It’s no secret that selling any property can be a difficult, stressful time, but selling commercial property can be even harder! While no system is ever perfect, there are plenty of tips that you can follow to make sure your land gets sold to the right person in a timely manner.
Know Your Most Likely Buyer
Ask yourself some questions such as “What are the surrounding uses of the property?”, “What is the current zoning or master plan for the land?”, or “How much can be built upon the site?” Just because you have a corner lot doesn’t mean Walgreens is going to buy your property. Traffic, demographics, size requirements, and proximity to existing stores/competition are just a few of the factors a user might look at when looking to acquire commercial property.
Land Condition Issues
You should have a good idea on what kind of land you are selling. Are you selling a fully improved lot that is graded with utilities to the site, raw land, or land that has had some work done? If you are selling raw land you should know some basics about your property. Things like the soil conditions (clay, sandy, rocky, etc), flood zones/ways, mineral rights, and easements/encroachments are just some basic questions you should be able to answer about the property. Not only for the user but also to know what kind of hurdles a user might be facing. Even fully improved lots should have a written definition of what fully improved means.
Be Patient & Reasonable!
Latitude Commercial has represented many users in the search for vacant land. From the publicly traded pharmacies to local strip center builder, what they almost always have in common is the need for time. There is so much money and behind-the-scenes work that goes into developing a vacant piece of property that if you are not prepared to wait for your price, you better be prepared to discount it heavily for someone to take the risk. Most of the users that have a large amount of properties have real estate committees (REC) that meet to approve sites after a price has been agreed upon. After that, they begin the permitting with the required government agencies. Most local government agencies have monthly meetings set up for these approvals so when you have to go to 4-5 meetings for an approval it can take 3 months, 12 months, or even longer for all the user’s permits. If your site needs any kind of variance, special use permit, rezoning, etc you can expect to wait much longer than any kind of minimum amount of time. Users/developers pay for surveys, site plans, architectural plans, appraisals, legal bills, environmental reports, geotechnical reports, and more to develop the parcel. All of that money is thrown away if the local government says no to the project so be ready to wait for your check or reduce it to shift the risk to the potential buyer.
Reinvest That Money
Assuming you are not a developer, and are able to qualify, you need to consider doing a 1031 Exchange. Owners can take advantage of the 1031 Exchange, and defer the capital gains you would otherwise pay by reinvesting it into another property. Doing a 1031 Exchange has so many benefits you can write an entire blog on it (such as this one we wrote!). Consider investing in something that produces regular cash flow instead of an asset like land that, best case, appreciates slowly over time.
Of course, these are only a few generic tips to help with selling your property. For an in depth discussion, contact us! Latitude Commercial provides commercial real estate services such as purchasing, leasing, tenant representation, and property management throughout Northwest Indiana and the Chicago Suburbs. To find out how we can help you find a new home for your business, call us today at (219) 864-0200.