7 Fatal Commercial Seller Mistakes

 
1. Overpricing/Underpricing-- Overpricing means that the building
may sit on the market for a long time, as it languishes on the
market, Buyers see that it has not been sold and assume that
either (a) It isn’t worth it and/or (b) that there is something wrong
with it. Even if they still want to buy it, their offer price will be
well below what could have been negotiated when it was new to
the market.

2. Non-verified information-- Get all bills, costs, and rents verified in
writing. People are more litigious now than they have ever been.
If you give them bad information, they can sue after closing and
likely win. The cost of defending a Provincial court action is
generally counted in the tens of thousands before you even see
the inside of a courtroom.

3. Defects to disclose or not to disclose-- that is the question.
You want to present the building in the most positive light, but
there are some things that must be disclosed in writing, otherwise
you will be spending a lot of time and money in court.

4. Environmental-- Banks and trust companies require phase 1
environmental studies to finance. It is much more cost effective
to attend to matters prior to lender, appraiser and inspector 
scrutiny . Once something is known, to deny it later opens a Seller
to legal damages for remediation and misrepresentation or fraud.

5. Financing and pre-qualification-- Most banks do a poor job in prequalifying Buyers. Is a Buyer prepared for the sticker shock when
the appraisal comes in on lending value? Lending value is
generally approximately 10-15 % under market value. The banks
seldom explain this to the Buyer, and now the Buyer wants to
drop the price by 10-15 % after tying up the building on condition
for weeks.

6. Under marketing-- Placing a few ads online or in the local journal
is great, but remember Economics 101. The higher the demand
for a product, the higher the price.

7. Poor presentation-- Buyers love numbers and data. Graphs,
analysis, and projections particularly appeal to the mind set of this
group. Making a professional presentation to them and their
partners will make a difference in price.