Questions to Ask a Commercial Real Estate Broker Before Buying
Buying commercial real estate is a huge decision that represents a large investment and commitment. The focus here is profit and functionality. You want the right property at the right price. That's why before you buy, you should ask your real estate agent or broker a variety of questions that determine whether or not this is the best land or building for your endeavor.
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How Long Has the Property Been Available?
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When any commercial plot stays on the market a long time, the seller often becomes more flexible. That means the buyer could make a lower offer and gain potential considerations like having a complete building and land inspection before the offer is official.
Have There Been Escrow Problems?
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Find out if the commercial site has ever been in escrow or if any other potential buyers had financing problems. A buyer dropping escrow could indicate unseen problems with the property that you'll have to bring up to code. If that prospective buyer had financing problems, it could translate into an opportunity to buy at a better price, depending on how close the seller was to a deal.
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What is the Overall Condition of the Property?
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When a company lists commercial real estate, it gathers a lot of information including the age of any buildings and the overall condition of the property. Get that information up front. Sellers always do touch-ups before viewings, some of which mask problems. Knowing about roof conditions, plumbing, wiring, local codes and zoning when you walk in creates a different perspective that can save you money now and later.
Is the Site in a Commercially Viable Location?
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In general, commercial property requires good access by road, and depending on the function, by rail and close to an airport. A site for a retail business will need to be close to local attractions and activities to draw the intended consumer. Know your target audience or tenant and buy accordingly.
What Taxes or Fees Apply?
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Commercial property will have taxes and fees that you need to figure into your bottom line. For example, you'll still have state and local taxes, and possibly license or permit fees, which will impact your profit margins. Balance them against anticipated income from the property before buying.
Are There Any Easements?
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Ask your broker if the property has easements. If the broker isn't sure, get records from the local building department. Easements allow someone, typically a neighbor or even a public agency, usage rights for part of the property. You want to know about this before you find something built in an unexpected location or a restriction on your use of the property that negatively impacts commercial endeavors.
Are There Any Energy Saving Features in Existing Buildings?
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Buildings that have earned the Energy Star label for achieving reduced energy-consumption goals save you money over the long term and may offer some tax advantages.
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References
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