Q. What does a commercial real estate broker do?
A. Brokers are valuable due to their their expertise surrounding the leasing and buying process associated with commercial real estate. A good broker is much more than just a someone who can find a new space for your business or help build your investment portfolio. The best way to view them is as you would your attorney or accountant. You want their advice as to what space is best suited for your business, what are the best lease or sale terms, etc. A good broker will help you in all aspects of the commercial space transaction, beginning with understanding exactly what you or your business are looking for and guiding you through the entire process.
Q. What are common pitfalls to avoid in a commercial real estate deal?
A. Don’t ignore local market conditions. There are two levels of due diligence required to evaluate a real estate investment–the market and the property. And of the two, local market conditions trump everything else.
A. Do your due diligence when it comes to the condition of the property. This should include physical characteristics like building systems, environmental matters and structural components as well as more intangible items, such as the title, survey, zoning and land-use regulations. Don’t try to do it all on your own, seek out experts to assist you, getting accurate estimates from professionals.
A. Have an accurate concept of the financials. Confirm and verify every element of income and expense. Value the property based only on present income, not projected income you have to produce.
Q. How do I know whether to lease or buy a space for my business?
A. There is no hard and fast rule of when you know whether to buy or lease a new location for your business. The best way to determine the right transaction is by going to a qualified commercial broker you trust who will take the time to sit down with you and go over the particulars of your business needs and make recommendations.
Q. What are the differences between investing in the commercial and residential real estate markets?
A. There are a variety of differences between the commercial and residential markets, foremost is the way that you invest in each market and the investment strategies involved. Often, commercial real estate investing has more of an eye on the long-term profit for your portfolio and offers more diverse opportunities.
Q. What federal laws have an impact on commercial real estate?
A. This is something you absolutely must discuss with your qualified broker, as laws are constantly changing and as an expert, they will be well-versed in the latest laws and changes that could effect your investment. Laws that pertain to commercial real estate cover everything from taxes, banking regulations and environmental issues.
Q. Is it necessary to do a new survey when purchasing commercial property?
A. There is no hard and fast rule to follow. However, in general, it is always preferable to have a fresh survey so you know exactly what you are buying. But if there has been a survey within the past few years and you are convinced after looking at the property that nothing has changed, your broker might recommend that you can safely avoid getting a new survey.
Q. When is either party obligated to pay a broker’s fee upon the sale of a commercial property?
A. For either party to owe a broker’s fee or a commission, there must be a written listing agreement in place and the fee is usually stated as a percentage of the sales price.
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