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Listing a commercial property for sale is drastically different than listing a residential property. Not only is the property most likely in a different bracket in terms of value, but it needs to appeal to an entirely different demographic.

Individuals and/or corporations purchasing commercial real estate have different needs, standards, and demands when it comes to commercial property. The very same features that may be considered a detriment when listing a residential property could be an important selling point for a commercial listing.

The process can also be a bit intimidating, especially when dealing with overly-aggressive investors or brokers looking to score a deal. Here are a few simple tips to help ensure the transaction goes smoothly.

The Commercial Sale

You’ve no doubt read about the intensity of the residential real estate market and, depending on the property type, the demand may be just as intense on the commercial side as well. The lack of supply of certain property types like industrial/logistics sites also gives sellers a huge advantage. Use the next section as a helpful guide when listing a commercial property for sale.

1.     Use a Little Elbow Grease & Prep for Listing

It doesn’t matter what the property …

When you’re investing in commercial real estate, it pays to know when to call in the professionals. Choosing the right commercial real estate brokerage firm can save you time, money, and headaches. How do you know which firm is the right one for you?

Ask Questions

You wouldn’t choose a doctor without an interview. The same is true of a brokerage firm for commercial real estate. You want to know what you can expect from the relationship with your broker. The best way to learn what to expect is to have a conversation and ask the right questions. Some things you would want to know are:

1. How long have they been in business and what familiarity do they have with your property type? What kind of representation do they offer?
2. How do they plan to market the property?
3. What is their fee structure?
4. How many deals have they closed recently?

It is important to know that the broker representing your interests in the transaction has the requisite experience, knowledge and professionalism to properly market your property. The questions above are ones you will want the answers to after speaking with any prospective broker.

Negotiate Your Contract

Once you’ve obtained the …

Unless you plan on purchasing a commercial property with cash, there are very few instances where your lender won’t require an appraisal of the property. This is a professional estimation of the market value of a property that is being considered for purchase.

As one might expect, the underwriting process for a commercial real estate transaction is quite a bit different than the process for a home purchase or refinance, as are the appraisals that are done for each property type. A residential appraisal strictly uses the sales comparison method to determine value. The appraiser will look at recent sales on the market and base their valuation solely on that after some adjustments for any property differences.

Your lender will want to be sure that the commercial space has productive use before they approve a loan, thus a commercial appraisal not only includes the sales comparison approach, but also an income approach. In an income approach, the appraiser will determine the income a property is likely to produce. This both helps to determine the value of the property and ensure that the property is capable of making enough income to service the debt.

Why Are Appraisals Necessary?

Besides the need …

Commercial Real Estate (CRE) can be a great investment for you to consider adding to your portfolio.  Consistent returns, passive income and the potential for appreciation are just three of the reasons why CRE might be a good investment for your portfolio.  Of course, it is important to research and make sure the property you are looking at is a good investment. Not all commercial properties are equal.  We recently reviewed 3 types of commercial properties in our blog – Types of Commercial Property to Invest In.  In this blog we are reviewing 3 more types.

Industrial Property

Industrial properties consist of any property that is used for the storage or manufacturing of goods. This includes warehouses, factories, and logistics spaces used for distribution. These properties can range from relatively small to massive in size and offer an investor a variety of different options.

One possible advantage of investing in industrial property is that many tenants who rent these spaces are established companies conducting large-scale operations with a proven track record of success. This allows for stable cash flow to any investor looking to diversify their real estate holdings from more traditional residential investments.

Retail Property

Similar to industrial …