Preparing Your Commercial Property For Sale: A Strategic Guide
They say real estate is all about location, location, location. But timing, timing, timing is just as critical. A recent property that hit the market as 100% vacant is a prime example—months earlier, it could have sold as a fully leased investment with the Federal Government as the tenant. However, after the Department of General Services (DOGE) terminated its 135,000 SF lease in Franklin, the owner is now facing a seven-to-eight-figure loss.
You don’t want to be caught flat-footed. Selling a commercial property requires strategic planning to maximize value and ensure a smooth transaction. By taking proactive steps, property owners can enhance marketability, attract serious buyers, and position their property for the best possible outcome. Timing & preparation is crucial. Below are a few time tested tips to keep in mind no matter how secure your commercial property may seem.
1. Analyze and Control Operating Expenses
Prospective buyers will scrutinize the property’s operating expenses. Take the time to review your expenses, identify cost-saving opportunities, and ensure records are well-documented. A transparent and well-maintained expense report builds buyer confidence.
2. Consider Future Operating Expenses
Buyers will evaluate not only current expenses but also potential future costs. Anticipate changes such as:
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A higher tax basis post-sale
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Increased insurance premiums due to a new valuation
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Potential maintenance and capital improvement expenses
3. Determine If the Property is More Valuable Leased or Vacant
Some properties hold more value as leased investments, while others may appeal to owner-users. Evaluate:
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Lease terms and tenant stability
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Current rental income vs. potential owner-user value
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Market demand for leased vs. owner-occupied space
4. Assess Property Condition and Remediate Issues
A property in good condition attracts higher offers and fewer contingencies. Identify and address key maintenance concerns such as:
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Roof integrity
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HVAC functionality
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Foundation and structural integrity
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Sewer line condition
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Exterior and interior aesthetics (paint, landscaping, signage)
5. Streamline Due Diligence
A well-organized due diligence package enhances buyer confidence and reduces deal risk. Ensure you have key documents such as:
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Legal Description & Deed
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Title Report
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Property Tax Records
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Lease Agreements (if applicable)
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Survey and Site Analysis
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Environmental & Structural Assessments
By having these materials ready, you can accelerate the sale process and justify your asking price.
6. Obtain a Broker Opinion of Value
Before listing your property, it’s essential to understand its market value. A broker opinion of value (BOV) provides an estimate based on market trends, comparable sales, lease rates, and property conditions. This helps set realistic pricing expectations and determines the best marketing strategy.
Final Thoughts
Preparing a commercial property for sale takes effort, but the return is well worth it. A proactive approach ensures a smooth transaction, reduces hurdles, and maximizes your return on investment. By assembling the right documentation and addressing key property concerns, you position your property for the strongest possible sale outcome.
