Making the Offer
Once you have located the building that suits your needs, it is the time to make the offer. When you do so, you need the following people on your team:
- Commercial Broker. He or she can tell you about the building and the pros and cons of the location, and brokers often know some additional information about the seller, listing broker, and motivating factors.This is the information that really isn't listed anywhere-it's the information your broker has gleaned over years of being in the trenches of commercial real estate.
- Attorney. Your attorney will be there to make sure you don't commit to any terms that would be harmful to the business.Additionally, he or she will make sure that the property lines, title issues and zoning concerns are protected in the purchase.
- Accountant. Your accountant always watches the bottom line and will inform you of the tax consequences of your purchase.
- Appraiser. An appraiser will let you know the fair market value of the property based on past sales of like properties within the area.Your banker will require an appraisal too, however, when you are making this large of a financial commitment you want to make sure you are making a good purchase.The cost of the appraisal is ultimately insignificant in comparison to the cost of paying too much for a property.
Ultimately an offer is made. Typically, the offer is a conditional offer. Those conditions might be:
- A satisfactory building inspection
- The appraised value is no less than the sales price
- Loan approval on this specific property
- Planning and zoning approval if alterations are needed
- Environmental inspection
The listing commercial broker will submit the offer to the seller, who may either accept it as written or make a counter offer that changes the terms. If that occurs, the offer is back in your hands, at which point you accept the changes, make new ones, or withdraw the offer altogether. Once all parties come to terms, you have an official offer to purchase in-hand.
You will contact your lender and finalize your financing based on the specific property you have located. Eventually a settlement meeting will occur, which is the culmination of the sale of the property. At that point, you are a commercial property owner!
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