Selling commercial property that’s been inherited can be challenging, especially if you lack the knowledge on how to price, market, and negotiation a piece of commercial real estate. In commercial real estate, there are two types of property owners. Ones that are educated and ones that wind up selling for way too little.
There’s not enough space on the blog post for me to explain every detail on selling commercial property but I’ve put together a list of the main topics that you should consider.
Step by Step Guide to Selling Inherited Commercial Real Estate
1. Determine the financial implications of the sale
It is important to be prepared for any tax penalties or other financial consequences that may occur following the sale of commercial real estate. I’d strongly recommend that you consult with a CPA or financial advisor that has direct experience with commercial real estate.
2. Complete the probate process
Before an inherited property can be sold, it will likely go through probate. During this process, the validity of the will is determined. The right attorney can greatly expedite probate while also settling any inheritance disputes that may arise between family members.
3. Work with a commercial real estate agent
The ideal real estate agent is not a friend or family member, but rather, somebody with excellent referrals and plenty of experience selling commercial property. You can go one step further during the interview process by asking the agent if they specialize in the type of property that you’ve inherited.
4. Maintain the commercial property
You need to ensure that the upkeep on the property is maintained throughout the probate period and sales process. That doesn’t mean you have to put a ton of money into the property but you’d benefit from maintaining the common areas, parking lot, and landscape.
5. Prepare for feasibility period
If the commercial property is in disrepair, then the due diligence period or feasibility period will take longer then a traditional sale. You need to understand that the buyer needs time to determine what they want to do with the property and if the local county/city will allow it.
6. Marketing plan
A strong marketing plan that incorporates online marketing, traditional marketing, and leveraging a broker network is essential to selling commercial real estate in today’s market. If your agent is lacking in any of these departments then I’d interview alternative candidates.
7. Set a reasonable asking price
In all likelihood, the property will not be sold for the initial asking price. Knowing this, it can be tempting to set the asking price high to compensate for an eventual drop — but this will merely drive prospective buyers away.
8. Avoid accepting the wrong offer
The highest offer is not always the best offer and you need to keep this in mind so that you don’t get too excited. Once you receive an offer you should review it with your commercial real estate agent. Take a look at the earnest money and the option money presented as well as the financing contingency. If the offer is reasonable and the buyer has shown that he or she can close then determine if you’re comfortable accepting it.
9. Complete closing paperwork
Make sure you work with a reputable closing attorney or title company that is local to you if possible. If you’re dealing with the sale of the property from out of state then you’ll have to depend on the recommendations from your agent.
Residential title companies are not always the best when selling commercial because the escrow officers lack the knowledge and expertise to make closing seamless.
Commercial Real Estate Agent Specializing in Inherited Commercial Property
When selling commercial real estate, the most successful sales take place when sellers surround themselves with trusted advisers capable of guiding them through every step of the process.
I routinely work with commercial property owners that attempted to sell their inherited office building, retail strip center or industrial space on their own. What I’ve found over the years is that they don’t know what they’re doing when it comes to selling commercial real estate. Let me explain… Property owners want a price that is way over market value or they’re selling it at a price that is under market value. Either way, they’re losing money because they lack knowledge.
Unlike residential real estate, commercial real estate is more complex and if you lack knowledge then you’re going to make big mistakes.
I can show you a better way to sell commercial real estate.