Ask yourself the following questions:

• How quickly do you need to sell the property?

• Are you looking for a certain type of buyer?

• What are the ideal terms of the sale? 

For example, if you have a balloon payment coming due on your loan, that can greatly impact your timeline for selling. Simply put, clearly understanding your needs in advance will help you make informed decisions when it’s time to negotiate with potential buyers.

Get an Appraisal

An appraisal of your commercial property can help you determine an appropriate asking price for the sale. This will also inform potential buyers on the value of the property and help to facilitate a smoother negotiation process. 

An experienced appraiser will be able to provide you with an accurate market value of your commercial property. Do keep in mind that during an economic downturn or in times of uncertainty, the results of the appraisal may not be something you agree with. However, it’s important to ensure you keep your expectations for your sale grounded in reality.

Prepare the Property

Making sure your property is in the best condition possible is essential for selling it quickly and for a higher value. 

Have deferred maintenance issues? Stop waiting, and just get the work done. Any commercial real estate buyer will spot these problems, and that could cost you the deal.

You may also wish to think about investing in some capital improvements to the property. This doesn’t mean a full rehab of your office building or warehouse, but spending a little bit of money to create more curb appeal — whether that’s adding some in-demand amenities or even improving the lighting or landscaping outside — can pay off when it comes to your property’s valuation in the eyes of a prospective investor.

Similar to selling a single-family home, it can also be a good idea to “stage” your property. This often isn’t possible if your building is fully occupied by tenants, but if you do have vacant space, there’s no harm in dressing it up a bit — especially if you’re potentially selling to an owner-occupier.

Step 2: Price Your Commercial Your Property

Of course, if you’re selling a commercial real estate asset, you need to have a sale price in mind. You’ve got to be realistic, of course. Remember that appraisal you got done in the previous step? That’s your starting point.

Beyond this, local market research goes a very long way. If you’ve got a self-storage property in a market with high demand and not much vacancy, leverage that in your asking price. Same goes for any kind of commercial real estate. 

At the same time, if demand is drying up, you’ll likely need to be more flexible in your pricing. That’s not to say you should ask for less than its value, but understand that any potential buyer will have done the same research. At the very least, they’ll have engaged a broker to provide a broker price opinion. So, you may have more trouble selling your property at 10% or 20% over market value if the market’s dynamics aren’t in your favor.

Commercial real estate investment brokers can be invaluable tools during this time, as they generally have their fingers on the pulse of the local market and can advise you on the best and most realistic price point, given your time constraints and other needs.

Calculating Your Internal Rate of Return

Once you've got your listing price figured out, plug your figures into our internal rate of return calculator below. This can give you a good indication of the profitability of your investment.

Step 3: Market Your Property for Sale

Once you have prepared your property for sale, you need to begin the process of marketing it. Long gone are the days of classified ads in the local newspaper. For a commercial real estate property of just about any size, you will want to consider utilizing a commercial property MLS, or multiple listings service. If you aren’t familiar with these, check out our MLS guide with a few of the top ones.

Tapping into your commercial real estate network can also be a great idea, depending on your connections. Especially if your property would be suitable for an owner-occupier, attending business events (if you’re located near your investment, that is) can bear fruit. After all, many small businesses can buy properties they’ll occupy with an SBA loan.

Of course, this is also another great time to consider engaging a commercial real estate broker. If you’re new to the selling game — or just new to the market — an experienced broker can be worth her or his weight in gold in getting your property in front of the right eyes.

Step 4: Negotiate the Sale of Your Property

So you’ve found a legitimate buyer, and they’ve put in an offer on your commercial property. Great news — but the job isn’t done just yet. Even if everything looks great on the surface, better keep the cork in the champagne bottle just a bit longer.

Negotiation is critically important in any commercial property disposition. One thing to bring to any negotiation table is extensive market research. I can’t stress this enough — if you can’t speak intelligently about recent comparable sales (or “sales comps”) in your submarket, you simply aren’t ready.

But more than market research, understand why your property is valuable. Read the appraisal you had done. Then read it again. Ask lots of questions when you can — and take very detailed notes. Markets change constantly, though, so if your appraisal is outdated, your price may be as well.

On that note, bring flexibility as well. It’s not always reasonable to expect to get everything you want out of your property sale. It may help to differentiate between your must-haves and your wants. Your buyer has almost certainly done the same, and that gives them power and flexibility to get a deal done — as long as you can keep up.

Once you’ve all agreed to a sale price, though, it does become easier. Some investors may ask that a seller pay for some repairs — that is, if you haven’t already fixed everything — and you’ll certainly have to get your paperwork in order, but most of that is covered in the next section.

Step 5: Close the Sale

The final step in selling your commercial property is the actual closing of the sale. As you might imagine, the paperwork and tax implications of a sale can be considerable. It helps to have your lawyer on speed dial for this part of the process.

Paperwork Requirements

The most important part of the closing process is the paperwork that must be completed before the sale can be finalized. This paperwork includes the sales agreement, the deed, and any other documents required by the state or local government. The parties may also need to sign a title commitment and other closing documents. It is important to make sure all paperwork is completed correctly and in proper order before the closing date.

Financing Considerations

Financing is another important factor to consider when closing a commercial real estate sale. Depending on the type of property being sold, the buyer may need to obtain a loan or other financing. This can slow the closing process, especially if the loan itself takes a while to close.

As the seller, you may also need to obtain financing if you plan to use the proceeds from the sale to purchase a new property. It is important to understand all financing requirements and to ensure that all paperwork is completed accurately and on time.

Tax Implications

Finally, it is important to be aware of any tax implications associated with the sale. Depending on the type of property and the location, there may be federal and state taxes due. Additionally, the buyer and seller may need to report the sale to the IRS and other relevant agencies.

If your sale of the property is part of a 1031 exchange, you may be able to defer paying taxes, but this still requires considerable preparation. Understand that you must close the acquisition of your next asset within a rather limited time frame or risk owing taxes on your capital gains.

Conclusion

When it’s time to sell one of your commercial real estate assets, understand that there’s a lot to think through and plan. Not only should you ensure that your property is in good condition (at a minimum), understand how market dynamics will impact your pricing and, thus, your overall return on investment.

This process is often extremely complicated — so be sure to consider enlisting the services of a capable commercial real estate brokerage to help you out. This can help you navigate through some or all of the more complex parts of the sale process, not to mention the benefits of having a deep understanding of the local market that most brokers have.

So now that you’ve sold your property, what’s next? Planning to invest your proceeds into a different property somewhere else? Be sure to leverage your next acquisition appropriately to boost your own returns.

Regardless of the property type or location, talk to our team about your financing needs. We close loans on any kind of commercial asset in any market across the United States. Just fill in the form below; we’ll get working on your free quote immediately.

Related Questions

How do you determine your commercial property's price?

Get an appraisal, and also understand the local commercial real estate market for that asset type. If demand is rising or falling, it could significantly impact your pricing.

Should I use a broker for my commercial property sale?

Selling commercial real estate is very complicated, and a broker can guide you through the process, marketing your property and providing expert market knowledge.

What are the best strategies for selling a commercial property in February 2023?

When it comes to selling a commercial property in February 2023, the best strategies are to ensure that the property is in good condition, understand how market dynamics will impact pricing, and consider enlisting the services of a capable commercial real estate brokerage. Additionally, it is important to leverage your next acquisition appropriately to boost returns.

For more information on how to sell a commercial property, check out this blog post from CommercialRealEstate.Loans.

If you need financing for your next commercial real estate acquisition, our team can help. We close loans on any kind of commercial asset in any market across the United States. Just fill in the form here; we’ll get working on your free quote immediately.

What are the most important factors to consider when selling a commercial property in February 2023?

When selling a commercial property in February 2023, the most important factors to consider are:

• Your timeline for selling the property
• The type of buyer you are looking for
• The ideal terms of the sale
• Any balloon payments coming due on your loan

For more information on balloon payments, please see this article.

What are the common mistakes to avoid when selling a commercial property in February 2023?

When selling a commercial property in February 2023, it is important to avoid common mistakes such as not taking stock of the asset’s condition and your expectations or needs, waiting to address deferred maintenance issues, not investing in capital improvements, and not staging the property if it is vacant.

Not taking stock of the asset’s condition and your expectations or needs is essential for selling it quickly and for a higher value. Source

Have deferred maintenance issues? Stop waiting, and just get the work done. Any commercial real estate buyer will spot these problems, and that could cost you the deal. Source

You may also wish to think about investing in some capital improvements to the property. This doesn’t mean a full rehab of your office building or warehouse, but spending a little bit of money to create more curb appeal — whether that’s adding some in-demand amenities or even improving the lighting or landscaping outside — can pay off when it comes to your property’s valuation in the eyes of a prospective investor. Source

Similar to selling a single-family home, it can also be a good idea to “stage” your property. This often isn’t possible if your building is fully occupied by tenants, but if you do have vacant space, there’s no harm in dressing it up a bit — especially if you’re potentially selling to an owner-occupier. Source

What are the current trends in commercial property sales in February 2023?

It is difficult to predict the exact trends in commercial property sales for February 2023, as there are many variables that can affect the market. However, based on current trends, it is likely that commercial property sales will remain strong. The U.S. economy is expected to continue to grow in 2022, with GDP projected to increase by over 4%. This strong economic growth, combined with low interest rates, should support a strong commercial real estate market. Additionally, foreign capital is expected to remain a key target for equity capital, with record growth in popularity from pre-pandemic levels. If travel restrictions are eased, there could be an influx of foreign capital as investors seek affordable precautions against possible depreciation of the U.S. Dollar.

Overall, the commercial real estate market is expected to remain strong in 2022 and into 2023. Investors should continue to take advantage of the low cost debt available for commercial real estate financing, as well as the high demand for investors in the market.

What are the best ways to market a commercial property for sale in February 2023?

The best ways to market a commercial property for sale in February 2023 are to utilize a commercial property MLS, tap into your commercial real estate network, and consider engaging a commercial real estate broker.

A commercial property MLS, or multiple listings service, is a great way to get your property in front of the right eyes. Some of the top ones include LoopNet, CoStar, and Xceligent.

Tapping into your commercial real estate network can also be a great idea, depending on your connections. Especially if your property would be suitable for an owner-occupier, attending business events (if you’re located near your investment, that is) can bear fruit.

Engaging a commercial real estate broker is also a great idea. An experienced broker can be worth her or his weight in gold in getting your property in front of the right eyes.

For more information, check out our MLS guide and our guide on small businesses buying properties they’ll occupy with an SBA loan.

What are the most important documents to have in place when selling a commercial property in February 2023?

When selling a commercial property in February 2023, the most important documents to have in place are the sales agreement, the deed, and any other documents required by the state or local government. Additionally, the parties may need to sign a title commitment and other closing documents. It is important to make sure all paperwork is completed correctly and in proper order before the closing date.

For more information, please see this article on how to sell a commercial property in January 2023.

In this article:

1. Step 1: Prepare Your Commercial Property for Sale
2. Understand Your Needs and Expectations
3. Get an Appraisal
4. Prepare the Property
5. Step 2: Price Your Commercial Your Property
6. Calculating Your Internal Rate of Return
7. Step 3: Market Your Property for Sale
8. Step 4: Negotiate the Sale of Your Property
9. Step 5: Close the Sale
10. Paperwork Requirements
11. Financing Considerations
12. Tax Implications
13. Conclusion
14. Related Questions
15. Get Financing