What is the process in writing an offer for a commercial property?
Question by tzimi: What is the process in writing an offer for a commercial property?
I am a residential realtor. I have a client that wants to purchase a million property that is listed by another broker. Do I send the listing broker a “Letter of Intent” or a commercial contract to sign? When a letter of intent is signed by the seller and buyer, does it then go to a real estate attorney? And does the real estate attorney handle the rest? Need Help ASAP!!
Best answer:
Answer by Rook
First of all keep your composure; appearance is very important to our clients. I would know, my entire family and I are practicing realtors. Many of your questions would be best answered by YOUR broker. Write up your best offer and present it. Utilize the tools your brokerage has to offer and land that deal! Best of luck to you friend.
Know better? Leave your own answer in the comments!
forget whether the property to be bought is res or commercial;
have your buyer offer whatever he wishes, and you take it to the
seller. If you have an exclusive buyer’s agency relationship with your
buyer, make an appointment with the seller’s agency and the seller
and do NOT hand the contract to the agent–unless the
seller is there present. 95% of the time, the seller’s agent will
try to say “give me your offer and I will give it to the seller.
IF you do that, you can’t learn why the biz is really for sale,
what it has, the motivation, etc. AND you can’t find out
what price the seller will really take.
Make sure your buyer is either fully qualified with a local
lender OR that YOU understand any “creative buying techniques”
which i like to use myself.
For those seller and agents who like to PLAY MORE GAMES
THAN SELL, they like Letters of Intent. I find them time
wasters. They are not offers. WE don’t give sellers of
res prop LOIs, so why use them with a commercial seller?
and some seller’s agents will try to bully the buyer’s agent
or buyer by making demands. Ignore that; it is purely
a negotiating technique. [you must give us.......
who is this buyer...........what has he..........] that is none of the
seller’s business.
The process of making an offer, opening escrow and closing a commercial property deal isn’t much different then that of a SFR/residential deal.
They only use LOI’s in commercial real estate to try and establish the Buyer and Seller are close in the important terms like price or odd terms you won’t see in residential properties such as: feasibility contingencies and long escrows.
The issue is Lawyers; most commercial Sellers don’t want to pay their lawyer $300 bucks or more an hour to go over a 12 page offer to purchase contract to make sure all the fine print in the isn’t screwing them, unless they feel they are getting close to what they want in the way of major deal points.
If your client is trying to lowball the Seller, go with an LOI, they are typically not legally binding but promise to have a real contract drawn up/filled out using a standard commercial real estate purchase contract in a week or two that would incorporate the basic terms of the LOI, like price.
If your client is going to offer something close to asking price, a real purchase contract is probably better but you better be certain of all the terms and conditions of a commercial real estate purchase contract versus and SFR purchase contract.
Depending on the type of commercial property were talking about; Residential income (apartment buildings), Strip center NNN retail, Office buildings, Freestanding gross retail stores, Industrial gross…. (the list goes on, on sub types) you have to watch out for certain things; commercial real estate is not regulated like residential real estate is but that is a different question.
As my personal opinion, DON’T let an attorney handle anything in the deal if you can help it, they don’t get paid for a successful conclusion of a deal they get paid by the hour, regardless of whether their client gets what they want. Lawyers or attornies kill deals, they don’t make them.
In some states an attorney is needed; in others the agents handle all the paperwork.
I would skip the letter of intent unless the listing agent insists on it. Write the contract. When signed, you have a binding agreement and your buyer can proceed with her due diligence and get the property inspected.
THese commercial sales can be wonderful. YOu are dealing with all businesspeople. No emotion like residential sales..