Selling commercial real estate can be a complex and challenging process, and there are several factors to consider before putting your property on the market. In this article, we will answer five frequently asked questions about selling commercial real estate.
What are the typical commission rates for commercial properties?
The commission rates for commercial properties vary depending on several factors, such as the property’s location, size, and value. Typically, commercial real estate agents charge a commission of around 5-7% of the property’s sale price. Commissions on properties with values over $3 million can be considerably less; However, the commission rates are negotiable, and you should discuss them with your agent before signing a listing agreement.
What are the factors that determine the value of a commercial property?
Several factors determine the value of a commercial property, such as its location, size, condition, zoning, market conditions, replacement value and rental income. Location plays a significant role in determining the value of a commercial property. Properties located in prime areas or commercial districts are likely to command a higher price than those located in less desirable locations. The size of the property also affects its value. Rule of thumb values are measured in square feet. The property’s condition is also essential, as well-maintained properties are likely to sell for a higher price than those that require significant repairs or renovations (deferred maintenance).
How long does it take to sell my property?
The time it takes to sell a commercial property varies depending on several factors, such as the property’s location, condition, commercial real estate agency selected and demand. Properties located in prime areas or commercial districts are likely to sell faster than those located in less desirable locations. The condition of the property also affects the time it takes to sell, as well-maintained properties are likely to attract more potential buyers than those in poor condition. In general, it can take several months to sell a commercial property, and it’s important to have realistic expectations about the selling process. Obviously market conditions in the debt market play a significant role as well. In a rising interest rate environment, banks tend to be more cautious with lending and require more money down and higher margins to cover debt service. This makes it more difficult for buyers to consummate deals. Less buyers in the market means slower transaction cycles.
Can a residential agent sell my commercial property in Florida?
Yes, In the State of Florida, there is a singular license for real estate agents with no distinction between commercial and residential. The better question is, “Should a residential agent list my commercial property?” This question requires a more nuanced response. Commercial and residential real estate are not very similar. The drivers of buyers can be distinctly different (i.e. Schools are important for residential buyers. Ceiling clearance is important for warehouse buyers) There are different skills required to sell each type of asset class. Residential and commercial properties are marketed on different platforms. There is no dominant listing service for commercial property like MLS for residential. But, this is the tip of the iceberg of the differences. When one is hiring a real estate agent, they are hiring the agent’s expertise in the marketplace. It’s unlikely that a residential agent with a farm area of 1000+ homes is going to have the time and bandwidth to understand every nook and cranny of their residential farm area, let alone the in’s and out’s of a commercial asset that could be miles from their chosen market area. Is it possible for a residential real estate agent to effectively handle a commercial transaction? Of course they can, particularly a neighborhood asset in the farm area the agent works and intimately knows. They are likely to connected to potential buyers who live there.
Regardless, when hiring a broker of any sort, it is best to interview that licensee and ask for their resume of transactions to make sure that the agent has experience with your type of property. Also make certain that the agents have subscriptions to the listing sites that are suited for your particular property. The more exposure your property receives the better the chance of obtaining the selling price you desire.
Are all commercial real estate agents the same?
No, not all commercial real estate agents are the same. Commercial real estate agents can be generalists or specialize in different asset classes, such as retail, office, industrial, land or multifamily properties. Most independent agents act as generalists in the marketplace, handling all varieties of properties. The more complex and valuable the asset is, however, the more important it might be to work with an agent who specializes in your property type and has a deep understanding of the buyers, sellers and tenants in that asset submarket.
In conclusion, selling commercial real estate can be a complex process, and it’s essential to work with an agent who can help you navigate the process and achieve your goals. By understanding the factors that determine a property’s value, the typical commission rates, and the importance of working with a specialized agent, you can make informed decisions and maximize your chances of a successful sale.
5 FAQ for Those Who Want to Sell Their Commercial Real Estate
Selling commercial real estate can be a complex and challenging process, and there are several factors to consider before putting your property on the market. In this article, we will answer five frequently asked questions about selling commercial real estate.
What are the typical commission rates for commercial properties?
The commission rates for commercial properties vary depending on several factors, such as the property’s location, size, and value. Typically, commercial real estate agents charge a commission of around 5-7% of the property’s sale price. Commissions on properties with values over $3 million can be considerably less; However, the commission rates are negotiable, and you should discuss them with your agent before signing a listing agreement.
What are the factors that determine the value of a commercial property?
Several factors determine the value of a commercial property, such as its location, size, condition, zoning, market conditions, replacement value and rental income. Location plays a significant role in determining the value of a commercial property. Properties located in prime areas or commercial districts are likely to command a higher price than those located in less desirable locations. The size of the property also affects its value. Rule of thumb values are measured in square feet. The property’s condition is also essential, as well-maintained properties are likely to sell for a higher price than those that require significant repairs or renovations (deferred maintenance).
How long does it take to sell my property?
The time it takes to sell a commercial property varies depending on several factors, such as the property’s location, condition, commercial real estate agency selected and demand. Properties located in prime areas or commercial districts are likely to sell faster than those located in less desirable locations. The condition of the property also affects the time it takes to sell, as well-maintained properties are likely to attract more potential buyers than those in poor condition. In general, it can take several months to sell a commercial property, and it’s important to have realistic expectations about the selling process. Obviously market conditions in the debt market play a significant role as well. In a rising interest rate environment, banks tend to be more cautious with lending and require more money down and higher margins to cover debt service. This makes it more difficult for buyers to consummate deals. Less buyers in the market means slower transaction cycles.
Can a residential agent sell my commercial property in Florida?
Yes, In the State of Florida, there is a singular license for real estate agents with no distinction between commercial and residential. The better question is, “Should a residential agent list my commercial property?” This question requires a more nuanced response. Commercial and residential real estate are not very similar. The drivers of buyers can be distinctly different (i.e. Schools are important for residential buyers. Ceiling clearance is important for warehouse buyers) There are different skills required to sell each type of asset class. Residential and commercial properties are marketed on different platforms. There is no dominant listing service for commercial property like MLS for residential. But, this is the tip of the iceberg of the differences. When one is hiring a real estate agent, they are hiring the agent’s expertise in the marketplace. It’s unlikely that a residential agent with a farm area of 1000+ homes is going to have the time and bandwidth to understand every nook and cranny of their residential farm area, let alone the in’s and out’s of a commercial asset that could be miles from their chosen market area. Is it possible for a residential real estate agent to effectively handle a commercial transaction? Of course they can, particularly a neighborhood asset in the farm area the agent works and intimately knows. They are likely to connected to potential buyers who live there.
Regardless, when hiring a broker of any sort, it is best to interview that licensee and ask for their resume of transactions to make sure that the agent has experience with your type of property. Also make certain that the agents have subscriptions to the listing sites that are suited for your particular property. The more exposure your property receives the better the chance of obtaining the selling price you desire.
Are all commercial real estate agents the same?
No, not all commercial real estate agents are the same. Commercial real estate agents can be generalists or specialize in different asset classes, such as retail, office, industrial, land or multifamily properties. Most independent agents act as generalists in the marketplace, handling all varieties of properties. The more complex and valuable the asset is, however, the more important it might be to work with an agent who specializes in your property type and has a deep understanding of the buyers, sellers and tenants in that asset submarket.
In conclusion, selling commercial real estate can be a complex process, and it’s essential to work with an agent who can help you navigate the process and achieve your goals. By understanding the factors that determine a property’s value, the typical commission rates, and the importance of working with a specialized agent, you can make informed decisions and maximize your chances of a successful sale.