Email
Translate

Main Content

Things You Need for Buying Commercial Property

Buying commercial real estate can be confusing and differ significantly from purchasing residential properties. If you are considering purchasing a commercial property, be sure to do your homework to understand the exact terms of your contract. This article will discuss all of the items that need to be considered before you purchase any commercial real estate. If you are buying commercial property what questions are there to ask?

Remember, when you are entering into a commercial property deal, your broker should be able to help you obtain all of the items necessary to close the deal. These items should also be reviewed by a licensed real estate attorney who can review the terms and ensure that you are protected from any potential risks. 

Hire a Real Estate Broker and Sign a Brokerage Agreement

The first step to any successful commercial real estate agreement is to find a real estate broker that is licensed in the state of California. This broker needs to be well-versed and experienced with the specific property that the buyer intends to purchase. Make sure that this broker has a history of successful real estate transactions. 

Additionally, be sure to get the scope and representation of the broker in clear writing that is agreed upon by both parties. The terms of the transaction should be clear, and if you have any questions, be sure to clear them up before proceeding. 

Perform Your Due Diligence

To get the deal started, with or without a letter of intent, you will need to arrange a meeting with the seller and receive all of the information and documentation about the property. At this point, the buyer should send the due diligence list to the seller. The broker will determine the scope of the due diligence, which includes length, budget, and a physical inspection of the property. 

From there, the buyer needs to perform a property inspection, a title search, and a chain of title. Next, the buyer should check for entitlements for real property, which include variances, conditional use permits, coastal development permits, and a zoning confirmation letter.

Paperwork

Next, buyers should obtain copies of agreements that are binding on the property. These include:

  • Joint venture agreements
  • Organizational documents
  • Good standing certificates
  • Loan documents
  • Guaranties
  • 3rd party property agreements
  • Occupancy agreements
  • Tenant Estoppel certificates 
  • Attornment agreements

The buyer should also obtain copies of all financial agreements, including rent rolls, appraisals, financial statements, and tax returns. Check all of these documents for tax impacts that may result from the acquisition of property. 

Also, this is the point where all permits and 3rd party approvals should be obtained. 

Closing

Once all of the documents are obtained, and the terms are agreed upon, the broker can schedule a date for closing and list the documents as exhibits. The buyer should also consider the maturity date of any financing agreement, 1031 exchange, or deadlines. Closings can be complicated, so it is always recommended to hire an experienced professional to guide you through the process. 

Get help with commercial real estate in Merced, CA. Call Soldavi Realty today at 209.975.7653.

Skip to content