
For example, if the demand for commercial real estate in your area is on a decline, you must be flexible and set a reasonable asking price. A lot of homeowners get in touch with expert realtors and investors to ensure an accurate estimation of their property’s value through different property valuation methods.
5. Prepare the marketing and sales plan
In this stage, you must determine where and how your property will be marketed along with figuring out the target customers. We recommend targeting customers who have the potential to better utilize your property. You must also keep a general marketing plan at the local, regional, and national levels.
6. Create a detailed marketing package
Remember that buyers will not approach you for a sale if your property seems shady. You must create a marketing package that includes accurate information about your property and intrigues potential buyers. Some common items that you can include in your marketing package are: –
- Site plan
- Floor plan
- Rent roll
- Municipality contact information
- Systems
- Zoning and usage data
- Photos
- Annual property operating data
- Detailed information
- Summary
7. Ensure adopting a multi-channel marketing approach
For this step, we recommend getting in touch with professional commercial realtors with access to expert tools and platforms. These will help you ensure maximum exposure and property engagement and will draw in target customers. Some common channels that you must market your property on include: –
- Social media
- Craigslist
- MLS
- Broker database
- Press release
- Association networks
- Email lists
- Direct email
- Title companies
- Publications
8. Monitor and report results
To ensure that the marketing plan adopted is effective, you must track property exposure and market conditions. This will also help ensure that the value of your commercial property is in line with market conditions and other important factors.
You must note that commercial properties are not sold overnight, which is why monitoring and reporting your marketing efforts is necessary.
9. Negotiate the offer and attorney document review
Once you get an offer, you must ensure that you understand what is important to your seller. This will help ensure that both of you are on the same page, allow for a seamless sale, and help close better business deals.
Other than focusing on the price, you must take the timeline into account. Ensure to bring your attorney to the table to prevent contractual issues and solve them as quickly as possible.
10. Risk mitigation and disclosures
Today, lawsuits and conflicts are becoming all the more popular in the commercial real estate industry. The prime reason is failure to disclose facts to a buyer, causing mistakes and misrepresentation. We recommend adding all statutory and contractual disclosures to the buyer and getting professional inspectors to do the checking.
11. Managing the Escrow process
The final phase of the sales process is the Escrow process, meaning that an escrow company must act as an objective intermediary between the involved parties. This will help ensure that the sale goes through in accordance with all applicable laws and there is no room left for error. Typically, these parties are involved in the Escrow process: –
- Seller
- Buyer
- Buyer’s broker or representative
- Title company
- Escrow officer
- Contractors
- Inspectors
- Appraiser
- Attorneys
- Lender
Conclusion
Although today’s commercial real estate market is quite dynamic and seems bleak, carefully planning your approach can help you land better deals. We hope the above article helps you better understand the factors involved and allows you to get started. If you are looking for professional help, get in touch with the expert team at Private Capital Investors to get the required support!
