Commercial Real Estate Buying Tips
Buying Tips - Using a qualified commercial property broker will save you time and money. Not only will your broker do much of the grunt work, your broker will possess a deeper market knowledge, and better market information.
Buying Tips - A qualified commercial property broker will put you in control of your real estate transaction. Since you are the one who will live with the property, control is exactly what you need.
Buying Tips - Real Estate brokers are either specialists or generalists. In buying, you need a specialist to work for you in attaining your best results.
Buying Tips - Commercial brokers fall into two categories: full service brokers, who serve as agents for both seller and buyer and buyer-only representatives. You will benefit from attaining the skills of a buyer representative.
Buying Tips - When encountering anyone representing a property of interest to you, be sure to ask if they are an agent, or an employee of the owner. This will protect your interests.
Buying Tips - Agency is an action; if a real estate licensee acts as your agent, they become your agent. A broker owes you a fiduciary duty. In other words: an absolutely faithful duty to perform in your best interest, and to do no harm.
Buying Tips - Dual agency occurs when one agent works for two opposing parties in the same transaction; for a seller and a buyer. Dual agency must be disclosed and all parties must agree to accept the dual agency scenario.
Buying Tips - Any broker, even a buyer's broker, can inadvertently become a dual agent in a transaction by performing an agency action for the other party.
Buying Tips - Experience is the most important factor in choosing a broker. In evaluating experience, consider both the depth and the cvuolume of experience.
Buying Tips - A full service broker receives as well as initiates transactions. They develop strong problem solving and negotiating skill. Full service brokers often work on more transaction than their tenant rep counterparts.
Buying Tips - Brokers are paid upon the completion of the transaction, and not paid if the transaction fails for any reason. Commissions are calculated in two ways: a percentage of the total sales price; or a flat fee.
Buying Tips - When hiring as broker, select one qualified specialist in the area and type of property you desire, and enter into an exclusive agreement with that broker.
Buying Tips - To protect your interests, put your agreement with your broker in writing and include the right to terminate the agreement on five to ten days written notice. IN this way, you can end the relationship quickly if your broker is not doing an outstanding job for you.
Buying Tips - You should begin your purchase by planning well in advance; time will be your ally, not your enemy.
Buying Tips - If time becomes an issue in your process, keep cool; most economic concessions are made right before the deadline of the transaction. You should avoid telegraphing your need to close quickly. Rather than reveal you are under time pressure.
Buying Tips - In addition to beginning your purchase efforts, establish a timeline of the Buying process. This will help you to accomplish all of your objectives in the right order, and in time.
Timing Your Transaction - Develop a complete definition of your requirements. This could include meeting with all managers, department heads, and perhaps your architect. Conduct broker interviews.
Timing Your Transaction - Begin to survey the market locating available properties meeting your requirements. Conduct inspection tours of the most desirable properties.
Timing Your Transaction - Make preliminary proposals, and open negotiations.
Timing Your Transaction - Review responses, evaluating counter-offers. Review space plans, and cost estimates
Timing Your Transaction - Once an economic agreement is reached, it will typically take a week or more for review of the legal documentation.
Timing Your Transaction - Depending on the size and type of the property, you should conduct physical inspections of the property you are buying including but not limited to the interior, roof, HVAC, structural, environmental, books and records.
Timing Your Transaction - There are a number of important questions to ask to accurately define your requirements. Doing this in advance will save you time, and avoid starting in the wrong direction. Committing your requirements to paper will also help as you visit properties to make sure nothing is overlooked.
Timing Your Transaction - As a broker, there are a number of questions I ask my clients to help them move from a rough idea of their needs to a clearly defined objective. You will use this information to screen out unsuitable properties once you start to make calls on available sites.
Location Location - What kind property are you interested in.
Location Location - Are you going to occupy it or are you buying it strictly as an investment?
Location Location - What area and vicinity is of most interest to you?
Location Location - What are your investment objectives?
Location Location - Are you involved in a 1031 exchange?
Location Location - Are you paying cash for the property if you need to finance it do you have a lender that you work with?
Questions / Information - When touring potential locations to lease, you are likely to be asked some qualifying questions. You might want to think about what information you are prepared to give up, and what you will want to hold back.
Questions / Information - In negotiation, information given too quickly can compromise your bargaining power, especially if time is short.
Questions / Information - The best time to drive the market is early Sunday morning. There is virtually no traffic, it is easy to pull over and capture an address and phone number.
Questions / Information - In deciding on suitable properties you visit, the super high-tech, using a digital camera with voice recording capability will save you time and effort.
Questions / Information - When touring the properties which most closely meet your requirements, it is important to be prepared to ask the most important questions first.
Questions / Information - Review your list of questions beforehand, and rank them; a 3 beside anything you cannot live without, a 2 beside that which is very important but you might be able to work around, and a 1 next to those desirable-but-not-necessary items.
Questions / Information - Gross square footage is most typically used with warehouses, industrial buildings and other stand-alone buildings, such as freestanding retail sites. Typically, the calculation will include the thickness of the sidewalls when measuring the total footprint of the site.
Questions / Information - The actual square footage that an office-user may occupy is typically less than the amount upon which the rent is based. The square footage you use exclusively is termed "usable square feet" and the amount upon which the rent is based is called "rentable square feet."
Questions / Information - Try to set up your inspection tours in groups of 3-4 buildings at a time; about 30 minutes per property plus travel time will be sufficient. This way you can more readily compare the features and benefits of the properties while the impressions are fresh in your mind.
Questions / Information - Also, be sure and ask your broker for a Tour Site Checklist. If you are negotiating for more than one property, I advise you not to go much beyond the 1st round of proposal responses, without informing the property owners.
Questions / Information - Creating competition in a softer market can work well in your favor, so letting the other side(s) know you have other options can garner some nice concessions.
Proposals - In preparing letters of intent, I prefer the approach which makes the proposal simple. This means to gain agreement on the big issues first and set aside smaller issues to work out later in the purchase agreement negotiations. This negotiation strategy relieves much of the inherent tension in negotiating, and makes agreement on the side issues easier to obtain.
Proposals - A well-written proposal to buy will get you well into negotiations. Once the proposal stage is complete, you will be provided a purchase contract for you and your legal counsel to review and fine-tune into a contract that accurately defines your agreement.
Proposals - An experienced broker can help you write a successful proposal to purchase. A Request for Proposal is a powerful instrument in a negotiation because the tone of the negotiations is set with the owner pursuing your purchase.
Request for Proposal - Not all owners will respond to RFP's ands will encourage you to make your offer first.
Request for Proposal - If you send out several RFP's and most owners respond, use those responses to either encourage the reluctant owner to come forth with a proposal, or if you really want a particular property, to frame your own offer with the other RFP's in mind.
Americans with Disabilities Act compliance - Do not attempt to tackle the Americans with Disabilities Act compliance without the help of a professional.
Americans with Disabilities Act compliance - If employing an architect, it will be their responsibility to keep you informed about ADA. At minimum you must go to the planning department and ask that the building file be reviewed and that a building inspector visits the site before you sign the purchase contract.
Americans with Disabilities Act compliance - When negotiating try to limit your exposure to the Americans with Disabilities Act compliance to the premises and put the compliance of the on the owner whenever possible.
Americans with Disabilities Act compliance - An error in judgment regarding ADA compliance can be very costly, so do not skimp on professional advice when dealing with this very important issue.
Americans with Disabilities Act compliance - Different properties have different operating expense histories and it is a good idea to ask for a 3-year history of the operating expenses. Well-run buildings possess very stable operating expense histories. Unless there has been a spike in operating expense - energy costs, janitorial contract re-negotiations, insurance crisis, snow removal, etc. - the expenses should be fairly even.
