Information on Selling Commercial Property

An office is an example of commercial property.

If the time has come to find a new location for your business, you need to learn a few important facts about commercial real estate. As in the field of residential property sales, you can sell your property with or without a real estate agent. Whichever method you choose, make sure you know about relevant zoning and legal restrictions, how to price your property, the best marketing techniques, and important tax information.

Definition

Commercial property means that the facility was specifically designed and approved for retail or wholesale use. Hotels, restaurants, offices, medical clinics, warehouses, and factories which engage in light manufacturing all fall into the "commercial property" category. Residential property, conversely, refers to real estate specifically intended for people to live, not to conduct business.

Time Frame

Commercial property could be on the market for a very short period of time or a very long period of time. The time frame depends on factors which the seller generally can not control. The real estate market in the region could be depressed, or there might not be a demand for that particular kind of property. Zoning regulations and other legal factors could impact the time frame as well. If a prospective buyer can not run his business from your property, he will not buy it.

Price

The price of your commercial property has a huge impact on its saleability. If you set the price too high, no one will want to buy it. On the other hand, offering too low a price means you will not earn the full value of your investment. In order to sell a commercial property for a price which will be fair both parties, hire a professional appraiser with a good reputation. The appraiser will tell you the property's exact worth, so you can set the price accordingly.

Marketing

Marketing a commercial property may bear some similarities to promoting residential buildings, but some differences exist between the two fields. The term "commercial property" could refer to a high-end office building or a small factory which produces shoes. Real estate agents and marketing consultants need to match the publicity materials to the type of property. Marketing a well-appointed law firm requires glossy fliers with color pictures, while the shoe factory probably needs a few classified ads to sell it.

Tax Considerations

Before you put your commercial property on the market, think carefully about taxes. Commercial property owners can defer paying capital gains tax if they engage in something called a "like-kind exchange." A like-kind exchange involves two commercial property owners exchanging similar types of real estate, as opposed to buying and selling these properties. For example, the IRS would consider two restaurant owners swapping properties to be a like-kind exchange.

References

• Businessdictionary.com: Commercial Property
• Daltonsbusiness.com: How to Sell a Commercial Property
• Johnson, Killen & Seiler Attorneys: Consider the Legal Structure When Selling Commercial Real Estate. Alok Vidyarthi
• Nebraska Commercial Properties
• Real Estate Marketing Ideas: Commercial Real Estate Marketing - Steps to Success