Aiming for a Sale

Buying and selling commercial property involves legal issues best handled by a skilled real estate attorney, who reviews documents and assists in the due-diligence analysis of the property. Your attorney will also draft the formal purchase agreement prior to coming to terms with the potential buyer. Having this document prepared and in hand allows you to control the terms and conditions of the sale.

Your broker can help you calculate the market value of your property, derived from cash-flow calculations and marketplace conditions, and computed via capitalization rate of net operating income. Other factors affecting property value are as follows:

• Recent appraisal 
• Lender requirements 
• Age and type of construction 
• Local competition 
• Availability of developable land 
• Area demographics 
• Comparable rental rates

Compile all due-diligence documents in a presentable format. If possible, create a CD or binder with the documents, photographs, reports, etc. This expedites the selling process by providing buyers with immediate, comprehensive documentation. The package should include the following:

• Bank statements (two years) 
• Real property-tax invoices (two years) 
• Utility bills 
• Profit-and-loss statements (two years) 
• Occupancy reports (two years) 
• Outside service agreements 
• Environmental reports 
• Preliminary title report 
• ALTA survey 
• Business license 
• Certificate of occupancy 
• Architectural plans 
• Soils report 
• Hazard disclosure report 
• Recent major repair invoices

A pre-marketing checklist should be developed with your broker to make certain the property is clean and deferred maintenance concerns are addressed. If the facility looks rundown, potential buyers may suspect other disguised problems. Be prepared to correct, repair or discuss any issues that may arise. A basic pre-marketing checklist should account for the following:

• Pressure wash and clean the facility driveways.
• Paint wood, block and stucco where necessary.
• Replace street numbers.
• Check replace/repair all signage.
• Number each hallway and staircase.
• Check facility ingress and egress.
• Beautify landscaping.
• Repair fencing, lighting, gates and elevators.
• Eliminate onsite water-retention areas.
• Check storm-drain integrity.
• Ensure the computer can generate facility reports.
• Prepare managers to answer questions.
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