I am currently working on two sale assignments which have highlighted the importance of conducting the proper pre-marketing due diligence when selling any commercial property. Most items should be addressed by a good broker; however in many cases getting the right materials together requires some upfront costs to be borne by the vendor. These can include:
- Commissioning a site and building survey for the property, especially for older properties where the original plans are unavailable or in poor condition; and,
- Completing a building condition report, especially when a detailed maintenance history of the building systems and major capital replacements (eg roof) are not available.
Having this information will lead to more effective marketing materials that will garner greater interest from more purchasers in less time. When prospective purchasers have this information on hand prior to making an offer they are more likely to offer at a higher price, require less due diligence items and time, and in competitive situations be more willing to offer unconditionally.
I believe that in all cases this will benefit the vendor by resulting in a higher sale price (more than enough to offset upfront fees for surveys and reports), requiring less time and resources after an offer has been accepted and leading up to condition removal, and a smoother transaction overall with a lower likelihood of unwanted “surprises.”
I conclude my post this week on a totally unrelated subject by sharing a few points made by Evan Osnos, a staff writer for The New Yorker living in Beijing that caught my attention. During an interview on The Colbert Report this week, Mr. Osnos noted:
- Many Chinese will take a three day train ride without a seat to find a job.
- There are more children learning English in China than there are in the U.S.
- There are more cars in China than the U.S. and only 3% of Chinese can drive a car.
Just sayin…I think this is more noteworthy than Charlie Sheen.