Ditch the Drama: 6 Tips for Smoother Real Estate Transactions
When you’re pursuing your dream of buying a commercial building or leasing office space, it’s easy to get caught up in the one thing you really want to avoid: drama. From loosely inspected properties to ambiguous leases, the journey can be anything but simple. As you move into your next real estate venture, keep these tips in your back pocket to avoid some common nightmare scenarios:
1. Always know the person you’re dealing with
First and foremost, make sure the seller is 100% certain the property is up for sale. Which brings up another point – always make sure you’re speaking with the owner (and not someone who’ renting the space) in the first place.
Steer clear of small-time commercial landlords who refuse to work with your broker. Their refusal to allow you fair representation prior to even signing a lease can be a warning sign that they will try to take advantage of you in other areas as a tenant in the future.
2. Beware of buyers without boundaries
Whether you’re moving in or out of a property, the process is both exciting and stressful. People moving in are eager to make the place their own ASAP, and it’s not unheard of for new tenants to begin the moving in process a bit early. Before anyone starts bringing in boxes, office equipment or sets up utilities – be sure the ink is dry and the deal has actually closed.
3. Also”… beware of fraudulent buyers
Even with a “proof of funds” from a brokerage firm, signatures can be unfortunately forged. Always verify proof of funds and pre-qualification letters. Evaluate the buyer. Pick a realtor or broker who can manage the deal for you. If you hear “Oh, I’ll be sure to get that over to you”…” time and time again – you may need to field other offers.
4. Know exactly what you’re getting
Take tours of the property, inspect thoroughly, get the full history of the property, and find historical data. Once you have a lease for the property you want, it is best to use a real estate attorney to review it. General attorneys or attorneys who specialize in other areas (IP, corporate, trusts and estates, etc.) may very well be excellent in the areas they know, but if they don’t have extensive experience in commercial leases, they will often end up focusing on the wrong points to argue and unnecessarily stalling/interfering with the process. Many brokers have attorneys they have worked with in the past – you should trust their judgment. Try to avoid a general attorney you may know personally – this is business.
5. Vet the broker you’re working with
The vetting process is imperative to having a successful real estate transaction. Ask your trusted advisors – attorney, accountant, banker, etc. about potential brokers they know. Don’t simply go with the first one who cold calls you. Treat this process as the major expense that it is. Also, be weary of leasing agents who say you don’t need a tenant rep broker or try to represent you as well.
Leasing agents represent the landlord – not the tenant. The leasing agent will get a bigger commission check if the tenant doesn’t have representation.
6. Ask questions
Real estate is an expensive business. Whether you’re leasing or buying, you have to be 100% certain in the property. No questions should be off limits. Even if you’re concerned about something seemingly small, don’t be afraid to ask. The phrase you’ve heard hundreds of times – “There are no stupid questions” applies to this process. Anything from ventilation, to square footage, to taxes are questions that your realtor/lender/attorney have heard hundreds of times. If you come up with questions and notice that many are left unanswered – don’t stop. Remember that it’s a major investment and every answer matters.
By having a trusted broker, banker, and attorney, you should feel better about avoiding these nightmare scenarios. However with potentially millions of dollars on the table, small mistakes can become catastrophic. Follow these steps to try and minimize risk when selling, buying, or leasing a property.