Problems You Might Encounter During a Commercial Property Sale

 In Industry Insights and Trends

In most real estate transactions, closing day is meant to be a day for final signatures and a happy buyer and seller. Unfortunately with commercial property, things don’t always go as smoothly as one would hope. Even those who feel well-prepared can walk into the closing only to learn there has been a complication. 

To educate and equip you to minimize this possibility, Southeast Venture has put together a short list of obstacles you – as a buyer or a seller – might encounter during a commercial property sale, as well as some tips for mitigating them.  

  1. Undisclosed Issues
  2. Tightly-Controlled Transactions
  3. Zoning Permits
  4. Consider A Brokerage Service

Southeast Venture represents landlords, tenants, buyers, and sellers. We provide effective brokerage services entirely with our clients’ objectives in-mind, including in commercial property sales. Contact us today.

Undisclosed Issues

Even though transparency is expected, commercial real estate transactions involve a lot of records, permits, and other background information, and sometimes things can slip through the cracks. Undisclosed issues that might come to light during a closing could include encumbrances (claims against the property), material defects in the structure, and restrictions on how the property can be used, to name a few. 

TIP: If undisclosed information comes up during a closing, you will likely need to involve a mediator or lawyer in order to work toward an agreement and solution. Or, you can hire a real estate broker to conduct extensive research of the property from the start. 

Tightly-Controlled Transactions

Similar to other real estate transactions, commercial property sales include a negotiated escrow agreement and payment before the official transaction takes place. By its very nature, though, commercial property tends to be more expensive and, therefore, requires more financing sources than residential property, meaning buyers often go to extra lengths to protect their funds. 

In a few words, that means delays! During a closing, it is not uncommon that the transactions needed to complete the sale will not happen simultaneously. 

TIP: Real estate brokers can help ensure all transaction clearances have been made and will arrive on-time, saving you time and stress. 

Zoning Permits

Zoning permits are a bedrock of commercial real estate investments, especially for new builds, redevelopments, and mixed-use properties. However, if the land or property type for the commercial property is not approved, the buyers would no longer be able to proceed with their desired investment. 

As surprising as it may sound, failing to verify and secure proper zoning permits during the inspection period prior to closing happens all too frequently. 

TIP: If you are the buyer, hiring a real estate broker is the best way to avoid this. A broker investigates zoning permits and asks the seller to provide documentation about any property restrictions.

Consider A Brokerage Service

Southeast Venture strives to provide our clients with as much information as possible regarding their commercial real estate transaction – and long before closing day. Learn more about our brokerage services today.

Plus, read about one of our recent successful sales!